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Economic developments in the Charleston metro area


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The demand-over-supply equation worked out to cause the occupancy rate to grow to 89.9 percent and rental rates to rise 2.3 percent over the past 12 months.

California-based apartment website RentCafe reported last week rents in the city of Charleston jumped 5 percent year over year through September to an average of $1,306 a month. In North Charleston, rates rose 4.0 percent to $1,009 per month, the firm noted.

But rising rents may not be the case for long.

Throughout the region, 4,652 units are under construction and another 4,843 are proposed.

Rents could fall as new units come online

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Charleston rents up 4%

The outcome will be empty units topping 6 percent in 2019 for just the second time in seven years, the researcher said. Currently, Charleston’s vacancy rate is 5.6 percent.

Charleston’s effective rent is $1,122 a month, up 3.8 percent year-over-year, the report said.

In greater Charleston, builders wrapped up 3,800 apartment homes in the year ending Sept. 30 with close to half in the downtown, Mount Pleasant and islands submarket. Developers count 5,300 units under construction now with 2020 completion dates.

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Why there are so many Hotels rising in Charleston

The College of Charleston’s Office of Tourism Analysis notes hotel occupancy in Charleston County rose from 71 percent in 2012 to 76 percent in 2016. Despite the growing number of rooms and competition, the number of nights sold was up 2.3 percent for the year.

While occupancy rates at Charleston hotels went down in 2018 for the first time in several years, more overnight stays were booked in the area than ever. And local occupancy rates remain significantly higher than state and national averages.

More carriers and more flights have led to a big jump in air travel. The number of passengers at the Charleston International Airport has more than doubled this decade: from 2.02 million in 2010 to 4.47 million last year.

The first two months of this year have shown a 13 percent passenger increase over last year’s numbers. Passengers arriving by air tend to stay longer and spend more money, according to Explore Charleston, formerly known as the Charleston Area Convention and Visitors Bureau.

And while the city has tried to curb hotel development, its chief planner, Jacob Lindsey, has said its ratio of hotel rooms to residents hasn’t tipped too far — at least not yet.

Lindsey has noted the city’s current ratio is about 14 hotel rooms per 100 residents, less than Savannah and New Orleans and about the same as San Francisco.

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23 new apartment projects on the rise

23 new communities are under construction, according to a new report. The number of proposed units increased over the past six months through September to 6,030, with most of them in Mount Pleasant and Charleston’s upper peninsula, Charlotte-based apartment service Real Data reported.

Several others are under construction across the region in almost every suburb.

Demand still remains strong as apartment occupancy jumped nearly 2 percent in the region to 91.2 percent over the past six months through September.

About 1,250 units were added to the supply during the same time frame. Rents also increased over the past 12 months to an average of $1,276 per month, up from $1,242 one year ago in September. Charleston’s average rental rate is the highest in South Carolina and higher than Charlotte.

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2019 Charleston-area hotel figures

  • Room nights sold: 4.8 million nights, +3.7%
  • Occupancy rate: 74.5%, -0.4%
  • Average daily rate: $148.46, -0.3%
  • Room inventory: 18,162 rooms, +921, or 5.3%

 

Charleston adds 900 rooms, had record-breaking room nights for 2nd consecutive year

After hitting record numbers in 2018, Charleston-area hotels sold more overnight stays than ever for the second consecutive year, according to new figures from the College of Charleston. 

More than 4.8 million nights were sold at Charleston County hotels in 2019, the college found, an increase of 3.7 percent over the previous year. 

The region added 921 hotel rooms during 2019, a gain of about 5.3 percent, bringing the area’s total inventory to more than 18,000.

Inventory gains started in January of last year with the opening of the 179-room Hotel Bennett on Marion Square. Other openings included a six-story Hyatt Place that opened in the middle of a Mount Pleasant shopping center and a 126-room Cambria Hotel in West Ashley

According to the most recent U.S. lodging update from commercial real estate firm CBRE Inc., Charleston ranked sixth in the U.S. for supply growth during the third quarter of 2019

Supply growth in Charleston outpaced demand, meaning occupancy rates went down. The same was true in Seattle, New York and Dallas. 

But while the market added more rooms in 2019 than it did the year before, the decline in occupancy was smaller. The average occupancy rate decreased by less than half a percent in 2019, while it dipped nearly 2 percent in 2018.

Across the U.S., average room rates are about $132 a night. For South Carolina, the average is even lower, about $119.

The average rate in the Charleston area was $148.86 night, a decrease of about 0.3 percent from 2018 figures. A decrease that small is “basically flat,” Guttentag said.

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Retail giant Walmart will build a massive import distribution center near Ridgeville, giving the State Ports Authority an anchor tenant for an industrial park aimed at diversifying cargo shipments through the Port of Charleston.

At 3 million square feet, the distribution center will be Walmart’s third-largest in the country, trailing import warehouse hubs in Texas and Illinois. Groundbreaking on the $220 million project will take place in March and the facility will be in operation by April 2022. At buildout, it will employ 1,000 people full time and boost the port’s cargo volume by 70,000 containers a year.

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S.C. real estate facts

Homes for sale in S.C. at the start of 2020: 26,667

At the start of 2021: 16,840

The median home sale price in S.C. in 2019: $218,601

In 2020: $245,000

In April, 2021: $269,900

In the tri-county Charleston area in April, 2021: $343,796

A year earlier: $290,000

The Charleston and Myrtle Beach areas accounted for this share of statewide home sales in April: 45 percent

Number of homes for sale across the tri-county Charleston Metro Area at the end of April, 2020: 5,488

At the end of April, 2021: 1,490

Soaring lumber costs were estimated to add this much to new home price tags nationally: $37,872

And this much to monthly rents in new apartment buildings: $119

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Elbit Systems of America LLC, a subsidiary for Elbit Systems Ltd., plans to establish operations in Charleston County, creating an anticipated 300 jobs, the S.C. Department of Commerce said in a news release.

The Texas-based company provides high-performance products and system solutions that focus on the defense, homeland security, commercial aviation and medical instrumentation sectors.

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