Office building construction is booming along the Interstate 526 corridor, which connects Mount Pleasant to West Ashley. There are a total of 18 buildings that are immediately accessible to the interstate located on Daniel Island and North Charleston. These two areas have seen the most development, the lowest vacancies, and the shortest leasing period when a new building is completed, according to the 2016 third quarter “Colliers International Research & Forecast Report” on office buildings in the Charleston region.
The report notes that at the end of the third quarter, the vacancy rate was 4.3 percent for these buildings, compared to the overall Charleston market vacancy rate of 7.3 percent. Two of the last four buildings constructed along this corridor, Faber Pointe and 1 Central Island both had a 90 percent occupancy rate within one year of being completed. The corridor has speculative construction projects, but also significant build-to-suite activity for both the Benefitfocus and Blackbaud campuses on Daniel Island.
The central location along Interstate 526 is a key factor for the boom in new construction of buildings. As regional traffic becomes more of an issue for employees during the last ten years, employers are looking for buildings that employees can easily reach from the residential areas of Mount Pleasant, West Ashley and Summerville. The Collier International report anticipates that this trend will continue in this region along the Interstate 526 corridor, which is home to the Faber Office Park, the Montague Road interchange, Boeing and the Centre Point mixed use development.
The report also notes that the expansion of the automotive industry is driving office leasing in Upper North Charleston and Summerville. The announcement of Mercedes-Benz Vans/Daimler and Volvo Care of North America to construct manufacturing facilities in the Charleston region has attracted companies that will help construct these facilities or service them once they are operational. These two automotive companies have committed a combined $1 billion of capital investment to create 3,300 new jobs at their manufacturing sites. Mercedes-Benz Vans/Daimler will also develop a facility on more than 200 acres of the Palmetto Commerce Park in North Charleston to produce their Sprinter vans for the United States and Canadian markets.
Source: Collier International Research & Forecast Report, Q3, 2016, “Quick Absorption of Newly Constructed Office Buildings”
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