This is the most exciting time for commercial real estate in the history of Charleston. The growth of jobs in Charleston has solidified some major shifts and transitions in the region. All property sectors are experiencing historic growth and setting new occupancy records.
New construction projects of mass and scale are apparent from the Charleston peninsula inland on the Interstate 26 corridor for 50 miles. Jobs are here with more on the way. Those jobs require offices, industrial spaces and retail centers as well as housing for the workers.
Residential Sector Boosts Retail
I’ve said it a thousand times, “Employed people with houses drive retail sales.” The foundation that supports the retail market is on an incline, such as housing values and consumer spending. With dozens of people moving to Charleston every day for jobs, retail is reaping the benefits.
New residential developments on the outskirts of Charleston are creating new retail opportunities within communities such as Carolina Park and Nexton. Residential developments downtown, such as Hoffler Place, Courier Square, and WestEdge are also adding retail space to meet the demand.
Retail space is at historic occupancy levels driving scarcity in every submarket. Rents are growing due to a combination of the demand and slow pace of new shopping centers being delivered in the market. The face of retail in Charleston is morphing into a hub of regional and national retailers alongside the local merchants who are opening up shops to fulfill the demand.
Retail moves at the speed of culture. That philosophy helps to explain the retailers’ quest to create unique experiences that continue to take over the outdated concepts. The national trend of certain big-box retailers shutting their doors for good is a reality that has hit this booming city as well - finally!
We need the space in Charleston, and it is getting leased up almost before it comes to market. However, not all brick and mortars are going extinct in Charleston. Big-box retailers including Costco, Home Depot, BJ’s and Academy Sports will refresh the market this year. In addition to big-box retailers, grocers remain strong and steady.
Industrial is growing at a frantic pace
As Boeing, Mercedes, and Volvo expand operations, suppliers are leasing and buying up industrial space in North Charleston and up the I-26 corridor toward Orangeburg. Shipping container volumes are growing and expected to double in coming years driving speculative industrial warehouse development for the first time since the early 2000s. New construction and infrastructure improvements including a rail spur and interstate interchange will serve areas near Volvo in Ridgeville and beyond.
National investors view Charleston as a relative “bargain” as compared to markets in the Northeast and Inland Empire. Investments from international owners are increasing now in order to “get ahead” of the growth.
We can’t talk about industrial without discussing the effects of e-commerce. As brick and mortar retailers compete with e-commerce distributors, they are altering their traditional business models in order to succeed. Supply chain logistics are on the forefront across all industries which require localized warehousing of goods to meet the just-in-time requirements that today’s consumer demands.
Applaud office sector for adapting to the times
Charleston has earned the nickname the “Silicon Harbor” as technology becomes one of Charleston’s fastest growing industries. The marketplace is quickly adapting with the development of smart buildings and structured parking to accommodate major employers and their requirements in the Charleston region.
With Charleston recognized internationally as one of the best places to live, major corporations are considering relocations of their headquarters. New infrastructure along I-26 will spur new opportunities to support additional office campuses.
Take for example, the newest interstate interchange in Summerville, exit 197, which recently opened to serve Nexton, Cane Bay and areas in Berkeley County which have become gridlocked. Expect to continue to see construction cranes on the horizon in an attempt to keep pace with the demand of new-to-market companies relocating to the Lowcountry.
So, looking ahead, we can expect the speed of the change and growth to accelerate. The execution of strategies addressing housing and transportation will dictate how long this continues.
New homes and apartments are under construction yet struggle to satisfy demand from the influx of new employees moving to the region. Expedited permitting, workforce housing and the broader vision of projects such as the West Ashley Revitalization District are bold steps in the right direction.
Increases in jobs, population and import/export traffic require immediate action to address the transportation challenges in the Lowcountry. Action to repair our roads and bridges are of critical importance for commerce, but more importantly for our safety and way of life. Taking action to solve housing and transportation will encourage companies to continue investing billions into the region benefitting the local and state economies.
Based on the commercial real estate market’s recent track record, it doesn’t appear to be pumping the brakes any time soon. Charleston has the most wonderful way of life attracting people from all over the world. Instead of building it and they will come, they are here, go build it!
John Orr, of Lee & Associates, is President-elect of the Certified Commercial Investment Members South Carolina chapter.