Columbia Office Figures Q4 2024

Transaction Activity

Sales Activity:

In Q4 2024, the office market saw four sales totaling 101,165 sq ft., including three investment sales and one owner-user purchase by Optus Bank. With the economy strengthening, lower interest rates, and banks easing investment fund stipulations, office sale activity is expected to remain steady.

Leasing Activity:

In Q4 2024 office leasing activity continued quarter-over-quarter consistency completing 39 leases amounting to 313,254 sq. ft., 64% of which were new. The average lease term was around 5 years and the average transaction size increased to 8,032 sq. ft.. Office flex properties saw activity increase; during Q4 2024 there were six flex deals totaling 71,920 sq. ft. Of these office/flex transactions, two were new and totaled 28,988 sq. ft. and the remaining 42,932 sq. ft. were renewals. Tenant confidence is growing with many tenants committing to five years or more and larger suites.

Market Movement and Net Absorption

The Columbia office market saw a year-over-year vacancy rate decrease of 13 basis points, from 15.3% to 14%, the lack of space highlights the need for innovative spaces or new construction. The Central Business District (CBD) experienced significant activity with 120,951 sq. ft. of net absorption, However, this trend may be short-lived as the CBD vacancy rate has now reduced to 11.5%. Scarcity of downtown space will likely boost rent for downtown office space in the coming year. In contrast, the rest of the market recorded a net absorption of 5,057 sq. ft. Looking ahead, suburban areas are expected to dominate absorption due to the availability of affordable, quality spaces.

Economic Trends & Outlook

The Federal Open Market Committee's 50-basis point cut in September has significantly influenced the economy. Despite the rate cuts being fewer than expected, the economy continues to improve, fostering modest hiring and consumer spending. This is anticipated to bolster the commercial real estate market. Despite national uncertainties from the election year, the local market remains strong, with previously stalled deals now closing. This market's robust appeal and solid fundamentals are likely to sustain activity into the next year.