Charleston Commercial Development Slows


Area commercial development slows down

April 28, 2008

By Katy Stech – The Post and Courier

When the residential real estate market catches a cold, the commercial market sneezes.

The latest office market statistics from Grubb & Ellis/Barkley Fraser show that some local office landlords are facing challenging times. The areawide vacancy rate crept up to 17.7 percent during the first quarter, an increase of about 2.9 percent compared with the same period last year.

Downtown Charleston and Daniel Island aren’t feeling the effect as much as other areas such as Mount Pleasant (up 6.4 percent), West Ashley (up 3.9 percent) and North Charleston (up 4.6 percent).

As a result, landlords are rolling out incentives, and tenants are asking for shorter leases because of the economic uncertainty, said Jeremy Willits, the firm’s senior vice president and principal of office services.

“Demand for office space is down. There’s no question about that,” he said.

The good news is that developers have responded and slowed their building pace. Also, smaller lease transactions still are strong, partially because some companies want to downsize.

Growth ensures that the long-term market’s prospects are healthy, Willits said, but the current residential slump will have to ease before vacancy rates return to normal.

“You can’t pretend that we don’t have a problem here — we do,” he said. “But I’d much rather be here than somewhere in the Rust Belt of the Northeast,” he said.


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