Economy
Charleston’s economic expansion continued in Q3, as the unemployment rate declined to 3.6% and the metro added more than 4,100 jobs year-over-year (YOY). Notably, nonfarm employment increased 0.9% YOY, three times the national growth rate.
Supply and Demand
Charleston remained the nation’s tightest office market among those with more than 10 million square feet of inventory, with overall vacancy declining 20 basis points (bps) quarter-over-quarter (QOQ) to 6.8%, its lowest level since Q3 2019. The market recorded more than 25,000 square feet (sf) of occupancy gains during the quarter, bringing the year-to-date (YTD) total to more than 100,000 sf. Much of the improvement reflected declining sublease vacancy, which fell 90 bps YOY to 1.2%, its lowest level since Q1 2023, while direct vacancy held at 5.6%. Daniel Island led occupancy improvement as tenants moved into sublease space leased in Q2, lowering the submarket’s overall vacancy 190 bps QOQ to 16.4%. Class A buildings also recorded more than 52,000 sf of occupancy gains, reducing Class A vacancy 70 bps QOQ to 10.3%. New supply remained limited, with Magnolia Landing in North Charleston the market’s only office project under construction. With minimal new development and sustained occupier demand, vacancy is expected to continue trending lower.
New leasing totaled more than 212,000 sf in Q3, bringing YTD activity to more than 744,000 sf, up 30.1% from the same period in 2025 and the strongest three-quarter total since 2022. Activity was more evenly distributed across the market in Q3; Downtown and Mt. Pleasant/East Charleston together accounted for 45.4% of quarterly leasing, up from 29.5% in Q2. Renewals totaled more than 59,000 sf, lifting YTD renewal activity to more than 166,000 sf, already more than 2.6 times the full-year 2025 total.
Pricing
Overall asking rents rose $0.91 QOQ to $30.75 per square foot (psf) in Q3, up 1.2% YOY and reaching their highest average since Q2 2024. Limited high-quality availability supported higher asking rates, with select Class A spaces marketed at $70.00 psf. This helped drive Class A rents up 8.9% YOY to $36.65 psf and CBD rents 5.5% in just one quarter to $41.77 psf. Suburban asking rents remained stable at $27.58 psf, largely unchanged for the past four years. As vacancy tightens and quality space remains limited, landlords are expected to maintain pricing leverage, particularly for Class A product.
