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Outside investors keep eyeing local commercial real estate
By Dennis Quick
Senior Staff Writer
When a Florida investor purchased 200 Meeting St. last December for $43 million, the transaction further illustrated the Lowcountry’s appeal to out-of-town investors.
Ever since 2001, when Chicago-based Jupiter Realty Corp. purchased Malvern, Pa.-based Liberty Property Trust’s entire Lowcountry portfolio for about $74 million, outside investors have been showing increasing interest in the Charleston area’s commercial properties.
“I get about four e-mails a week from people looking for office buildings and shopping plazas,” says Charles Caromody, broker-in-charge of Charleston commercial real estate firm CB/Richard Ellis Carmody, which recently sold several buildings in North Charleston’s Executive Park at Faber Place to New York investors.
In January, Inland Western Retail Real Estate Trust Inc., of Oak Brook, Ill., purchased the Public Shopping Center in Mount Pleasant’s Park West subdivision.
“National investors have picked over first-tier cities like New York and second-tier cities like Charlotte,” explains Carmody. “Now they’re going after third-tier cities (like) Charleston.”
The Lowcountry’s economic attributes have grown more attractive to national investors, notes Robert Clement III, a principal at downtown real estate firm Clement, Crawford & Thornhill Inc. “Our demographics are improving. More people are moving here, salaries are increasing and job growth looks good.”
Clement calls last December’s announcement of the forthcoming Global Aeronautica aircraft parts manufacturing center in North Charleston a “big step” in giving the Lowcountry national publicity.
He points out that the two investment groups he has partnered with to redevelop Charleston’s blighted Neck area are from Raleigh, N.C.
Interest in real estate investments is also “an offshoot of the declining stock market,” Clement says. “Investors are looking at real estate in addition to or instead of stocks.”
Jeremy Willits, a broker at BarkleyFraser.com in West Ashley, agrees, pointing out that more investors are “getting out of equities and into sticks and bricks.” The fierce competition for buildings in the Charleston area, however, has lowered the capitalization rate, meaning that investors, eager to snatch up properties, are buying for lower returns on the dollar.
Although out-of-town commercial real estate investors are looking at the Lowcountry more frequently and closely, heavyweight buyers seeking large office buildings are doing little business here, says J. Luzuriaga, executive vice president of Jupiter Corp.’s Charleston office.
The Charleston area has a class “A” office space inventory of more than 3.1 million square feet, according to real estate firm Colliers Keenan’s 2004 year-end office market report.
“How many big office buildings are there in Charleston? Not many,” Luzuriaga says. Since the Lowcountry has a meager inventory of large office buildings that would be appetizing to what Luzuriaga calls “institutional outside buyers,” most out-of-town investment deals are on a small scale.
Dennis Quick covers commercial real estate for the Business Journal. E-mail him at dquick@crbj.com.
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