Residential real estate demand felt in the multi-family market> Columbia Business Report
A record housing stock in South Carolina and beyond, which has created a residential real estate market where buyers are buying single-family homes without the knowledge and for tens of thousands above asking price, is having an effect of drive on multi-family dwellings as well.
Dan Doyle, senior vice president and COO of real estate developer SC The Beach Co., has never seen anything like it.
âThe absorption is very strong. The rental speed is very strong and the occupancy rates are very high, âsaid Doyle. âI’ve been in the multi-family business for over 26 years and I really haven’t seen a time when these three components are at the level we know today. “
The Beach Co. is based in Charleston and owns properties in Columbia and Greenville. Its CanalSide mixed-use development on the Congaree River includes Sola Station, a residential community with spaces ranging from studios of 621 square feet to three-bedroom apartments at 1,465 square feet.
The development, which began welcoming residents in 2017, has recently seen an influx of commercial tenants, including Cafe The Front, which opened last year, with more to come, Doyle said.
âWhen we started out, the idea behind this property was really to create a new neighborhood in downtown Columbia, and that clearly doesn’t happen overnight,â said Doyle. âWe saw three phases of development there. We now have over 700 rental units in this neighborhood. â¦ The residential sector behaved very well there. The point we’re at right now is that in the last phase that we did there, we delivered 28,000 feet of commercial space, so that’s really our goal now is to being able to deliver that last one that will really make it a place for people to come out of their homes and have a cup of coffee or go to a little market or a restaurant, all the uses that will come into play there.
The Beach Co. has also developed The Cardinal at Cardinal Crossing, a mixed-use community in Forest Acres, and Providence Park, a luxury apartment complex in northeast Colombia.
Its Southeast portfolio spans from Nashville to Savannah and includes The Factory at Garco Park apartment community in North Charleston, the Watermark single-family development in Mount Pleasant and the Main + Stone mixed-use community in Greenville.
The majority of the company’s properties are âpurpose built residential,â said Doyle, with limited expansion capacity despite growing demand. Market momentum, however, has influenced some aspects of the company’s business plans.
The Beach Co. opened a mixed-use development called Canvas in downtown Greenville in May 2019. Part of the property is a former office building.
âWe decided to keep it in operation for a short period of time, given that there is a long useful life left for the equipment and construction systems that were in place there,â said Doyle. “But as we see the market continue to move, it gave us a reason to go back and update the numbers.”
Residential demand is strong and supply weak in all markets served by The Beach Co., Doyle said.
âA lot of things really boil down to the fact that we’ve historically – and not just here in South Carolina but nationally – we’ve had a housing shortage,â he said. âWe really need to see more housing built, both for rent and for sale.
âThere are a number of different things that hinder this. It is partly inventory, other zoning, others simply opposition to certain types of housing. There are a lot of different things that play into how we are in the situation we find ourselves in today. “
The pandemic’s supply chain disruptions and rising material costs are also complicating the construction picture.
âWith the supply chain disruption we’ve seen and the rising costs of materials, my guys are struggling to keep up with demand,â said Allen Hutto, CEO of the Building Industry Association of Central SC. âYou can’t have windows. You cannot get devices. You can’t get garage doors. There is a supply constraint on just about everything right now.
Added to this is an increase in offshoring, in part due to the increasing flexibility of working from home, to the south-east, as well as still declining mortgage rates.
âMortgage rates have been low since April 2020, and that really pushed a lot of people to refinance last year,â said Jan Hadder, regional vice president, builders division, in the Silverton Mortgage office in Columbia. âAs people remained confined to their homes because of the pandemic, especially the younger generations who lived in apartments, the desire to buy a house and have a little more leeway increased. And as mortgage rates remain low, the option of buying a home has become even more attractive. “
The catch, however, comes from a simultaneous decrease in housing stock, also fueled by labor shortages.
âSo we had this influx of people who wanted to buy houses, but we didn’t have enough houses to buy – just supply and demand,â Hadder said. “That’s when we started to see selling prices go up and people paying up to 50,000 above the asking price.”
A real estate axiom holds that the commercial follows the residential, and with the surging market, this has been proven at The Cardinal development in Forest Acres and elsewhere, Doyle said.
“We are seeing an increase in activity as a result of the pandemic,” he said. âRetailers are coming back to life and people want to come to this place. It is one of the best trade corridors in the state of South Carolina. We look forward to what lies ahead.
Doyle said a growing ability to work from anywhere is driving growth across The Beach Co.’s Southeast portfolio, including its three key SC markets.
âThe growth we’re seeing, whether it’s here in Charleston, Greenville or Columbia, is a direct result of a simple lifestyle change,â he said. âIt’s a change in the way people can work today. It’s just a desire to live in a place that has a better climate and potentially a lower cost of living. It could be taxes; it can be a whole lot of things. But I think if you go to any of these markets you’re going to see an influx of people coming from either the Northeast, the Midwest, the West Coast, and they realize that these places are really gems. . They are attractive. They correspond to our way of life.
âYou associate that with job growth and a lot of other factors that make it more affordable, and I think that’s just a winning recipe. “
The diversity of the three markets also makes the mix work, Doyle said. Charleston’s tourism, tech, and manufacturing bases create spikes in growth during economic booms, but may see correlated declines during downturns, while Columbia has a more stable government-based economic base, education and the military.
âIt balances our portfolio, because we know that while we may not see the highest of the highs that we will see in some of these other markets, we are also not going to see the lows,â said Doyle. . âLike any equity or real estate investment portfolio, you’re always looking to provide balance. And so I think the three major metro areas in South Carolina are capable of doing that. ”
This article first appeared in the July 19 print edition of the Columbia Regional Business Report.
Contact Melinda Waldrop at 803-726-7542.