By Liz Segrist
Published Oct. 28, 2013
Job and population growth are driving the housing sector in the Charleston area, and apartments are the hot spot for activity, said Dan Doyle, development vice president at The Beach Co., a Charleston real estate development company.
Occupancies and rental rates are at a 20-year high in the area, and more developers are moving into the market to capitalize on this growth, Doyle said.
“That’s a testament to our economy,” Doyle said to about 300 attendees at the Charleston Realtors Association’s market forecast in Daniel Island on Thursday.
The vacancy rate for Berkeley, Charleston and Dorchester counties is 5.2% with an average rental rate of $903, according to The Beach Co.’s market forecast.
Mount Pleasant had the highest vacancy of 9.1% with a $1,245 average rental rate. Summerville followed with the second highest vacancy rate at 6.9% with an $847 average rental rate.
James Island had a 2.8% vacancy rate with an average of $1,079 for rental rate.
“Certain pockets could experience issues if they aren’t producing the right product or if they’re asking too much. ... So be careful, but I do think the market is strong enough to handle the activity,” Doyle said.
Doyle expects future apartment developments to include more amenities and mixed-use offerings, for instance, ground-floor retail spaces, such as the large, mixed-use development Nexton in Summerville; Riviera at Seaside in Mount Pleasant; and The Flats at Mixson in North Charleston.
“There are still a lot of opportunities available, and much of it will be redevelopment,” Doyle said.
The tourism industry continues to drive retail activity and hotel construction in the Charleston region, especially in downtown Charleston, said John Orr, Colliers’ retail vice president.
Charleston’s year-to-date retail vacancy is around 7%, above the average of roughly 4%. The area’s rental rate of more than $16 per square foot is above national averages of roughly $15 per square foot, Orr said.
Currently, there are 1,500 hotel units in various stages of development throughout Charleston, Orr said. He expects the brands not currently located in the market will stake a claim soon.
“The Charleston retail market continues to improve and grow,” Orr said. “Rental rates are up, and vacancy is down. It’s because of the job growth and tourism boom here.”
Vacancies are decreasing and rental rates are rising in the office and industrial market as well, but the entire sector needs more inventory, said Bob Caldwell, the president of Caldwell Commercial Real Estate Service’s office and industrial sectors.
Some new mixed-use office projects are coming down the pipeline, such as Nexton in Summerville and the Horizon District in downtown Charleston.
“We need additional development throughout the state to support all of this growth,” Caldwell said.
Reach Liz Segrist at 843-849-3119.