The Charleston, South Carolina, area continues to have a strong economy with a healthy demand for housing units. However, with the intense level of development activity in the area, even healthy absorption will not be enough to lower the vacancy rate in the coming year, according to Michelle Westbrook, multifamily analyst with Carolinas Real Data.

With 1,408 units under construction, even if the expected 700 to 900 units are absorbed, the vacancy rate in the Charleston area is expected to either maintain its current level or continue to rise, possibly to as high as 12 percent by December 2002. Due to the heightened vacancy rate development should begin to level off in the near future, at least until the demand can catch up to the new supply.

From December 2000 to December 2001, 1,042 apartment units were absorbed in the Charleston area. This is the highest annual absorption reported in this market since the 1994 inception of the Carolinas Real Data Charleston Apartment Report, says Westbrook. She also reports that 1,430 units were completed last year, causing the vacancy rate to climb from 8.5 percent in December 2000 to 10.2 percent in December 2001.

Two areas with high levels activity are James Island and Summerville. Both of these submarkets have a large number of units either under construction or proposed. In the James Island submarket, 514 units are under construction. However, as of December, the Summerville submarket claimed the most starts (248 units) and the most proposed units.

As of December 2001, the Summerville submarket was leading the Charleston area in proposed development with 647 apartment units proposed within four communities. The largest of these proposed communities in Summerville is The Vinings at Wescott Plantation. This community of 400 units will be built in two phases and is being developed by Greenville, South Carolina-based Easlan Capital.

There are two large communities under construction on James Island. Merry Land Properties of Augusta, Georgia, is building the final 194 units at Merritt at James Landing, directly adjacent to the company's existing Quarterdeck Apartments on Folly Road and SC-30. This community will have a total of 270 units upon completion. B&B Associates is building 320 units at The Islands between Folly Road and Riverland Drive.

Atlanta-based Trammell Crow Residential has 240 units under construction at Alexan Belle Hall on Long Point Road and Interstate 526 in the Belle Hall subdivision in the Mt. Pleasant submarket.

In the Summerville submarket, Ultima Holdings is building 248 units at Cedar Grove on the northwest corner of Dorchester Road and Riverbluff Parkway in the Cedar Grove subdivision.

The average rent reported in December was $654, up from $626 the year before. The number of communities giving some type of concession doubled to 44 percent during 2001. This is the highest number of communities offering concessions ever reported in the Charleston Apartment Report.

"Developers are building communities that offer amenities catering to those who rent by choice rather than necessity," Westbrook notes. These apartments are developed in response to the new trend of renters choosing apartments for a convenient and hassle-free lifestyle. Unit amenities now include garages, crown molding, built-in bookshelves, garden bathtubs, gourmet kitchens and pre-wiring for multi-media or in-home business use, all aimed toward the growing renter-by-choice population.

Michelle Westbrook serves as a multifamily analyst with Carolinas Real Data.


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