MARKET INSIGHTS
OFFICE
Charleston’s office market is gradually stabilizing, though performance varies considerably by building quality and location. Vacancy remains relatively low compared with peer markets, and leasing demand is steady among professional services firms, financial businesses, and smaller tenants. Most activity reflects companies relocating or adjusting their space needs rather than widespread expansion, with newer, amenity-rich buildings and adaptive reuse projects attracting the strongest interest. Limited construction is helping contain supply pressure. Higher development costs and tighter financing have curtailed new projects, while much of the remaining pipeline serves medical uses or forms part of mixed-use developments. However, tenants moving into newer properties are leaving vacancies in older buildings. Sublet inventory, at roughly twice its pre-pandemic level, adds competition, particularly in suburban areas, and gives tenants more negotiating power. These differences are evident in occupancy and rents. Premier properties in areas such as North Morrison Boulevard remain nearly full and command premium pricing. Older downtown and suburban buildings face slower leasing and greater pressure to offer discounts, concessions, or upgrades. Overall rent growth has resumed at a moderate pace, but gains remain concentrated in the most desirable properties. Steady demand and minimal new supply should support further improvement. The pace of recovery will depend largely on filling sublet space and making older buildings competitive as tenant preferences continue to favor quality, amenities, and location.
INDUSTRIAL
Industrial market is improving gradually as leasing improves and new construction slows. Leasing activity in the first half of 2026 reached a three-year high, supported by a broader mix of tenants and fewer move-outs and consolidations. Net absorption has turned positive following the losses recorded through much of 2024 and early 2025, although slower employment growth and weakness in housing-related businesses continue to limit expansion and leave substantial sublease space available. The market is still absorbing more than 30 million square feet delivered over the past five years. Overall availability remains among the highest nationally, with much of the excess concentrated in large distribution buildings. Smaller properties near established population centers face less competition and continue to benefit from local demand. A steep reduction in speculative development should help reduce the surplus, though filling large vacant facilities will take time. Annual rent growth remains slightly above the national average but has slowed as landlords compete for tenants. Concessions and discounted subleases are putting particular pressure on bulk distribution space, while smaller infill buildings have maintained stronger pricing. Investment activity has cooled amid vacancy concerns, financing conditions, and uncertainty surrounding global trade. Buyers are favoring properties with dependable tenants and long-term leases, alongside selective opportunities to improve older buildings. Prices have adjusted and capitalization rates have risen, but Charleston’s port and regional growth remain long-term draws. Further recovery will depend on sustained leasing demand and the market’s ability to absorb its remaining large blocks of vacant space.
RETAIL
The Tri-County's Retail market continues to thrive from population growth, tourism, and a diverse employment base. Activity spans the downtown peninsula, Mount Pleasant, North Charleston, and expanding residential communities in Berkeley and Dorchester counties. Established shopping corridors such as King Street, Meeting Street, and U.S. Highway 17 remain important destinations, while Nexton and Carnes Crossroads are attracting retailers seeking access to new households. Regional highways, the airport, and the port further support the economy and consumer demand. Leasing is led by service businesses, entertainment operators, healthcare providers, fitness concepts, and value-oriented retailers. Recent commitments include NRG Entertainment, Bank of America, Charleston Surgery Center, MOVMNT Personal Fitness, DriveTime, and Design Within Reach. Development remains modest and is concentrated in Berkeley County, Mount Pleasant, and Johns Island, primarily through mixed-use projects, neighborhood centers, and freestanding stores. With more than 65% of the pipeline already leased, new deliveries should create limited vacancy pressure. As of the third quarter of 2026, the Charleston submarket recorded 310,000 square feet of net absorption over the preceding year, below its five- and ten-year annual averages of 440,000 and 380,000 square feet. Vacancy stands at 3.1%, matching both historical averages and remaining below the metro’s 4.3% rate. Submarket rents average $27 per square foot on a triple-net basis, compared with $26 across the metro. Annual rent growth has slowed to 1.2%, versus 1.6% metro-wide, although cumulative gains over the past decade remain stronger at 39.4%, compared with 33.7%. Downtown and Mount Pleasant continue to achieve the highest rents, while suburban corridors offer access to growing customer bases. Over the next two years, residential expansion and tourism should sustain demand, while restrained construction helps keep vacancy low. Rent increases are likely to remain moderate as consumer spending growth slows and retailers take a selective approach to expansion.
MULTI FAMILY
Charleston’s multifamily outlook is improving as construction slows, giving the market time to absorb the more than 20,000 apartments added since 2020. Vacancy has declined, concessions have become less common, and rent growth has returned to positive territory. These gains primarily reflect fewer deliveries rather than stronger demand, although population growth, new household formation, and a diverse employment base continue to support leasing. The development pipeline has contracted substantially from its early-2023 peak. Most construction remains concentrated along Interstate 26, including Summerville and Goose Creek, with additional activity in select infill locations. Limited development opportunities in downtown Charleston and Mount Pleasant continue to support premium rents. Charleston remains among the Carolinas’ most expensive rental markets, but performance varies: mid-priced communities have held up relatively well, while luxury properties face greater competition from new supply. Investment activity has also picked up, with buyers targeting stabilized suburban communities and older properties with renovation potential. Financing costs remain a constraint, but recent transactions suggest continued confidence in Charleston’s growth prospects. Slower deliveries should support further occupancy gains, while softer employment conditions, affordability pressures, and interest rates could limit the pace of recovery.
HOSPITALITY
The hotel market outperformed national growth through August 2026. Revenue per available room (RevPAR) rose 5.8% over the trailing 12 months, supported by a 2.1% increase in occupancy and a 3.6% gain in average daily rate (ADR). Nationally, RevPAR increased 2.9%, with occupancy up 0.2% and ADR rising 2.7%. Leisure travel remains a major demand driver, supported by Charleston’s historic attractions, restaurants, cultural venues, and proximity to beaches and outdoor recreation. Events including Spoleto Festival, Charleston Wine + Food, and MOJA Arts Festival provide additional visitor traffic. Higher-end hotels led performance, with luxury and upper upscale RevPAR growing 6.1%, compared with 4.3% for upscale and upper midscale properties and 3.2% for midscale and economy hotels. The market contains approximately 22,000 rooms across four submarkets. Charleston/West Ashley accounts for about 7,900 rooms, followed by Charleston Airport with 6,500. Charleston/West Ashley also leads in RevPAR, frequently exceeding Mount Pleasant/Isle of Palms, the next-highest submarket, by approximately $70. New supply remains relatively limited. Two hotels added roughly 290 rooms over the past year, slightly above the three-year annual average of 270 rooms. Another 280 rooms are under construction across three properties, equivalent to 1.3% of existing inventory versus 2.5% nationally. The longer-term pipeline includes approximately 2,400 rooms in final planning across 20 projects, including the 139-room Four Seasons Charleston. Despite stronger operating results, hotel investment activity slowed. Eight properties traded during the trailing 12 months through August 2026, generating approximately $76.2 million in sales, with individual investors leading acquisitions.