Q2 2022 Commercial Real Estate Market Report: Charleston, SC
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
The commercial real estate market in Charleston, South Carolina continued a positive trajectory of growth in Q2 2022.
Its office space market saw higher-priced Class A office space amidst a "Flight to Quality"; its industrial market saw its vacancy rate plummet by 9% alongside an increase in asking rents.
As of August 15, 2022, average asking rents per square foot for office space and industrial space in Charleston, SC are about $28 and $7.40, respectively.
General Area Overview & Demographics
As of August 2022, the metro-area population of Charleston, South Carolina is approximately 734,000 people. The population density is 1,458 people per square mile.
The median age in Charleston is about 36 years old. The gender makeup of Charleston is 50% male and 50% female.
The average household size in Charleston is about 2.4 people. The average income per household in Charleston is $54,813. The homeownership rate in Charleston is 62%.
General Commercial Real Estate Performance in Charleston, SC
The Charleston, SC commercial real estate market performed well in the second quarter of 2022.
Employment is growing in Charleston and is, as a result, directly affecting asking rents, property prices, and leasing activity as well as outpacing the national average.
In the second quarter of 2022, the Charleston SC office market continued to be strong, with higher quality office space being sought out and the average cost per square foot remaining steady. Market activity was robust, with a number of new leases being signed. The outlook for the rest of the year is positive, with continued growth expected in both rents and the number of new leases.
The industrial/warehouse sector in Charleston, SC showed continued strength in Q2 2022, with average rents rising and vacancy rates falling.
Charleston, SC Office Market Activity in Q2 2022
Office vacancy rates declined in Q2 2022 to levels not seen since Q1 2020: 8.2%. Office space leasing activity increased almost 2% year-over-year to about 480,000 square feet, with Class A office space seeing the largest share of this activity.
Commercial tenants looking for Class A space can expect to pay hefty premiums for this increase in quality: about 12% throughout the market and 32% on the peninsula.
Notable Office Market Leases in Charleston, SC in Q2 2022
Some of the most notable office market leases that took place in Charleston, SC in Q2 2022 include:
- Total Quality Logistics leasing 40,000 square feet on Daniel Island Drive for an undisclosed amount.
- Jear Logistics leasing 32,500 square feet on Benefitfocus Way for $27.00 per square foot.
- Industrious leasing about 17,000 square feet on King Street for about $38.00 per square foot.
These are some among the many new direct office space leases that Charleston, SC saw in Q2 2022.
Charleston, SC Industrial/Warehouse Market Trends
The industrial market in Charleston, SC is starting to see demand outpace supply: Net absorption increased by about 40% over the previous quarter to about 3.5 million square feet. Availability is at record lows.
Growth in Charleston’s population is directly influencing the need for new single-family homes, which, in turn, influences the need for construction companies. Thus, the need for industrial commercial real estate space grows accordingly.
Notable Industrial Lease Activity in Charleston, SC in Q2 2022
Some notable, new industrial lease activity that took place in Charleston, SC in Q2 2022 includes:
- Volvo’s leasing of about 500,000 square feet for five years at about $5.50 per square foot.
- Cummins’s leasing of about 84,000 square feet for ten years at about $6.75 per square foot.
- CE Rental’s leasing of about 43,000 square feet for seven years at about $8.50 per square foot.
Other notable commercial tenants that have joined the Charleston, SC industrial market include Ethos Therapy and Perfection Hy.
New Industrial Real Estate Development Projects in Charleston, SC in Q2 2022
Charleston’s submarkets of North Charleston, Berkeley County, Dorchester County, and Daniel Island are seeing about 7.4 million square feet of new industrial real estate projects currently under construction.
Charleston’s investment pipeline remains strong, with more institutional money finding its way into the city’s industrial market. This will create steady sales volume through the rest of 2022 as consumer demand for goods also continues to increase.
Takeaways for Charleston, SC Commercial Real Estate Investors
Employees are making their way back into the office in Charleston, and their employers are paying top-dollar for the most premium office spaces in town.
While this has led to a slight decrease in average asking rents for office space in Charleston, it’s simultaneously increased demand for higher-quality office space.
Employment in Charleston is outpacing the national average, tightening the labor market, and with inflation starting to slow, the purchasing power of the dollar may start to recover as a result.
Do your research, stay diligent, and happy investing.
Methodology
All figures presented in this article are based on MyEListing.com’s commercial real estate listing data in corroboration with other freely available data and information covering the commercial real estate industry.
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