Four significant downtown office tower transactions fueled an active third quarter in Columbia, with 20% of office buildings in the central business district sold as the area’s vacancy rate fell.
Leasing activity in the CBD remained strong, with many tenants renewing their leases and expanding their space, according to a report from Colliers International.
The highlights of the quarter:
- 1221 Main St. – A 204,154-square-foot Class A tower anchored by NBSC, Edens and the McNair law firm traded for $65 million, or $318 per square foot.
- 1441 Main St. – The 264,857-square-foot building sold for $29 million, or $109 per square foot.
- The Tower at 1301 Gervais – A 298,926-square-foot Class B building sold to RealOp investments for $28.1 million, or $94.00 per square foot.
- Capitol Center – A regional investor, New York equity firm Hamilton Equity Partners, purchased the 466,000-square-foot building for $43 million, or $92.27 per square foot.
The third quarter vacancy rate in the CBD was 12.27%, down from 12.31% at the end of the second quarter of 2017. The overall average asking rental rate was $19.32 per square foot per year, which was 13.6% higher than a year earlier.
Average rental rates fell 5.9% from the second quarter because of the absence of new construction, which limited the amount of space available for rent, the report said.
Most leases were for spaces between 2,500 and 5,000 square feet.
The overall market vacancy rate in Columbia fell from 17.43% at the end of the second quarter to 17.18% at the end of the third quarter. The market average asking full service rental rate decreased from $16.56 per square foot per year the previous quarter to $16.02 per square foot per year this quarter.
Over the last year, the asking rental rate for the market decreased 2.3%, a trend the report attributed to lack of vacant space and lack of new construction.
In the suburban markets, vacancy stood at 21.9%, with an overall asking rental rate of $14.28 per square foot.