By JIM PARKER
The Post and Courier
If one, no, two words define downtown Charleston’s commercial activity, they’re “explosive” for retail and “constricted” in terms of office space.
Yet both the shopping and office markets from Broad Street to the Crosstown have had major influences, in varying ways, on the entire Lowcountry commercial landscape.
Those observations stem from brokerage NAI Avant’s first quarter 2013 report on local retail and business center markets. The South Carolina company has an office in Charleston.
According to the headline on the office report, “Downtown Office Market Tightens, Fueling Suburban Office Development.” Meanwhile, the report on the shopping scene notes, “Downtown Charleston Retail Market Erupts as Upper King Activity Takes Off.”
Dexter Rumsey, who is the company’s senior broker in Charleston, compiled the office market findings earlier this month. The shopping market study comes from Ruth Marie Embler, retail specialist broker.
According to Rumsey, the tight market affected the first quarter 2013 office snapshot. But the outlook “proved to be exciting” as indicators suggested growth in future quarters.
The retail market “continued to trend in a positive direction” during the quarter, Embler says. National and international accolades bestowed on Charleston in late 2012 built momentum and a strong finish for the market that has carried over to this year.
Here’s more detail on retail, according to Embler:
• Tourism “continued to play a large role” in economic growth locally, and the benefits have trickled down to the retail market.
• King Street and the central shopping district “have remained attractive to prospects,” as evidenced by competition between tenants for available space and the emergence of above-average rental rates. Certain King Street leases “are pushing north of $45 a square foot.”
• New ventures such as Cariloha at 341 King St. and Moon and Lola at 322 King announced plans in the first quarter to open. And after speculation, “trendy Swedish retailer” H&M said it would open its first South Carolina store in the 18,300-square-foot historic Kress Building at 281 King. Williams Sonoma, which had been there, moved to a new spot at 359 King.
• The “trendy restaurant and nightlife vibe” of Upper King Street was supported by new retail and mixed-use developments set to open this spring and summer.
• Another example of “retail momentum” in the quarter are plans by Evening Post Publishing Co. to redevelop 12 acres between King and Meeting streets “into a mixed-use commercial and residential development including a retail component.”
• Suburban markets also “displayed retail growth potential.” Cases include Nexton, a mixed-use development in Summerville that recently broke ground. The first stage of the Nexton Retail Village is available for pre-leasing with up to 200,000 square feet of retail space. Also planned in the suburbs is shopping center redevelopment surrounding the Folly Road BI-LO on James Island.
What follows is a closer look at the metro Charleston office market, based on Rumsey’s report:
• There was some activity downtown, where “Class A” (top notch) rental rates are in the low $30s per square foot. Charleston-based PeopleMatter human resources software firm moved to a new 14,500 square-foot office at 466 King St. Meanwhile, 174 Meeting Street is a 52,000 square-foot Class A office building being built with a July completion date. Holder Properties is the developer and Certus Bank will be anchor.
• The 65,000-square-foot Class A office building 25 Calhoun Street sold for nearly $370 a square foot, “significantly elevating value expectations for trophy assets going forward downtown.”
• Peninsula office vacancy rates remain low and tenant demand is growing. As a result, “we also began to see the necessary development of new Class-A product in the suburban markets.”
• Holder Properties wrapped up work at Faber Pointe in the first quarter. The 75,000-square-foot office building is off Interstate 526 in the Executive Park at Faber Place in North Charleston.
• Nexton in Summerville “is shaping up to be a booming market for new Class-A, campus-oriented suburban office space.” MeadWestvaco broke ground in the quarter on its new corporate headquarters at Nexton “in a prime location that is highly visible from I-26 and 17A.” The headquarters will be in a 100,000-square-foot Class-A office building developed with The Rockefeller Group. Occupancy is planned for first quarter 2014.
• South Carolina Research Authority said it has an agreement with MeadWestvaco to build another 100,000-square-foot Class-A building on a contiguous 10 acres of land at Nexton. The authority sold its office building in North Charleston to Boeing.
Says Rumsey, “This new suburban office market will likely exceed expectations as a hub of business activity, proving that the benefits of the reverse commute with little traffic and good proximity to I-95 may be competitive when corporations are seeking office sites in the greater Charleston market.”
NAI Avant, one of the larger commercial real estate businesses in the Southeast, employs 65 professionals in brokerage, leasing, development, property and project management.
As a member of the NAI Global Network, NAI Avant is affiliated with more than 350 offices in 55 countries.
The company’s Property and Project Management Group manages a multi-million-square-foot portfolio of properties across South Carolina, North Carolina and Georgia.
Founded in 1966, NAI Avant is headquartered in Columbia with an office in Charleston. For more, visit www.naiavant.com.
Reach Jim Parker at 937-5542 or firstname.lastname@example.org.