The percentage of vacant Class A office space fell by half in downtown Charleston from March to July, but the decrease isn’t worth the rejoicing one would imagine.
It’s largely a result of developer Allen Bell’s recent announcement that the vacant former Huntington Banks building, known most recently as Huntington Square, at the corner of Lee and Hale streets, will be gutted and retrofitted for condominiums. Bell says 67 condo units will occupy the building sometime next year.
That new categorization led commercial property developer Howard Swint to remove Huntington Square’s 100% vacancy rate and replace it with Fifth Third Center’s much more handsome 5.7%. That dropped the official vacancy rate from a cumulative 20.7% to 10.4%.
Swint could have included City Center West in place of Fifth Third. City Center West, or the West Virginia Lottery building on Pennsylvania Avenue, is a much bigger structure and better fits the downtown high-rise model. That building is now owned by the state of West Virginia and therefore off the open market, according to Swint’s methodology.
Swint acknowledged that the 10% drop isn’t a true one, or one signifying fervent economic activity. He says the stats are significant, however, in the removal of white elephant Huntington Square from the available Class A office space stock. Swint, former legislator and developer Brooks McCabe and others say Charleston has too much office space.
“This is a market adjustment, by taking one former Class A tower and repurposing it for new use,” Swint said. “There are buildings in downtown Charleston, on Capitol Street and the Boulevard, which have gone through three or four different lives. Some had their beginnings as warehouses for river traffic. Others were hotels converted for other uses over the many, many years. Huntington Square is just another example of economic progression within building stock.”
A closer look at the numbers does indicate some stability among the capital city’s Central Business District glass towers. For instance:
- Chase Tower, at the corner of Virginia and Capitol, saw its vacancy rate rise, but only slightly, from 7.4% in March to 10% in July.
- BB&T Square on Summers Street easily weathered nearly identical vacancy rates (15.8% in March to 15.7% in July.)
- United Center’s vacancy rate dropped slightly, from 5.4% to 4.8%.
- Neither Laidley Tower at 500 Lee St. E. nor the MVB Building at 900 Washington St. E. budged. Both Laidley and MVB held steady, at 9.8% vacancy for Laidley and 10.5% for MVB, in both of Swint’s surveys.
“One hopeful thing to remember is that the Class A market held largely steady through the pandemic, and so far through this year,” Swint said. “That’s a good thing.”
In a related development, Class B office space would appear to possess more holes in its fabric. Class B is usually a primarily bricks-and-mortar structure with older office configurations, lower ceilings and mechanical structures that may need updates. Two Charleston landmarks, the Kanawha Valley Building and 405 Capitol St. — the former Daniel Boone Hotel — are heavy on vacancies. They are not alone.
One such office, the Atlas Building on Quarrier Street, has already been repurposed into apartments and is full of tenants. The Union Building, also full of vacancies, is headed for condo land, observers say. Loft apartments are also planned on Virginia Street.