High demand for office space could mean more construction

Two of Charleston's office towers:the BB&T building and Huntington Square. Both feature Class A office space, which is in high demand.

CHARLESTON, W.Va. -- High demand for the most sought-after office space in downtown Charleston means new office buildings are likely to be built, according to an area broker.

The city's five downtown Class A towers -- Chase, BB&T, United Center, Huntington Square and Laidley -- are effectively full and able to lease only portions of their floors, according to a January survey by Howard Swint, an associate broker at West Virginia Commercial.

"We're at what we call effective full occupancy," Swint said. "It means that for all intents and purposes, the five Class-A towers in downtown Charleston are nearing where they can't offer full floors."

The downtown towers have vacancy rates ranging from 8 percent to around 3 percent. That's a good thing, Swint said.

"When you're at effective full occupancy, new construction is more likely and [so is] spillover of demand into Class-B space," he said.

One possibility for the construction of new office space could come along with developers' plans to build a new hotel downtown.

Southern Land and Dickinson Properties, along with Kanawha Land Co. LP and developer Charlie Wendell are planning to build a Marriot Courtyard on Kanawha Boulevard just off Interstate 64 by the Elk River. They also hope to build a 10,000-to-15,000-square-foot office building at the same time as they build the hotel.

How much office space they build will depend on parking, cost and available land, Wendell said.

It also will depend on finding a tenant for the office space. They don't think it will be a problem.

"[The high occupancy rate] is one reason we thought it would work," said Lewis Payne, a shareholder of Southern Land and Dickinson Properties. "We've had people inquire already."

One reason behind the burgeoning demand for Charleston's Class-A office space is the recent sale of the former City Center West building to the state Lottery.

CHARLESTON, W.Va. -- High demand for the most sought-after office space in downtown Charleston means new office buildings are likely to be built, according to an area broker.

The city's five downtown Class A towers -- Chase, BB&T, United Center, Huntington Square and Laidley -- are effectively full and able to lease only portions of their floors, according to a January survey by Howard Swint, an associate broker at West Virginia Commercial.

"We're at what we call effective full occupancy," Swint said. "It means that for all intents and purposes, the five Class-A towers in downtown Charleston are nearing where they can't offer full floors."

The downtown towers have vacancy rates ranging from 8 percent to around 3 percent. That's a good thing, Swint said.

"When you're at effective full occupancy, new construction is more likely and [so is] spillover of demand into Class-B space," he said.

One possibility for the construction of new office space could come along with developers' plans to build a new hotel downtown.

Southern Land and Dickinson Properties, along with Kanawha Land Co. LP and developer Charlie Wendell are planning to build a Marriot Courtyard on Kanawha Boulevard just off Interstate 64 by the Elk River. They also hope to build a 10,000-to-15,000-square-foot office building at the same time as they build the hotel.

How much office space they build will depend on parking, cost and available land, Wendell said.

It also will depend on finding a tenant for the office space. They don't think it will be a problem.

"[The high occupancy rate] is one reason we thought it would work," said Lewis Payne, a shareholder of Southern Land and Dickinson Properties. "We've had people inquire already."

One reason behind the burgeoning demand for Charleston's Class-A office space is the recent sale of the former City Center West building to the state Lottery.

At the time it was sold, the building had a high vacancy rate, Swint said, meaning that a lot of available Class-A office space was taken off the market.

"We're back to the point where we were before the financial crisis in 2008," he said. "The demand has caught up to the supply, which is limited in Class A. So there's spillover in Class B [office space].

"We anticipate new construction downtown is just a matter of time," Swint said.

Another reason for the high occupancy rate is an increase in energy sector firms locating in downtown Charleston, Swint said.

Audubon Engineering, which recently opened an office at Huntington Square, is a good example, he said.

"I wouldn't be surprised to see more than one building go up in Charleston in the near future," Swint said. "All eyes are on the potential for a 'cracker.' "

While the ethane cracker plant obviously wouldn't be located downtown, the offices related to the plant could be, he said.

"That could be a game changer," he said.

There are downsides to having a high occupancy rate for Class-A office space, Swint said. For instance, lease rates could increase.

"[But it would be] only marginal in a market like ours because of the potential spillover in Class B," he said. "We have a big inventory of Class B in downtown Charleston."

Reach Lori Kersey at lori.ker...@wvgazette.com or 304-348-1240.

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High demand for office space could mean more construction