Nearly three-dozen apartment developments with 6,251 units are either planned or under construction in the city of Charleston. Their combined footprint is 261 acres: equal to three Citadel Malls or four Hampton Parks, a Post and Courier analysis has found.
More than half of those units are already being built, while others are grinding their way through the city’s approvals process. Some developers may abandon their projects before breaking ground, but in general, the apartment wave appears to be an all-time high for the city.
Charleston officials and developers said it’s positive growth for a city they contend is in dire need of more housing, particularly affordable housing. City planner Jacob Lindsey said the influx of so many apartments could be the needed supply that brings down rent prices across citywide.
“We are in a deficit for housing in our region, and we need to add more dwellings to meet demand,” he said. “With so many people moving to Charleston we need additional housing, or prices will inevitably increase.”
The developments are heading to areas that have been zoned for high-density projects, such as the Upper Peninsula, where the zoning rules encourage developers to dedicate a portion of units to workforce housing. That means they will be priced below market rates.
While members of residential and preservation groups say they have no problem with apartments, they are concerned about the sheer number headed to Charleston at a time when its streets, highways and bridges are already choked with traffic.
They also wonder how much the new apartments will truly drive down rent prices for the average person.
“It makes us ask the question: are we growing in a way that is sustainable for the community, or are we growing in a way that works for developers to come in and title properties, then flip those properties and move on with a profit?” Kristopher King, executive director of the Preservation Society of Charleston, said.
“Does that promote housing for families?” he added.
Building before infrastructure?
The 34 new apartment developments will touch every area of the city: downtown, West Ashley, Johns Island, James Island, Daniel Island and Cainhoy. Almost half of the units, or 43 percent, are planned downtown, with the second largest majority — 30 percent — moving into West Ashley.
Daniel Island will see four new apartment buildings with about 751 units. The city's portion of James Island has two developments on the way with 326 units. Johns Island will get two projects with 335 units, and the Beach Co. is planning a 264-unit complex on Cainhoy, above S.C. Highway 41.
Most of the 15 downtown projects are planned in the upper East Side, and six of the 10 new apartments in West Ashley are rising in the area west of Interstate 526 between Savannah Highway and the Glenn McConnell Parkway.
Tim Muller is the chairman of the Peninsula Neighborhood Consortium, a group comprised of downtown neighborhood associations. He said a common concern with new apartments is how they will impact traffic and parking.
“I think the greater concern is just whether the city can truly accommodate all the number of apartments based on the lack of mass transit, based on our limited infrastructure,” he said. “We’re building before we have the infrastructure, which is a big problem.”
Muller said many in the neighborhoods are worried the trend could shift the focus away from other needed uses, such as grocery stores. But many of the projects will be mixed-use, meaning they’ll include ground-floor retail spaces.
As for addressing over-growth, Lindsey said the areas seeing most of the apartments are designated parts of the city that can handle urban developments.
“I think it’s very important to emphasize that the multifamily projects, especially downtown, are the ones that are called for in our comprehensive plan,” he said. “They’re urbanizing areas. They’re places where residents will be able to walk (and) ride their bike to work. And ultimately, locating housing in those places will support transit in the future.”
He also said residents of nearby neighborhoods could benefit from the new developments as they attract more businesses to those areas.
“They may have better services available to them. They may have more restaurants, more coffee shops, because there are going to be more folks nearby to patronize those businesses,” he said.
City Councilman Mike Seekings, who is also the chairman of the Charleston Area Regional Transportation Authority, said the wave of new apartment developments underscores the need to invest in public transit — and not just for commuters who travel long distances to and from work.
“Short-haul public transit is our next big thing,” he said.
'Only going to get better'
Lindsey said every aspect of Charleston’s real estate market is “very hot,” meaning demand for land has skyrocketed and driven up value. At the same time, with more people wanting to live in urban environments, the demand for apartments has soared in recent years, too.
John Darby, president and chief executive officer of the Beach Co., said many vibrant cities such as Charleston and Nashville are seeing so many new apartments because of the types of people moving there.
“Millennials are moving to those cities because it meets their lifestyle. They tend to want to live together. They tend to want to live in an urban area where they can walk to work, walk to restaurants,” he said.
People in the Baby Boomer generation are also interested in apartment living because they’re downsizing their households and perhaps moving to places where their adult children are, he said.
Charlotte-based White Point Partners is developing two apartment complexes in the Upper Peninsula and two others near the West Ashley Circle. Ryan Hanks, one of the firm’s three partners, said they want to invest in those areas because of the types of businesses that are opening there.
Younger people are attracted to living in the Upper Peninsula because of the trendy restaurants and bars sprouting up, he said. “I think that’s only going to get better over the next couple of years,” he said.
The West Ashley Circle, on the other hand, is expected to become a retail hub for its rapidly growing corner of West Ashley.
“There seems to be a lot of retail and commercial growth that’s going to happen there, so we’re trying to get out in front of that,” Hanks said.
Who will benefit?
While there’s a wave of new apartments planned in Charleston, it might not do much to offset the dwindling number of affordable housing options — an issue Mayor John Tecklenburg pledged to solve during his campaign last year.
“Existing affordable housing is disappearing,” said Debbie Waid, chief program officer of the S.C. Community Loan Fund. “We are already thousands of units behind based on the current need, and it’s only going to get worse until there are some interventions that can kind of stem the tide.”
She said many of the houses with affordable rents are being renovated and turned into luxury rentals, while apartment buildings with lower price-points stand to be replaced by hotels or higher-end apartments.
Although there will be an increased supply of apartments in the coming years, that might not make a lasting dent on rent prices. Financing in recent years has been more available to apartment developments across the country but banks have started to tighten the reins. Today it requires more initial capital to get an apartment project in the pipeline while construction prices and land values in Charleston continue to rise, Darby said.
“In the last two years, there has been some rent growth to make up for that increase in cost,” he said. “A project that cost $50 million two years ago might cost $60 million now.”
If several projects are completed at once, that tends to create a temporary “renter’s market” with cheaper rents, he said. But it’s more likely the projects will be staggered out, as some catch up with financing setbacks. In that case, property owners won’t be competing for the same pool of tenants, and rent prices might not be dampened at all.
Bob Faith, founder of the development giant Greystar, agreed with that analysis. While he said apartment developers might run the risk of overshooting demand in the short term, it won't curb the interest in the Charleston real estate market overall.
“The underlying things driving Charleston are not going to stop,” he said, citing economic development growth and the steady volume of people entering the area. The Lowcountry will “continue to be successful.”
That trend might actually work against the effort to bring more affordable housing options to Charleston. Most affordable housing in the city is provided through the Charleston Housing Authority through several programs. In addition to placing people in public housing, its Housing Finance Agency provides loans to create housing opportunities for low to moderate-income residents.
But developing new affordable housing projects — public or not — is increasingly difficult given the current land values in Charleston, Waid and Darby said.
“The best plan right now for affordable housing is inclusionary zoning, to get market-rate developers to include affordable units in their overall development,” Waid said.
The Department of Planning, Preservation and Sustainability is currently working on new zoning tools that could help achieve that goal and will go a long way towards fulfilling Tecklenburg’s campaign promise, according to Lindsey.
But the 6,251 units currently in the pipeline already have been entitled, so any new rules wouldn’t apply to them. There is an opt-in zone already on the books that requires apartment developers in the Upper Peninsula to dedicate 15 percent of their total units to workforce housing.
Of the roughly 2,000 units in that zone, about 300 will be for workforce housing. Those units will be priced so people earning between 80 percent and 120 percent of the area’s median income will be able to afford them.
Waid said while that’s an improvement on the current situation, workforce units and affordable units are not the same thing.
“The vast majority of low-income households within the city of Charleston are not going to be able to take advantage of that,” she said.
King, of the Preservation Society, added that many of those units are only suitable for single-person households.
“You look at these workforce housing units, they average about 600 square feet and they’re basically studios,” he said. "Are we building housing for everybody, or are we just creating a lot of inventory for college students and very young professionals?”