Downtown apartment development: Boom or bust.

[vicupstate]

1 minute ago, CLT_sc said:

What are rental rates in Greenville?  I saw a chart which surprised me, so I am not sure if it was true.  But, rental rates were lower in Greenville than Charleston, no surprise, Charlotte, no surprise, and Columbia...this surprised me a little.  I expected to see them at similar rates. I think the chart was in the Greenville news, just can’t find it.

But, I would not use two developments as a barometer for the market.

I seemed to remember seeing that as well, but the differnce between Columbia and Greenville was like $10.  Charleston is like $200 a month higher than Greenville IIRC.   Columbia has seen  a massive amount of University projects in the last 7 years or so, all in the urban core, so not so surprising. 

[Den2Gvl]

https://www.greenvilleonline.com/story/news/2019/04/11/greenville-sc-apartment-rent-risen-triple-us-average-last-year/3423005002/

[CLT_sc]

Yep, that’s the article.  I was surprised to see the rent that cheap in Greenville.  Could  be a lot of terrible properties dragging the average down....I am not sure.  

[vicupstate]

5 hours ago, CLT_sc said:

Yep, that’s the article.  I was surprised to see the rent that cheap in Greenville.  Could  be a lot of terrible properties dragging the average down....I am not sure.  

Or it could be that moderate growth rather than hyper growth, allows the supply to more  closely stay in tandem to demand, and not create a shortage.      

[Exile]

On 5/9/2019 at 4:58 AM, vicupstate said:

Or it could be that moderate growth rather than hyper growth, allows the supply to more  closely stay in tandem to demand, and not create a shortage.      

A couple of questions for you all who live in Greenville and are close watchers of these things---i.e., most of you on this board, I guess.

The scale of the McClaren, given Camperdown and all the other apts/condos going up or having been built downtown, indicates that demand continues to rise  for urban residential. Greenville's always been relatively conservative about most such things, which is one of the reasons its downtown has perhaps seemed less developed relative to its peer cities. It's pretty much always been that way. Greenville will likely never suffer from the "skyscraper curse" the way other cities might.

My questions are these: what connection, if any, do you see between downtown residential development and downtown office potential? And if you do, how long do you think it will be before a new tallest office tower goes up in Greenville? Normally, I'd feel pretty confident saying that Camperdown will be the last major building for perhaps a couple of decades, based on historical precedent, but we're in unprecedented times for Greenville. Downtown really is densifying residentially, but not nearly as much in terms of office development. I can't imagine all these new residents downtown will be commuting to the burbs. Rather, they'll live and work downtown, and the flow of commuters into DT will likely increase. And if that convention/arts complex becomes a reality, all the more. (I know Phil Hughes has that concept for a tallest, but that's all residential, too, right? I'm asking about office construction).

So what's going to happen? Any prognostications? A new tallest office tower? A gaggle of 10-15 story towers? Something else?

Edited June 26, 2019 by Exile

[gman430]

I also don’t see it being decades before the next big office building gets built. The ONE office buildings were built just a few years ago. No reason the next one won’t be just a few years away. I see a new tallest getting built at County Square if it happens.

Edited June 26, 2019 by gman430

[CLT_sc]

The answer to the office question depends on numerous factors.  First, Greenville needs to fill a lot of the existing space which has been vacated by tenants moving around downtown.  Last time I looked, One still has a ton of space available.  The Liberty buildings have a decent amount of space and the BofA tower will when BofA moves out. Second, rental rates need to support taller construction.  At certain points, it just becomes more expensive to build higher which commands higher rents. I am not sure Greenville’s rates support a 30++ story tower (without subsidies)  And, to build a good tower with nice floorplates, you would need to build a 500-600,000 door tower to make a 27 ish story tower work.  You could build a tall skinny building just to get height,  it would most likely be for a specific user. 500k feet in Greenville is years worth of absorption, so that would be a big risk.  More importantly, Greenville AND the state of S.C. need to actively recruit more than manufacturing companies (outside of the Charlotte counties).  This is the most critical driver not just for Greenville, but also for Cola and Charleston.  There are so many benefits to this, primarily keeping college grads in SC.  The #1 destination for the Moore School graduates is Charlotte followed by Atlanta, NYC, Washington etc.... This is a top business school, and retaining these types of people will enhance S.C.  finally, it depends on the continuation of lots of capital.

[GVLover]

26 minutes ago, CLT_sc said:

The answer to the office question depends on numerous factors.  First, Greenville needs to fill a lot of the existing space which has been vacated by tenants moving around downtown.  Last time I looked, One still has a ton of space available.  The Liberty buildings have a decent amount of space and the BofA tower will when BofA moves out. Second, rental rates need to support taller construction.  At certain points, it just becomes more expensive to build higher which commands higher rents. I am not sure Greenville’s rates support a 30++ story tower (without subsidies)  And, to build a good tower with nice floorplates, you would need to build a 500-600,000 door tower to make a 27 ish story tower work.  You could build a tall skinny building just to get height,  it would most likely be for a specific user. 500k feet in Greenville is years worth of absorption, so that would be a big risk.  More importantly, Greenville AND the state of S.C. need to actively recruit more than manufacturing companies (outside of the Charlotte counties).  This is the most critical driver not just for Greenville, but also for Cola and Charleston.  There are so many benefits to this, primarily keeping college grads in SC.  The #1 destination for the Moore School graduates is Charlotte followed by Atlanta, NYC, Washington etc.... This is a top business school, and retaining these types of people will enhance S.C.  finally, it depends on the continuation of lots of capital.

I would argue SC has done an excellent job attracting manufacture sites, and the statistics would back that up. Where SC falls short is attracting high-tech jobs and that’s largely because the state is too conservative on investing in education and creating policy to attract said jobs (Greenville County in particular hasn’t done well at attracting manufacturing sites, and that wouldn’t be much of an issue if the County actually tried to attract other industries). Greenville, as of late, has been doing an increasingly better job at attracting smaller HQ’s and regional offices, and in-fact, as crazy as it sounds, Greenville is one of the fastest growing tech centers in the country albeit we don’t see it much on the ground it seems because we never hear a large, renowned company announce here. 

https://www.brookings.edu/research/where-jobs-are-concentrating-why-it-matters-to-cities-and-regions/

Edited June 26, 2019 by GVLover

[CLT_sc]

5 minutes ago, GVLover said:

I would argue SC has done an excellent job attracting manufacture sites, and the statistics would back that up. Where SC falls short is attracting high-tech jobs and that’s largely because the state is too conservative on investing in education and creating policy to attract said jobs (Greenville County in particular hasn’t done well at attracting manufacturing sites, and that wouldn’t be much of an issue if the County actually tried to attract other industries). Greenville, as of late, has been doing an increasingly better job at attracting smaller HQ’s and regional offices, and in-fact, as crazy as it sounds, Greenville is one of the fastest growing tech centers in the country albeit we don’t see it much on the ground it seems because we never hear a large, renowned company announce here. 

https://www.brookings.edu/research/where-jobs-are-concentrating-why-it-matters-to-cities-and-regions/

What you said is 100% right.  The state of S.C. does not invest as much in education which leads to innovation and home grown companies that absorb a lot of office space. For instance, the state contributes about $130mm annually to Clemson and Carolina.  By comparison, the state of NC contributes over $400mm to UNC and NC State.  As a result, SC has absolutely nothing even close to RTP and the corporations represented in CLT. 

I spoke with a state rep in Cola last year.  When I asked him about education and recruiting jobs, his response was “we need to look at Alabama and Mississippi for what we want to do”.....that is a really scary thought.  But, today, that is the mentality of elected officials.  He is a UVA grad so, he is not dumb.

SC should  continue to recruit manufacturing, but companies like JP Morgan, Citi, Nationwide, and technology companies should be recruited for back office functions and then  some innovation. There are small pockets of tech in Cola, CHS and GSP.  But, they are for the most part tiny and insignificant at this point.  Could they grow, yes, then it becomes a retention battle and following capital.  So, tech is important, but banks are in essence technology companies so why not chase them too.  It won’t show in a brookings stat, but just as meaningful.