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Charleston, SC vs. Hilton Head, SC: Which Is Better for Businesses?

Published: 07-27-22 Category: General CRE

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.

The commercial real estate markets in Charleston, SC and Hilton Head, SC both have benefits for your business. However, there are certain factors that you need to consider before you decide where to launch or move your business.

Let’s dig in.

Population Comparisons

One of the first things to look at when you’re figuring out the location for your business is the population. Understanding the population of each city will help you identify who your potential employees and customers are.

Average Demographics

Looking at demographics of Charleston and Hilton Head will give you a closer look at the people who live there. Let’s look at population size and median age.

Charleston, SC has a population of 151,612. The population in Charleston has decreased by 0.7% since 2020, according to the Census Bureau. The median age in Charleston is 34.9.
The population in Hilton Head, SC is 38,076, which is significantly smaller than Charleston. The Census Bureau shows a 0.3% decrease in population since 2020. The median age in Hilton Head is 58.

These two stats are especially significant if you’re planning to hire a lot of people from the area or if your product is targeted to a specific age group.

For example, if your target audience is 50+, then an older population would likely be more profitable than a younger one.

Median Household Income

Now let’s look at the median household incomes of Charleston and Hilton Head, SC. The average household income in Charleston is $72,071, while the average household income in Hilton Head is $86,171.

These numbers are significant if you’re relying heavily on the population of the area to spend money with you. For instance, if you’re opening a retail space or investing in property, then you need customers within your market.

On the other hand, if you’re a business that plans to open an office or industrial space, you’ll need employees instead of customers.

Commercial Real Estate Comparisons

Comparing two locations for your business involves looking at the unique specifications of each commercial real estate market.

Average Commercial Rents

The average commercial rent of an area can help you figure out how much you need to budget if you plan to bring your business there.

The average commercial rent space in Charleston is $32.81per square foot.
The commercial rent space in Hilton Head ranges from $16 per square foot to $40 or $50 per square foot.

Both Charleston and Hilton Head compare fairly evenly on average commercial rent, which means it will likely come down to inventory availability – or vacancy rate.

Commercial Vacancy Rates

The commercial vacancy rate tells you how much of the commercial real estate space in any one area is available, across all sectors. A lower vacancy rate usually means that the market is more competitive in that area.

The commercial vacancy rate in Charleston is 11.06%.
Hilton Head has just 39 commercial vacancies (12 office spaces, 10 retail spaces, and 1 industrial space).

Because the population size of Hilton Head is significantly smaller than Charleston, it makes sense that the vacancies are fewer, too.

However, the spaces that are available may be worth looking at if everything else about the market aligns with your business needs.

CRE Market Outlook for 2022

A lot of commercial real estate dealings in Charleston are based around the downtown area and the Charleston City Market, a popular retail shopping destination for both tourists and locals. Vacancy rates in the City Market are at just 2%.

The Port of Charleston has always had mostly manufacturing businesses, but now the city is looking to attract more eCommerce distributors to the area.

The commercial real estate market in Hilton Head has been most favorable for multifamily investment opportunities, due to the steady, consistent population growth in the area.

Commercial Activity Comparisons

Let’s look at the breakdown of each commercial real estate sector in Charleston and Hilton Head.

Retail: In-Person Shopping Versus Online Shopping

Charleston’s retail shopping activity is significantly higher than Hilton Head because of how robust the shopping is in the historic downtown area, which includes the City Market. In fact, in November 2021, Charleston retail activity increased 20% year over year.

Industrial: Warehouse Storage Activity

The Port of Charleston is a lucrative area for businesses looking for industrial spaces, especially those in need of production, distribution, storage, or manufacturing space.

In Hilton Head, there’s low demand and a low inventory of industrial spaces. There aren’t a lot of warehouses or spaces where companies can store or manufacture goods.

If you need to conduct industrial activity, Charleston is the better spot of the two.

Office: Office Space Activity

Finding office space in either Charleston or Hilton Head may be difficult. Here’s a breakdown of what each city has available:

Charleston has around 150 office space vacancies. Most of these spaces are Class A, with just 22% being Class B space.
Comparatively, Hilton Head has 11 vacancies for office space. The office space available is all Class B space.

Charleston has more square footage to choose from, but still a low inventory compared to other cities in the U.S.

Multifamily: Leasing Activity

In Charleston, multifamily activity is picking up. The average asking rent has increased 13.8% year over year.

Multifamily market activity In Hilton Head is strong. Recently, a global commercial real estate firm broke ground on its new 330-unit multifamily property. Hilton Head is in the Greater Savannah area which has been steadily growing since 2000.

Deciding Which Location Is Right for Your Business

Both Hilton Head and Charleston have their advantages and disadvantages. Where you choose to build or move your business is dependent on the activity you’ll be conducting.

Consider the population, the current market outlook, and recent activity for your specific sector. These factors can help you figure out which area will be more profitable for your business.