The Panama Canal expansion is expect to boost cargo to and from the port of Charleston.
Look for booming shipping, multifamily expansion and a lodging surge to contribute to commercial property gains in the Charleston area, a large-scale brokerage notes.
The findings stem from California-based CBRE’s recently released 2018 Southeast U.S. Real Estate Market Outlook. The report track regional factors in six states — Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee. The study also drilled into local market such as metro Charleston.
A strong local outlook offers a host of highlights, including:
Multifamily: The market expects to see an active combination of high growth in rentals and low vacancy rates. They bolster multifamily as the leading investment property type in the Charleston market, according to CBRE. Suburbs offer more affordable lease properties, building competition for downtown apartment-home villages. At the same time, "the attractiveness of living downtown will always keep the peninsula strong," the brokerage says.Hotel: The industry’s best days may be in 2019, when accommodations supply will increase "at an elevated rate" above 5 percent, CBRE says. The rate is higher than recent history and "significantly above" the market’s long-run average. This year, "supply will expand faster than demand resulting in lower occupancy rates," the commercial agency says. Into the next decade, the average daily lodging rate expects to continue on an upward trajectory, "establishing Charleston as one of the fastest growing markets in the country in the next two years," CBRE says.Industrial: The region looks to build more than 2 million square feet of speculative space in the next two years, but demand isn’t likely to keep up the pace. As a result, vacation rates are apt to elevate short-term. Still, the Charleston area’s distribution of goods should grow significantly thanks to Panama Canal expansion allowing larger ships to serve the East Coast.Retail: Among the busiest places for store and shop development will remain along Interstate 26 and into north Daniel Island. Some of the spots were predominantly industrial but are expanding residential areas now. Another expanding area, the agency says, is West Ashley.Office: Tenants are shifting to less expensive suburbs, which shows the bulk of new development. More than 200,000 square feet of speculative space will be completed in the next two years and likely to be "quickly absorbed," the brokerage notes. The asking rate-gap between the peninsula and suburban markets is more than 35 percent and expected to widen in the coming years, CBRE says.
In an overview on the Southeast as a whole, CBRE notes that the region "is emerging as an economic powerhouse with a diversifying base."
The brokerage cites Atlanta and Miami as international gateway markets and strong growth and educated work forces in Charlotte, Tampa, Raleigh-Durham and Nashville.
Memphis and Orlando are emerging as distribution hobs, while automotive industries account for 12 percent of the workforce in Greenville-Spartanburg and in Birmingham, Alabama.
Major ports include Charleston and Savannah. The most active hotel development markets are Nashville, Charlotte and Charleston and the most active tourism markets remain Orlando and Miami.
"With 48 percent of the country’s net migration flocking to the Southeast, there is still a high amount of activity and interest in urban multifamily assets," CBRE says.
CBRE Group, Inc. calls itself the world’s largest commercial real estate services and investment firm based on 2017 revenue, employing more than 80,000 people. Visit www.cbre.com.