By Dennis Quick
Senior Staff Writer

Apartment-to-condominium conversions, which began lighting up the Lowcountry’s residential real estate landscape about three years ago, remain a popular, affordable alternative to purchasing a single-family home, according to industry experts.

“It’s still a hot trend,” says Jim West, broker-in-charge at Charleston Premier Properties, which this year has converted two West Ashley apartment complexes, a 230-unit complex and a 110-unit complex in the north area. “The demand is still strong, and I don’t see it slowing down.”

The drive behind apartment-to-condo conversions continues to be homeownership affordability. With the average cost of a house hovering around $270,324 in the Lowcountry and with the area’s average annual salary of roughly $33,000, many first-time homebuyers see condo ownership as a way to break into the market.

Prices for converted condos generally start between $75,000 and $100,000, depending on the location, says Gettys Glaze, owner of Sandlapper Real Estate Group in West Ashley.

Apartment-to-condo conversions “are pretty steady,” Glaze says. “The market is providing a product for investors, first-time homebuyers and retirees.”

However, the market risks becoming saturated, he says, adding that conversions are slated for Johns Island, Mount Pleasant and Summerville.

Value deal

In some instances, converted condos have appreciated dramatically. At the 132-unit River Point Row, a former James Island apartment community Charleston Premier Properties began converting to condos last year. The converted condos began selling at around $80,000. Units have resold for as much as $130,000, West says.

Trademark Properties on James Island has converted more than 2,000 apartments during the past three years, according to Richard Davis, Trademark’s president and CEO.

This year Trademark converted the 300-unit Peninsula apartment complex on James Island. Tenants were offered first crack at the introductory prices, which started in the low $100,000 range, plus a 5% discount, according to Trademark’s Dawn Nosal, the firm’s condo-conversion coordinator.

The conversion trend is part of the nation’s overall flourishing condominium market, which feeds off the rising costs of single-family houses. Between 1995 and 2003, the number of occupied condos in the United States rose from 4.4 million to 5.4 million, according to the Harvard University Joint Center for Housing Studies’ “State of the Nation’s Housing 2005” report.

Pick and choose

While the apartment-to-condo conversion trend continues, developers are being more particular about the apartment complexes they convert, says Ray Case, president and broker-in-charge of North Charleston-based commercial real estate firm Coldwell Banker Commercial Atlantic International Inc.

Now, developers are focusing more on upscale, class “A” apartments for condo conversions because “older apartment complexes are a lot less desirable,” Case says.

Apartments that are two or three years old, in good condition and include recreational amenities, like swimming pools, tennis courts and workout facilities, are more likely to get flipped into condos. Also, class “A” apartments in choice locations like Isle of Palms and Mount Pleasant have a higher chance of being converted to condos, he says.

Case estimates that between 500 and 750 apartment units have been converted to condos this year in the Lowcountry, and he expects the trend to continue throughout the remainder of the year.

Trademark’s Davis says apartment-to-condo conversions in Charleston originally set out to fill the affordable housing niche for low-income workers. Older apartment buildings were the first to be converted because their age made affordable prices more feasible.

The conversion trend then shifted to more upscale apartment communities with newer, class “A” buildings. This helped satisfy the demand of higher-income earners who did not want to own a house.

The trend is particularly hot in prime locations like Mount Pleasant, which has limited the number of house-building permits issued each quarter. People looking for quality housing in Mount Pleasant but do not want to wait for a building permit have an alternative in upscale condo conversions, Davis points out.

Dennis Quick is the senior staff writer for the Business Journal. E-mail him at dquick@crbj.com.

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