In what seems like a blink of an eye, 2025 is about to come to a close. Like many industries, the real estate industry experienced growth in some areas and a lot of ups and downs in others. Trying to get a feel on what might happen in Charleston’s commercial real estate sector next year, several local experts weighed in on the market now and what they expect to happen over the next 12 months.
“My overall expectation is that 2026 will be a year of stabilization for the Charleston commercial real estate market,” said Chris Cunniffe, managing broker and license partner at Engel & Volkers. “Charleston remains a highly-sought market for commercial investment and is viewed as a premium market even within the highly-desired Southeastern U.S. region, due to land scarcity and continued strong population growth.”
Cunniffe adds that, like other cities, political and economic factors have created headwinds for Charleston’s commercial markets.
“Commercial investors and lenders remain in a cautionary stance due to uncertainty over the U.S. tariff policy, higher interest rates compared to prior years, and high construction costs,” he said.
Looking to 2026, Cunniffe mentioned that, with there being fewer construction projects getting funded in the current environment, he expects to see net absorption of vacant space in 2026 in several sectors that are currently seen as overbuilt, including office, industrial and multi-family.
“The retail sector remains a bright spot that I expect will continue to shine in 2026,” he said.
One example of a commercial project in the works is the redevelopment of Pacific Box and Crate, a 221,600-square-foot mixed-use development on Charleston’s upper peninsula, that involves converting 26,000 square feet of office space into lifestyle retail and restaurant space. The original concept that opened in 2017 included the Workshop food hall, and while that idea never took off, two restaurants that are there now, Edmund’s Oast Brewing Co. and Rancho Lewis, remain popular. Currently under construction, the renovations are expected to be finished in the second quarter of 2026 and will include an improved central courtyard and a children’s play area.
Reviewing this year, Todd P. Garrett, managing partner of Industrial & Investment Services at Harbor Commercial Partners, said that industrial leasing activity has picked up since the summer, but leasing and sales activity is still well below where it was over two years ago.
“Higher interest rates are keeping sales slow, and most sales prices are below their highs of recent years,” said Garrett. “Cap rates, or the return in year one on a sale, have gone up.”
He added: “Big-box industrial will have a couple of years to climb out of the hole created by oversupply, with vacancy above 20%. Meanwhile, Greenville-Spartanburg’s big-box industrial is at 6.5% vacant.”
“On the smaller flex industrial spaces, vacancy is much tighter at 6.1%, but the ‘selling’ lease rates are roughly $2 below the ‘asking’ lease rates and landlords are giving more concessions to get a deal done,” he said.
So what does he forecast for next year? “I do expect sales and leasing activity to pick up as interest rates are expected to keep dropping this year,” he said.
Gerry Schauer, who works with the Office & Investment Services at Harbor Commercial Partners, said that limited new office development since the pandemic has allowed existing inventory to be steadily absorbed, contributing to declining vacancy across the Charleston market.
“At the same time, a continued ‘flight to quality’ among office users has supported strong rental rates for well-located, high-quality buildings,” he said.
Looking ahead to 2026, Schauer expects office development activity to increase, alongside growing confidence from both investors and lenders in Charleston’s business sector.