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Part of the new commercial construction coming to the Charleston region includes a planned 10-story hotel on the vacant lot where the old Charleston County Library once stood near Marion Square. FILE/LEROY BURNELL/STAFF/POST&COURIER

Part of the new commercial construction coming to the Charleston region includes a planned 10-story hotel on the vacant lot where the old Charleston County Library once stood near Marion Square. FILE/LEROY BURNELL/STAFF/POST&COURIER

Originally published in The Post and Courier

BY WARREN L. WISE
Posted: October 10, 2014

Thousands of new homes planned for Greater Charleston. Fifteen thousand new residents each year. Low vacancy rates for retail, office and industrial buildings.

That all adds up to the Charleston region being on the cusp of a time of new construction for commercial properties, according to the latest Commercial Real Estate Market Forecast from the Charleston Trident Association of Realtors.

“Growth” appeared to be the takeaway word from the annual look ahead.

“I think you will continue to see growth,” said Margaret Brockinton, president of Carolina Retail Property, who focuses on the retail sector. “The market is robust, to say the least. We are running out of property. All areas are having a good bit of activity.”

In the office segment, Terry Ansley with Landmark Enterprises, said, “I believe we are early in the growth cycle and chasing the demand.”

On industrial space, large speculative buildings are rising, but smaller ones are needed, said Alec Bolduc with Avison Young real estate.

The large suppliers for Boeing have not yet materialized, he said, but 74 percent of the aerospace-related firms in South Carolina have fewer than five employees.

“They are going to be growing and expanding and looking for spaces we don’t have today,” Bolduc said.

He added that the trend toward more rail-served buildings will continue to grow, and the refrigerated warehouse business will change the market and allow for more opportunities.

On the hospitality front, Michael Tall with Charlestowne Hotels said hotel room growth averaged about 100 keys a year over the past five years, but that will change during the next three years when more than 1,500 rooms will be added in the Charleston Metro area, many of them downtown through the twin Midtown Hyatt hotels opening next spring and the new high-rise hotel slated for the former Charleston County Library site near Marion Square.

With the number of tourists continuing to climb and the number of smaller, boutique hotels scheduled to be built, Tall believes downtown room rates will continue to be higher than the rest of Charleston County simply because the demand will be there to fill the supply.

Overall hotel occupancy throughout Charleston County, which has nearly 17,000 rooms, was 72 percent last year, above the healthy level of 70 percent. On the peninsula, occupancy has hovered around 80 percent this year and is expected to continue that pace in 2015.

Led by MeadWestvaco’s Nexton development near Summerville, which calls for 10,000 new homes over the coming years, and thousands of others planned throughout the region, Kevin Wadley of Ashton Woods, a homebuilder, said, “It will be interesting to see how Charleston will absorb all the new houses.”

He added that the coming glut of new homes will eventually put downward pressure on prices.

Bolduc said the asking price for industrial properties will continue to increase.

One problem all developers are experiencing is financing, real estate agents agree. After the bitter recession, banks are leery to lend unless tenants are lined up in advance.

“It’s going to take of lot of hand-holding between developers, lenders and primary tenants,” Ansley said.

Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.
Originally published in The Post and Courier