Auctioning of Main Street buildings a ‘soft spot’ in city center vitality

A second property on Main Street has gone to auction within the span of two months, raising speculation about the true strength of a resurgency of Columbia’s downtown commercial district.

The 12-story Certus Bank building at Main and Lady streets, perhaps best known as the former home of National Bank of South Carolina, was auctioned June 27, according to California auctioneers Auction.com.

It is unclear, however, who the new owners of the 45-year-old structure are, or their intentions for the use of the 148,000-square-foot building. Auction.com, the Google-owned online real estate marketplace that handled the sale, says on its website the building is in escrow until July 27. That’s when records concerning the sale will be made public. A representative of the auction company would say nothing more.

In May, a two-story brick building at 1634 Main St., one block from the Richland County courthouse and City Hall, was bought at auction by real estate broker and developer Tom Burch for $837,000. Burch’s bid for the building in a high-profile location was the only offer, the West Columbia auctioneers said at the time.

Burch has not responded to The State newspaper’s requests for an interview, so its future use remains clouded.

Downtown office space is becoming a premium commodity, experts say, in part because little new construction is under way and rental rates have increased in each of the last 10 quarters to hit historic highs, according to Colliers International second-quarter report, its most recent study.

The Columbia office market has the highest occupancy rate in more than five years, and ended the quarter with a 16.6 percent vacancy rate, down from 17.4 percent a year ago. Columbia and the St. Andrews sub-markets hold the lowest Class A office space vacancy rates in the region at 10.5 percent and 9 percent, respectively, the report states.

The Certus building – which has entrances at 1122 Lady St. and 1227 Main St. – has become a victim of the success around it and a lack of sufficient upgrades, said Matt Kennel, head of City Center Partnership, which advocates for and guides development in the commercial district.

Buildings that offer less than Class A office space are a “soft spot” in what he otherwise calls a very strong market.

“There is life for those buildings,” Kennell said. “From the office standpoint, it’s difficult for a class B or class C space. I think that’s why some of them become distressed when they aren’t able to convert, or (the owners) don’t have the capital to completely renovate them.”

“My sense of it is that people are demanding better – meaning higher finishes, more technology, newer buildings, better HVAC systems – those kinds of things,” he said. “Modern, class A office space is very scarce.”

Constructed in 1970, the original home of NBSC, the building was purchased for $15.3 million by C&K Carolina Inc. in 2006, during the height of an economic building boom. During the Great Recession, it fell into foreclosure and was bought in 2013 for $4 million by its most recently known owners, 1122 Lady Street Holdings.

The Richland County assessor’s office sets the 2014 taxable value of the property at $7.8 million.

In 2009, a new 18-story Main & Gervais office tower opened next door on the state Capitol. It dwarfed the bank building and erased its views of everything from the State House complex to Williams-Brice Stadium. In 2010, NBSC also moved into Main & Gervais.

Problems for the structure persisted.

In February, a law firm that occupied two floors in the Certus building opted to move from the downtown location to the suburbs, said Tommy Johnson, vice president of Colliers International in Columbia, the building’s leasing agents.

“That really kind of hurt our occupancy,” Johnson said. Occupancy dropped from about 77 percent to about 58 percent, the current rate. “We had some older tenants that had become comfortable with their views of the Capitol and had benefited from having a vacant lot next door.”

“Things changed substantially for them, so they moved on,” Johnson said.

Class A, top-drawer office space such as that offered by the 17-story Meridian Building, is doing well, Kennell said. It sold in June to California-based Hertz Investment Group for $417 million, part of a six-tower purchase in four Southeast states, the new owners said at the time.

Some older office buildings have successfully been repurposed, Kennell noted.

▪  The Barringer Building, Columbia’s oldest skyscraper, has been converted to mostly residential.

▪  The former Seibels Bruce building on Lady Street also is being repurposed into residential space.

▪  The new owners of the former Ag First building, which was class C office space, are turning the former bank building into high-end apartments.

Still the auctions have left questions for what otherwise is a Main Street on a development tear. Led by bank buildings, the city center is in the midst of a boom in housing for students and young professionals. That has spun off into a trail of new restaurants and retail outlets.

“We’re waiting to understand if we will have new ownership at that (Certus Bank) location,” said Johnson, the commercial space vice president.