Real estate officials show concerns about city liquor overlay

King Street at one thirty in the morning is jammed with traffic from cars, taxis, bikes and pedestrians. Grace Beahm/Staff

A Charleston City Council ordinance to limit alcohol sales in parts of the downtown raises concern with some local real estate officials who believe the rule could have a negative impact on the area's commercial real estate market.

"Clients will be limited in what they can do with a property," said Tim Hagar, broker-in-charge for National Restaurant Properties' local office. "They may have to decide on another retailer or the business will have to find another location."

Days ago, Charleston City Council gave initial approval to an ordinance that would create an "entertainment district overlay zone." The statute would restrict new businesses from serving alcohol after midnight in the areas along East Bay Street, all of King Street and majority of Meeting Street. The rule would also thwart many businesses within the zone from operating between the hours of midnight and 6 a.m., including food stores, gas stations, bars, restaurants and other establishments that sell alcohol.

The ordinance excludes existing establishments and many hotel bars, which will be allowed to stay open until 2 a.m.

City officials say the ordinance is presented as a way to get control of a ballooning nightlife in recent years and also help diversify the retail landscape in the historic downtown.

Michael Bennett, the developer behind a number of downtown hotels, called the ordinance a "good idea," adding "nothing good happens after midnight."

"I trust the judgment of the city planners and the mayor's office to manage that aspect of that community," he said.

Some local real estate advocates like Charleston Trident Association of Realtors' say the ordinance could curtail commercial property sales in the downtown.

"What it does is it picks winners and losers with commercial property owners," said Ryan Castle, the association's government affairs director. "It does restrict property owners who purchased with the expectation to have a new buyer and to use it for a certain purpose."

Castle added that the restrictions could limit the value of a property when it comes up for sale.

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"It looks like they're trying to give a land-use solution to a public safety problem," he said. "We are looking to talking to the city about what steps can be taken that are a better solution than this."

Elaine Worzala, director of College of Charleston's Carter Real Estate Center, said the ordinance limits use of properties and creates a situation of "haves and have-nots"

"The restriction limits cash flow for the restaurant with two fewer hours of operation," she said. "That means they can't spend as much for rent or the purchase of the property and that changes the dynamics."

Worzala added that the lessening of property values could mean less property taxes for government.

"Property tax is based on the value of the building. If they can't keep that value, the government will lose property tax revenue."