Office construction pushes vacancy upward
- As more office buildings are delivered to the market, vacancy is expected to rise for the next couple of quarters until the demand catches up to the supply.
- There are currently 688,047 square feet of office properties under construction and 996,290 square feet of proposed office buildings to be constructed.
- Depending on the ease of permitting, Flagship 3, located within the digital corridor, will finally begin construction no later than the first quarter of 2019.
Flagship 3 to begin construction by the first quarter of 2019
The Charleston Digital Corridor (“CDC”) was formed in response to the request of Charleston citizens to grow a diversified, high-wage economy. It is currently home to Flagship 1 and Flagship 2, which offer non-traditional office space with open floor plans and short-term leases. According to the CDC website, “the CDC is focused on creating the business, education and social environment that is attractive to tech and tech-related companies. The CDC leverages its carefully nurtured relationships, program elements, legislative access, and contacts, to assist companies with integrating them into community. This integration is accomplished through four pillars - community, talent, spaces and capital.” The success of the digital corridor has prompted an additional need for Flagship 3. This office building was first announced several years ago; however, there have been minor set-backs due to commercial development restrictions. According to the Charleston Digital Corridor group, depending on the ease of permitting, construction on Flagship 3 will be underway by the first quarter of 2019.
The Charleston office market is comprised of 12,793,870 square feet in 372 office buildings within seven Charleston submarkets. Two new office buildings became available this quarter, adding 29,025 square feet to the office market. The office market vacancy rate during the second quarter of 2018 was 12.53%, which is slightly higher than the first quarter vacancy rate of 12.30%.
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