Following the boom of multifamily development in Charleston in the late 1990s, development tapered off a bit, but now it has picked up again, according to Aubrey Moore, apartment researcher at Carolina's Real Data. "Over the past year, the Charleston market has seen 1,635 units completed. This is much stronger than the three years prior to that, although there has been a steady growth since 1997," says Moore.

Of the proposed units in Charleston, 66 percent or 1,176 units are concentrated in Summerville and another 568 units are under construction in Goose Creek. "New development is concentrated in these two areas because of the lack of building there in the past," says Moore. Developers had most recently concentrated on the Mount Pleasant and James Island markets, and most of the recently completed projects in those areas. Now, with those areas becoming overbuilt, at least temporarily, developers are looking to the less developed Summerville and Goose Creek areas, adds Moore.

Evans Development, a company prominent in North Charleston, has proposed to build Summerfield Apartments in the Summerville area, and Harley Property Investors is planning Canlen Walk and a second phase of Heron Reserve. Ultima Holdings out of Atlanta is proposing Cedar Grove, their first community in the Charleston area. Bostic Brothers and Merry Land Properties are also prominent developers in these areas.

The average overall rental rate in Charleston is $622, but the averages range from $527 in Goose Creek to $806 on James Island. The vacancy rate for Charleston as of December 2000 was 8.5 percent, but the rate ranges from 5.7 percent in North Charleston to 17.8 percent in Mount Pleasant.

One trend in Charleston is that developers are looking to attract renters-by-choice rather than those who rent by necessity. "This is due to the favorable demographics of this segment of the population. Because of this, developers are developing high-end, luxury apartments with extra amenities like wine cellars, movie theaters, granite countertops, crown molding, nine-foot ceilings and Internet access. Some units are even being built to mimic single-family homes," says Moore.

A significant factor in the future growth of Charleston, according to Moore, is that it is home to the largest containerized cargo port on the South Atlantic and Gulf Coasts. With a possible new port terminal to be located on the Cooper River side of Daniel's Island, this area may become open to future development activity. This may have a significant effect on the apartment market because the demand for housing units may climb on Daniel's Island as a result.

Mount Pleasant and James Island will be the areas to watch again in the future, according to Moore. "The market goes in cycles. Since there has been so much development in these two areas over the past few years, developers will slow down and watch how long it will take the markets to absorb all of the units before they begin to build more. This is why developers have decided to build in other areas such as Summerville and Goose Creek," says Moore. In Mount Pleasant, there were more units completed than there were absorbed, which is why the vacancy rate in Mount Pleasant grew from 5.9 percent to 17.8 percent. The same thing happened in James Island, and this also explains its vacancy rate increase, adds Moore. "It will be interesting to watch how long it takes these two markets to absorb all of the units currently being developed and how quickly the vacancy rate comes back down."

In the near future, growth will probably slow down a bit, according to Moore. "Growth is outpacing demand right now, which means that developers will slow down their development and see how the market is responding to the supply," says Moore.

Aubrey Moore is an apartment researcher with Carolinas Real Data.


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