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Markets in 3 of WV's busiest cities vary based on client demand

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JIM ROSS / The State Journal JIM ROSS / The State Journal
JIM ROSS / The State Journal JIM ROSS / The State Journal
JIM ROSS / The State Journal JIM ROSS / The State Journal

Three of West Virginia's urban areas have decidedly different needs and demands when it comes of office space.

Charleston's Class A space is effectively full, and potential tenants are spilling over into other available space. Huntington has no Class A space as such, and demand for space there is spilling out of town into unincorporated areas.

And Morgantown, growing at a good clip thanks to West Virginia University and oil and gas extraction, is seeing an office space being developed where the business action is.

Charleston

Howard Swint, an associate broker at WV-Commercial Real Estate LLC in Charleston, surveys Class A office space in the capital city. What he found in his most recent survey was that most of the available space is taken.

"It's what we term effective full occupancy," Swint said. There may be pockets of space here and there, but for all practical purposes, all the Class A space is spoken for, he said.

Swint defined Class A space as that found in modern high-rise towers with on-site structural parking, a prestigious tenant mix and modern fire and light systems.

Five commercial buildings in downtown Charleston fit that description, Swint said: Chase Tower, BB&T Square, United Center, Huntington Square and Laidley Tower. Their vacancy rates range from 0.8 percent at Huntington Square to 7 percent at Laidley Tower, with an average vacancy rate of 3.4 percent, he said.

The step below Class A is Class B. The overall vacancy rates in Charleston for that type of office space is not known, Swint said. "I don't know anyone who does a Class B survey," Swint said.

"When Class A approaches full occupancy, traditionally we have had a spillover of demand into existing B buildings. 

The best example of that is Capitol Street. One by one those retail buildings have been bought and rehabbed to the point the central business district has been gentrified to the point we expect less spillover and more new construction."

One company is doing just that. MVB Bank plans to build a new four-story branch office at the corner of Washington Street East and Margaret Street. MVB had planned to have a three-story building there, but when the company looked at the leasing opportunities in the Charleston market, it decided to add an extra floor, said spokeswoman Aly Goodwin Gregg.

"Downtown Charleston is recovering very well past 2008, and people are investing in the city, and we want to be part of that," she said.

Huntington

Class A office buildings are the highest quality buildings in their market. Generally, they're newer, are well located, have good access and are professionally managed. As a result, they command the highest rents in a market.

Class A space is rare in Huntington, said Francis W. McGuire, a Huntington real estate broker with 35 years of experience in commercial real estate.

Unlike Charleston, which has several modern office towers, the tallest buildings in downtown Huntington are older structures, with interior spaces that reflect the standards of an earlier era.

The newest of these, the Prichard Building, a former 300-room hotel, was built in 1926. The 15-story West Virginia Building was the state's tallest building when it was built in 1924. The Coal Exchange Building also was built in 1924. The St. James, an office/residential complex, is located in a building originally built by the First Huntington National Bank in 1913. One full floor of the St. James is now available for lease, McGuire noted.

"Fortunately," McGuire said, "there's a good bit of downtown space that easily could be upgraded to Class A." He cited a half dozen properties in his own listings that would be suitable candidates for such improvements.

Downtown's River Tower West is an example of what can be done with an older building. Built as the Masonic temple in 1911, the five-story building was given a total interior makeover a few years ago when it was leased to a call center. Managed by Huntington Realty Corp., the building is currently vacant and available for lease.

With downtown Class A space in short to nonexistent supply, some have elected to buy other buildings and transform them into modern office spaces. The Jenkins Fenstermaker law firm is now located in a former furniture store, and the Campbell Woods law firm recently moved into a building that previously housed C.M. Love, a long-time downtown hardware store.

Beyond the Huntington city limits, on U.S. 60 East, developer Bill Childers has put a new twist on office location. He's transformed a former strip mall into the East Hills Professional Center, where tenants can buy condominium office spaces. The spaces are "as is," with floor, roof, sprinkler and a completely remodeled exterior. Tenants can then have their office offices suites built to their own custom designs.

Morgantown

The office space market in Morgantown is much different than it is in Charleston, said Sam Bossio, a commercial real estate agent with Howard Hanna Premier Properties by Barbara Alexander in Morgantown.

"There is Class A office space, and it's being sucked up by WVU and things like that. There's also a push by little plazas developing office space," Bossio said. "Morgatntown along the I-79 corridor is big for the gas and oil industry."

Along the corridor, there are several office parks that are building combination office/warehouse/laydown yards.

"We do have that demand for office space, and we seem to find it, but it's not one big complex with Class A office space," Bossio said.

James E. Casto contributed to this story.