Published May 10, 2013
There probably will be more repurposing of historic buildings in the Central Business District as landlords try to meet the demand for good quality office space, according to a first-quarter office market report by NAI Avant.
The trend already is underway as Agape Senior relocates its headquarters in three buildings in the 1600 block of Main Street, said Macon Lovelace, a broker at the Columbia commercial real estate firm.
Agape will occupy 43,000 square feet of space in the three buildings that once were home to Kimbrell’s Furniture, Schulte’s department store and the W.T. Grant store.
More competition for office space downtown will benefit suburban submarkets, particularly the Class “A” and Class “B” multitenant buildings in St. Andrews and northeast Columbia, Lovelace added.
“We expect to see a significant increase in the activity levels for the suburban office markets in 2013 as a result of the reduced supply of quality office space” in the Central Business District, he said.
Vacancy rates in those submarkets are substantial mostly because tenants have moved downtown to take advantage of location and some of the leasing concessions and rates landlords offered in 2011 and 2012 to fill vacant space, Lovelace said.
Also impacting vacancy rates in submarkets is a cutback in space leased by the state government, Lovelace said.
The vacancy rate for Class “A” office buildings in the Central Business District was 8.6% at the end of the first three months of 2013. The overall rate for all of the Columbia market was 15.2%.
St. Andrews, which has 2.7 million square feet of office space, had the highest vacancy rate of submarkets at 24.2%, according to the report. Northeast Columbia, with 1.1 million square feet of office space, followed at 18.4%.
St. Andrews also had the largest amount of contiguous space — 135,675 square feet — on the market.
The overall asking rental rate for the Columbia market was $15.80 per square foot. The average for Class “A” office space was $17.68, followed by $16.03 for Class “B,” and $10.98 for Class “C.”
The average asking rate for the Central Business District was $16.66 per square feet.
Lexington, which has less than 100,000 square feet of office space, had the area’s highest rent at $16.74 per square foot.
As vacancy rates fall, rents are bound to climb, the report said.