2022 Multifamily Market Report: Charleston

Published: 06-09-22    Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Charleston multifamily market report

Charleston is experiencing some of the demand of people migrating toward the Sunbelt for warmer weather and more affordable living.

The average monthly asking rates for rentals increased 15% YOY in 2022. The occupancy rate sits at approximately 93%.

While Charleston isn’t necessarily experiencing the growth of some other small cities in the Southeast, it is still growing.

It’s more affordable than many other cities and this could lead to an influx of new residents, as other cities become too expensive for many working class families and new graduates to live in.

Charleston Multifamily Market Highlights

Charleston multifamily market highlights

The Charleston multifamily market report highlights some of the opportunities in Charleston, South Carolina for the multifamily sector:

For multifamily investors that do not want to spend the amount required to buy in the highest growth markets, investing in a market like Charleston that is growing but more affordable can be an effective strategy.

The Pacing of Multifamily Rents in Charleston

Charleston multifamily market rents

Nationally, rents rose by 11.3% in 2021. In the counties that make up the Charleston region, there were some price increases for one-bedroom apartments:

Long-Term Changes in Rent

Rents should continue to grow in Charleston, as with the rest of the Sunbelt.

The large volume of investments from large real estate firms and developers suggests a strong market going into the future.

Short-Term Changes in Rent

Over the short-term, Charleston is experiencing some growth in rent that is higher than the national average. Despite this, Charleston is still fairly affordable.

As some other cities become too expensive for residents to afford rental rates, some migration into lower cost cities could occur.

Multifamily Sales in Charleston

There have been quite a few notable multifamily sales and acquisitions in Charleston, including:

Notable Acquisitions So Far

At the end of 2021, Trion Properties purchased Latitude at West Ashley, a 312-unit multifamily complex for $51.8 million.

This follows the purchases of multifamily complexes in North Carolina and Orlando for a total of 672 units. It is located within driving distance of the two biggest employers in the city, making it a top choice.

In early 2022, the Continental Realty Corporation acquired a 92-unit multifamily community for $28.3 million.

The housing complex was built in 2018 and has modern designs and amenities comparable to anything built today.

The complex targets professionals in the area, including Boeing and the Medical University of South Carolina.

Notable Sales So Far

In mid-2022, retail investment firm Armada Hoffler sold a student housing complex near the College of Charleston to an unknown buyer for an unknown amount.

The complex was built by Armada Hoffler in 2020, and is a single five-story building designed specifically for student housing.

In September and October of 2021, Edac Enterprises sold the Forest Cover Apartments to Eskay Management for $21.5 million.

The sale was brokered by Aline Capital’s Multifamily Advisory Group. The facility features three different types of apartments and is priced at a moderate family income level.

The Radco Consortium, a national real estate company, sold Radius West Ashley, Ashford Review, and Ashford Palmetto Square to the Braden Fellman Group for $76 million.

The properties were collected by Radco over several years and sold together in a package deal. A total of 498 multifamily units were sold in the transaction.

Market Forecast for the Rest of 2022

The Charleston multifamily market is expected to continue at the rate it has been going.

This is a reasonable scenario, as the region is continuing to grow. Some of their major employers are tech companies, which could lead to more demand for workers.

Rents will continue to increase over the next 5 years.

The large amount of new development that is beginning will make Charleston more attractive to new residents in the coming years.

General Investor Activity: Where is the most money flowing?

The Charleston market is not as heavily invested and there are fewer institutional investors in property management, but still, it’s a growing region.

There are more investors that have become interested in the inland regions and they are starting to invest more in the Sunbelt.

Real estate investment trusts (REITs) are also playing a big role as they have expanded into the region as well.

Some REITs have been buying single-family homes and apartments, and this has helped to push their portfolio towards multifamily.

However, these investments may be shifting over time as other markets become too expensive.

Takeaways for Multifamily Investors

The Charleston multifamily market should continue to see growth throughout the next five years.

Charleston is still quite affordable compared to other coastal cities; however, it is becoming more expensive, as many people are migrating to the region.

This could lead to an increase in new residents and new demand for apartments.

In the next few years, there will likely be more interest from institutional investors and REITs that are looking toward lower-cost Sunbelt markets now that they have achieved scale in cities like Atlanta.

The interest in affordable Sunbelt markets like Charleston should continue to be strong.

Over the last five years, the market has been going through a transition of sorts. The economy has shown signs that it is getting better and due to this, people have been returning to Charleston.

With this influx of new residents, there is room for growth in this market, and rent prices are projected to increase over the next 5 years.

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