Apartment demand strong; new units affect vacancy rates

Construction continues on 930 NoMo, a 430-unit student apartment complex at the base of the Ravenel Bridge on Morrison Drive on the Charleston peninsula. It’s expected to open in the fall.

The demand for apartments is expected to remain strong in the Charleston area into 2016, but construction of new units is starting to affect vacancy rates, according to Real Data. Rent costs are rising as well.

The current vacancy rate in the region is 6.7 percent, a level that’s expected to hold or rise slightly throughout the year. The area gained 443 renters over the past six months.

About 3,700 apartment units are under construction, the highest number ever recorded by Charlotte-based Real Data for the Charleston market. The majority of those are in the Mount Pleasant area, the firm said.

The real estate research firm projects rents will rise at a slower pace this year than in recent years. The average rental price per unit over the past 12 months for the Charleston area was $976, the third highest in the Southeast, according to Real Data. Only Tallahassee, Fla., and Orlando have higher rent prices. The area with lowest rent rates in the Southeast is Greensboro, N.C.

According to Axiometrics, an apartment market research firm, the annual effective rent growth for the Charleston and North Charleston area rose 6 percent during the first quarter. The average increase was 4.9 percent nationally, up from 4.7 percent in the fourth quarter of 2014.

“The rapid growth of 2014 has continued into 2015, and is the result of many factors,” said Stephanie McCleskey, Axiometrics vice president of research. “We are seeing solid job growth, single-family homes are becoming less affordable and, of course, the trend of people choosing to rent instead of buy continues.”

Nationally, the average renter paid $1,114 per month in the first quarter, $6 more than in the fourth quarter of 2014.

“Occupancy has declined slightly from the fourth quarter to the first quarter in three of the past four years,” McCleskey said. “It’s the normal trend for this time of year. If the occupancy rate does not rise in the second and third quarters, we will know moderation is occurring as a large amount of new supply continues to come to market.”

Courier Square, the proposed $85 million mixed-use development at Meeting and Columbus streets in downtown Charleston, will go before the Board of Architectural Review on Wednesday for final approval.

Development is expected to start soon on the project, which includes 226 apartments, retail and office space and a parking garage.

Greystar, the Charleston-based firm that buys, builds, sells and manages apartment complexes, is developing the site for property owner Evening Post Industries, owner of The Post and Courier. Construction will likely take about two years on the 2.8-acre tract.

The site will have 90,000 square feet of commercial space and 215,000 square feet of residential space. It will consist of four floors facing Meeting Street for retail, commercial and office space.

A penthouse apartment will sit back above the fourth floor. Behind that will be the studio and one- and two-bedroom apartments on six floors, rising to eight floors farther back. The building will wrap around a 600-space, six-story parking deck.

The site is now being used as a storage area for crews working on the nearby Midtown project at King and Spring streets. Work there should be done by midsummer, project manager Matt Waddell said.

Charleston has a new real estate firm.

Ty Hanlan recently launched Hanlan Consulting & Development LLC. Hanlan brings with him 40 years of industry experience, most recently as director of real estate development for athletic footwear and apparel giant New Balance. The firm’s office is at 241-243 East Bay St. in Charleston.