With an anchor tenant apparently secured, Charleston Gateway Center's owner is preparing to break ground on a long-planned expansion, another signal that the office-leasing market is on the rebound.
Rivers Enterprises Real Estate hopes to start work in early January on a five-story, 60,000-square-foot addition to its existing building at East Bay and Calhoun streets, Mark Marenakos, the company's vice president of development, said Wednesday.
Completion is scheduled for early 2006, he said.
"When it's done, it'll look like a single building," Marenakos said of the matching side-by-side properties.
While it will be connected to the original structure, the expansion will have its own main entrance and identity. It is being called Carolina First Center, according to plans submitted to the city.
Carolina First, a unit of Greenville-based bank owner South Financial Group, is said to be moving at least some of its Charleston headquarters to Gateway Center. Plans submitted by Rivers Enterprises' architect also show a Carolina First branch on the ground floor of the addition.
Marenakos, who declined to discuss specific tenants, would say only that Rivers Enterprises has struck agreements to lease about half of the available space at Carolina First Center.
"We're receiving lots of interest," he said.
Mack Whittle, South Financial Group's chief executive, could not be reached for comment Wednesday. But earlier this year he noted that the company's fast-growing Carolina First franchise was in need of additional office space in Charleston.
"We're about to pop out of the seams in this building," Whittle told The Post and Courier, referring to the bank's current regional headquarters at 276 East Bay.
The city's Board of Architectural Review is set to give final approval to the Gateway Center expansion next week. The project will require the demolition of 478 East Bay, a former automobile dealership that was converted into offices about 20 years ago. Two neighboring property owners have submitted letters endorsing the new addition.
Rivers Enterprises built its spire-capped Gateway Center in 1997, hoping to lure businesses that had grown weary of the traffic and parking hassles that come with renting office space in the tourist district.
The 68,000-square-foot building is now fully occupied by UBS Financial, several law firms and other tenants, including Rivers Enterprises.
Rivers Enterprises, which also owns the nearby Fountain Walk complex, had planned to add on to Gateway Center from the start. It put out feelers about the expansion several years ago, but then the national economy cooled and the local commercial real estate market softened.
Demand for office space is picking up again, Marenakos and other brokers said.
"It takes a while to get the product delivered," he said. "That's what people are scrambling to do now."
The amount of vacant office space in the Charleston region dropped 1 point to just under 15 percent in the second quarter, ending an unnerving two-year climb, according to Charleston real estate brokerage barkleyfraser.com.
Carolina First is not the first bank to set its eye on the lower Calhoun corridor.
Last year, RBC Centura said its regional offices and a branch will occupy part of a new building that is nearing completion at 100 Calhoun. About two-thirds of that 68,000-square-foot property is spoken for, said Donald Browning, a principal with Providence Real Estate Advisors, which is handling the leasing. Space is going for $28.50 a foot per year at 100 Calhoun.
"I think the market is on the upswing," Browning said Wednesday. "Coming out of a recession, you'll find people will start looking to hire, and when they start hiring, they start looking for more office space. It's the proverbial cycle."
