We have all seen the news. The residential real estate market is hot and it’s a great time to be a seller. What about the commercial office market? If you own an office building, I’m sure you want to know if your value is still there.
If you lease office space you probably need to know if the rent is going up next time you renew, or will you be able to find new space when you move?
The pandemic did shut down the office market for a while last year, and in some areas of the country it is still shut down.
The national news is filled with stories about people who went home to work and are not going back to the office anytime soon. This is probably true for densely populated urban areas with large corporate office buildings, or cramped call centers with hundreds of cubicles, but in most of our local market this is not the case.
Fortunately, the local office market has recovered. There is plenty of demand for office space in this area. The only caveat to that statement is that it applies mostly to the smaller suite office market.
The vast majority of office buildings in Columbia, Richmond and Aiken Counties are small when compared to those in Atlanta or any other large metropolitan area. We don’t have a lot of large corporate headquarters with over 100,000 square feet. We have many 5,000 to 10,000 square feet buildings with multiple tenants. The reason is there are many small businesses in our market that need smaller suites, or out of town companies that want to open a satellite office in Augusta.
This type of small space inventory has been a post-pandemic blessing. Employees are much more willing to go back to a small office with just a few people, then a densely populated high-rise building.
I’ve seen a strong demand for suites with 2,000 square feet or less. There are fewer of these spaces available in Evans or Martinez right now. Those we have listed recently have leased within 30 days or less. Plan ahead if you are looking for space. Give yourself at least a couple of months to find the right space. If you own a building with a large block of vacant space you might want to consider subdividing it into smaller suites; as that has been the strongest market in our area and there are no signs it will change.
Even though market vacancy has gone down recently, I haven’t seen much upward movement in rental rates. Our office inventory is still adequate for the current demand. As a whole, tenants are still very sensitive to higher rents, and we are not in a market where new office construction is economically feasible. Current construction costs are higher than the return you can achieve in office rents. Continued market tightening and increasing rents are needed before we will see a lot of new office construction. This is good news for people who own existing buildings.
My recent experience indicates office building prices are still good, but we are not seeing the huge appreciation seen in the residential market. If you are looking for an office suite I recommend giving yourself some time to find it. Smaller suites do come on the market, but they go relatively fast. Frequent internet searches are the best approach. Here are some websites where you can find office listings – CREXi.com, Loopnet.com, and Officespace.com. You can also check our website at DCLawrence.net.