What are the tallest buildings in Columbia?
The commercial real estate market is booming in Columbia with occupancy rates soaring and investors snapping up most of downtown’s office towers for record prices.
But commercial real estate brokers and developers say don’t expect any new office towers to go up anytime soon – unless the city of Columbia chips in for a new tower to house, in part, City Hall.
“Never say never,” said Martin Moore, senior vice president with CBRE commercial real estate firm in the Carolinas. “The rental rate is just not high enough considering the cost of land and cost of construction. There would have to be someone who wanted a specific building for a specific purpose and was willing to pay for it.”
Rental rates for the highest quality office space in Columbia are going for $20 to $23 a square foot. Martin said those rates would have to jump to the mid-$30 range before a developer would find it financially feasible to build a new tower.
“You have to have people to drive a building,” he said. “And that’s a big percentage (rental rate increase) in a market that is $22 or $23” a square foot.
John Holder, the Atlanta developer who built the Main & Gervais building in Columbia as well as the Meridian building on Main Street and the new IBM building on the University of South Carolina campus, agreed.
“The cost to build these days is dramatic,” he said. “Buying land and building costs have grown significantly. And rental rates have not.”
Holder built the Tower at Main & Gervais building in 2009, and it sold in August for the whopping sum of $65 million, or $348 a square foot. Other office towers in Columbia sold recently for $90 to $200 a square foot.
Construction of the Main & Gervais building was funded by three firms — Edens retail developer, NBSC bank and the McNair Law Firm — for a specific purpose: to be in the highest profile location in South Carolina, directly across Gervais Street from the State House.
“They were willing to pay a premium for the space,” he said.
It would take another tenant or tenants with similar motives to fund a new tower, Holder said. Otherwise, downtown tenants will probably just stay where they are and make renovations.
“They’ll say, ‘I’ll just suck it up and stay where I am,’” he said.
One wild card may be plans for new City Hall.
City Council in 2015 purchased the former United Way building in the 1800 block of Main Street – catty cornered from the present City Hall, and issued requests for proposals to build up to 400,000 square feet of space. The idea has been floated that a tower could be built there in conjunction with a private developer who would also lease out additional office or retail space.
“It will probably be built sooner rather than later,” said Matt Kennell, president and chief executive officer of Center City Partnership, which encourages and guides investment in the central business district. “And we would very much like to see a tower.”