Published Oct. 19, 2012
Although there was plenty of leasing activity during the past quarter, the vacancy rate for the Columbia office market appears to be frozen.
Colliers International, a commercial real estate firm, reported that the third quarter vacancy rate increased slightly by 0.02%, marking a negative absorption of 1,341 square feet.
The overall vacancy rate for the Columbia area, which consists of 161 buildings consisting of nearly 10 million square feet of office space, was 23.33%, Colliers reported.
While the downtown Central Business District ended the quarter with a 22.61% vacancy rate, the Class “A” vacancy rate registered 13.59%. The vacancy rate for Class “A” space in the suburban markets was 13.77% compared to the overall suburban vacancy rate of 24.04%.
Economic uncertainty and the upcoming presidential election seem to be keeping businesses on the sidelines, Colliers said.
“Despite limited absorption, there is still considerable leasing activity occurring in the market as tenants continue to look for options but are slow to execute transactions in this environment,” the report said.
Some bright spots included renewed investment activity among the larger downtown office towers, Colliers said. It noted that in September, Massachusetts-based CommonWealth REIT bought the 17-story Meridian building from Holder Properties for $60 million.
Also, AgFirst Farm Credit Bank announced its intention to buy the Bank of America Plaza at the north end of Main Street and move some 380 workers into 100,000 square feet of space in the tower.
Colliers’ forecast calls for a “sluggish” fourth quarter due to state and national elections and the holiday season.
However, it expects the first quarter of 2013 could be stronger “in terms of positive absorption” in the Central Business District with growth to follow in the suburban markets.
Rental rates for downtown office space also should increase during the year as the supply of space dwindles. Rental rates in the suburban markets are likely to remain flat, Colliers added.
The average asking rate during the third quarter in the Central Business District was $16.53 per square foot, with Class “A” going for $19.20. The market average for the quarter was $15.05.