Driving north through Charleston, South Carolina’s upper peninsula, Katie McKain explains the rationale behind a new initiative that seeks to shape this rapidly developing district, home to several creative and high-tech businesses and some of the city’s hottest commercial real estate. In a city known for its politeness and graciously restored historic homes, it is not surprising that Charleston is approaching its growth strategy with such thoughtful consideration.

“We’re expecting our population to nearly double in the next 20 years,” McKain, a senior planner with Charleston’s city government, says on a tour that kicked off ULI Carolinas’ Second Annual Meeting in early February. “The growth here is on fire. We want to ensure that it happens in a responsible, sustainable way.”

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The Upper Peninsula Initiative taps into the momentum that has been building over the past decade as the Charleston economy has grown more vibrant and diversified. Ranked 20th among U.S. markets to watch in Emerging Trends in Real Estate® 2015, Charleston still counts tourism, logistics/distribution, and defense/aerospace as its main economic drivers, but it is the technology sector that has captured national attention. Dubbed “Silicon Harbor” by Fast Company magazine, Charleston has become a hotbed for digital startups with homegrown firms like Blue Acorn, PeopleMatter, and BoomTown! creating high-wage jobs, drawing talent from outside the region, and pumping dollars into the regional economy.

The initiative is a collaborative community planning effort focused on responsible growth of the upper east side of the Charleston peninsula. It is also known as Charleston’s first EcoDistrict, a planning framework developed by a Portland, Oregon–based nonprofit organization that emphasizes authentic community engagement, rigorous performance standards, and strong project management. The initiative relies on a mix of residents, developers, government, local businesses, and nonprofit groups to create a plan that aligns with eight planning priorities.

“We thought it was the perfect area to implement this model due to its important location, recent increase in development activity, and projected exponential growth,” McKain says.

While all start out small, a few of Charleston’s software and cloud-computing businesses have scaled up quickly and are increasingly looking to the upper peninsula for cheaper commercial rents and greater opportunities to build flexible spaces from scratch. Technology firms are also driving local business creation in other sectors: retail, food and beverage, and creative and professional services like design, marketing, architecture, and law.

To stay ahead of the steady flow of development and rezoning applications, McKain and other members of the initiative’s steering committee want to seize the moment to push for sustainable growth throughout the 865-acre (350 ha) study area. Historically, heavy industry and manufacturing dominated the upper peninsula, and a result, “much of the land is contaminated and has been really underutilized until now,” McKain says.

The initiative offers the upper peninsula a fresh start while preserving the character of its industrial past. The initiative embraces dense, mixed-use urban forms; a housing strategy that includes affordable and workforce options; net-zero energy use; low-impact development; and green infrastructure to treat stormwater. A proposed zoning ordinance would allow developers to build taller and more densely in exchange for incorporating benefits to the community such as workforce housing, affordable commercial spaces for local businesses, transportation improvements, and green open spaces into their projects.

Three developments offer a snapshot of how the upper peninsula is evolving from an industrial no-man’s-land to a vibrant, 18-hour district with a mix of jobs and housing that is sure to attract millennials and newcomers interested in Charleston’s quality of life.

Half Mile North: Open Floor Plans and Industrial Feel Appealing to Tech Startups

Half Mile North on Morrison Drive exemplifies the kind of mixed-use office development that might become more common on the upper peninsula. Developer Michael Wooddy of Raven Cliff Company was initially drawn to the site due to its lower price point and easy access to Interstate 26 and U.S. Highway 17, Charleston’s main thoroughfares.

Composed of 21 parcels, the site housed the former warehouses of a local hardware store and an Italian ice company. It wasn’t until Wooddy recruited his first tenant—finance consultants SIB Development—in 2013 that he realized that Half Mile North’s unconventional spaces, rough-hewn exteriors, and gritty neighborhood might appeal to tech startups. “The area was still in transition,” Wooddy recalls. “We had to find businesses that would feel comfortable, and young tech companies weren’t ‘sketched out’ by the area.”

For Wooddy, the tipping point occurred when the Charleston Digital Corridor, a business incubator that offers coworking space and resources to technology startups, announced it would develop Flagship 3, a 45,000–square-foot mixed-use office building for emerging entrepreneurs as well as established, high-growth companies, just a few blocks away on Morrison Drive. The city is anticipating technology businesses to cluster and grow in Flagship 3 and adjacent county-owned properties that will be repurposed as flexible office space, effectively creating another tech hub on Morrison Drive.

Raven Cliff decided to recruit Blue Acorn, an e-commerce company for retailers, to be its anchor tenant. The company moved into a 12,000-square-foot building in 2014 with plans to expand to another building later this year. “We knew they would like the open layout and be comfortable with the warehouse setting,” Wooddy says.

Of the 11 buildings on the site, Raven Cliff has six remaining to renovate, including the new Blue Acorn office. In addition, Half Mile North will feature a 21,000-square-foot multitenant office building with a socially minded tech company, Good Done Great, taking up two-thirds of the space. Wooddy knew that Raven Cliff had to “amenitize” the site, so he sought out Edmunds Oast, a beloved brewpub offering craft beers and an artisanal menu, to be Half Mile North’s first eatery. And two more restaurant projects and a coffee shop are in the works. An outpost of Butcher & Bee Charleston, a popular sandwich shop, is also set to open in Good Done Great’s building.

Wooddy’s biggest challenge is that rare commodity that Charlestonians liken to gold: parking. Half Mile North has a sizeable surface lot, but with tenants adding employees, Wooddy knows the site will soon run out. “We’ve reached capacity with parking,” he says, adding that it is unlikely he will build a parking deck anytime soon. Parking decks are common further down the peninsula, but Wooddy is not ready to pass the costs to his tenants and lose his competitive edge over downtown. “My gut keeps telling me there’s a limit to what people will pay. I don’t know if we can push rents significantly higher than where we are now.”

Magnolia Development: A New Walkable, Bikable Mixed-Use Community

A brownfield redevelopment that has yet to break ground, the Magnolia development proposes to transform the upper peninsula’s “neck,” where chemical manufacturers left contaminated sites in need of major environmental remediation. The 135-acre (55 ha) site will be one of the largest infill redevelopment project in Charleston’s history.

The developer of Magnolia proposes to build an urban, mixed-use community with the capacity for 3,500 housing units at buildout—including both market-rate and workforce multifamily units—in a part of Charleston where housing density is lacking. According to local area stakeholders, a significant need already exists for housing, office, and retail space in a walkable, urban environment in places that are located closer to downtown Charleston.

Office space, retail uses, a hotel, and entertainment options will round out the development to create a “day-to-night” feel. A large waterfront park, trails, and a community dock will offer residents and workers views and recreational opportunities along the Ashley River and its marshes.

Cigar Factory: Adaptive Use Project Is Home to Creative Class

Directly across from the Port of Charleston’s Columbus Street Terminal, the 125-year-old Cigar Factory is a historic landmark that will soon be a mixed-use office and high-end retail complex. Operating as the Cotton Mill of Charleston during the late 1800s, the property was purchased by American Tobacco Company in the early 20th century and transformed into a cigar factory.

Featuring soaring ceilings, meticulously restored floor-to-ceiling windows, and original brickwork, the building is listed on the National Register of Historic Places. It is a stunning example of adaptive use with views of the port’s bustling activity and the Charleston Harbor. Developer William Cogswell used a mix of federal and state historic tax credits as well as the South Carolina textile mill credits to finance the project.

On a tour through the property, Cogswell explains the building’s role in American history as well. The civil rights anthem “We Shall Overcome” first emerged as a protest song when African American factory workers led a strike against American Tobacco in 1945. Seventy years later, the building is no longer a symbol of Charleston’s racially charged past but one that points to future aspirations.

“What’s driving interest in the upper peninsula is opportunity,” says Cogswell, principal of WECCO Development, since office and retail vacancy rates downtown are so low. “What’s interesting about this building is that it’s historic but provides an aesthetic [that] new businesses are looking for.”

While Half Mile North is clearly focused on technology, the Cigar Factory is intended to be a premier shopping destination with 60,000 square feet of ground-floor retail space and flexible office suites that Cogswell hopes will appeal to creative, media, and professional services firms. The property is already 70 percent leased, with one major tenant, Garden & Gun magazine, set to move into new editorial offices in May.

For his part, Cogswell wants the upper peninsula to retain its industrial character and continue to be home to the shipping and logistics businesses connected to the port.

“Throughout its history, Charleston has always been able to mix the residential, the retail, and the industrial,” he says. “From my perspective, this mix is what makes for a more authentic and ‘working’ city. Given the fact that our main industry is tourism, we need to maintain this authenticity or we risk becoming just another tourist trap.”

Archana Pyati is an impact writer on the Strategic Communications team at ULI headquarters in Washington, D.C. Please contact her at archana.pyati@uli.org with comments or story ideas.