Quick Absorption of Newly Constructed Office Buildings
- The Interstate 526 corridor office market is booming.
- Expansion of the automotive industry is driving office leasing in Upper North Charleston and Summerville.
- Investors continue to be attracted to Charleston’s office market with three additional sales this quarter.
Booming Activity Along Interstate 526
Office market activity in Charleston has been the most robust since 2007 along the Interstate 526 corridor which connects from Mt. Pleasant to West Ashley. There are a total of 18 buildings that are immediately accessible to the interstate clustered primarily on Daniel Island and North Charleston. Collectively, these two areas have seen the most development, the lowest vacancies and the shortest leasing period when a new building is completed. At the end of the third quarter, the vacancy rate was 4.3% for these buildings. In comparison, the market as a whole was at 7.3%. Two of the four last buildings constructed along this corridor, Faber Pointe and 1 Central Island Plaza were both more than 90 percent occupied within one year of completion. In addition to speculative construction, the corridor has seen significant build-to-suit activity with both Benefitfocus and Blackbaud developing their campuses on Daniel Island.
Driving the activity along Interstate 526 is its central location. As regional traffic has increased in the last ten years, employers are attracted to buildings that employees can easily reach from the principal residential submarkets Summerville, Mt. Pleasant, and West Ashley. Going forward, we anticipate this trend will continue with the most ideal regional location being Interstate 526 between the Ashley River and I-26, home to the Faber Office Park, the Montague Road interchange, Boeing, and the Centre Pointe mixed use development.
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