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CharlestonCommercialMarketForecast.com
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Thank You to Our Planning Committee
Blair Belk, Belk | Lucy
Thomas Boulware, NAI Avant
Benjie Lanier, Wells Fargo SBA
Thomas Mathewes, Roadstead Real Estate
Doug Roland, NAI Avant
Gerry Schauer, Avison Young
Bryan Stange, ECS Carolinas
Vitre Stephens, Avison Young
Clayton Taylor, Taylor Consulting
Ryan Welch, Lee & Associates-Charleston
www.CharlestonCommercialMarketForecast.com
Charleston Tables
ADC EngineersAllianceAvison YoungBeach Co.BNC BankCaldwellCarolina OneCBRECC&TCHS IndustrialCollege of CharlestonCresCom Bank
DurlachECS CarolinasGoff D Antonio & AssociatesGrayson Thomas, LLCHolder PropertiesIntegra Realty ResourcesLee Assoc.NAI AvantSCBTSouth StateTD BankThe Shopping Center Group
www.CharlestonCommercialMarketForecast.com
Jim HillVice President,
Commercial and Industrial Development & Land SalesWestRock Community Development and Land Management Division
Retail Analysis and Outlook 2015
Presented by: Jeff Yurfest, CCIM
www.CharlestonCommercialMarketForecast.com
Total Retail By Submarket
Downtown
West of the Ashley
North Charleston
Mount Pleasant
Summerville/Goose Creek
Daniel Island
www.CharlestonCommercialMarketForecast.com
www.CharlestonCommercialMarketForecast.com
Charleston Retail Vacancy Rate
20112012
20132014
2015
0%1%2%3%4%5%6%7%8%9%
8.25% 8.50%
6.50%6.25%
5.10%
Southeast Retail Vacancy Rate
Greenville12.3%
Columbia8.5%
Charleston5.1%
Raleigh6.3%
Charlotte 8.7%
Greenville12.3%
Columbia8.5%
Charleston5.1%
Raleigh6.3%
Charlotte 8.7%
Retail Vacancy by Submarket
Downtown
West of th
e Ashley
North Charle
ston
Mount Pleasant
Summervi
lle/ G
oose Creek
Daniel Island
0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%
2014 2015
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Asking Rents for Charleston Retail
20112012
20132014
2015
$0.00$2.00$4.00$6.00$8.00
$10.00$12.00$14.00$16.00$18.00$20.00
$14.75 $14.25 $15.25 $15.25$18.40
www.CharlestonCommercialMarketForecast.com
Rental Rate by Submarket
Downtown West of the Ashley
North Charleston
Mount Pleasant
Summerville Daniel Island$0.00$5.00
$10.00$15.00$20.00$25.00$30.00$35.00$40.00$45.00 $42.65
$14.77$11.72
$18.55
$12.08$17.16
2014 2015
www.CharlestonCommercialMarketForecast.com
Key Takeaways•Declining vacancies and increasing development
costs create historically high rental rates.•Strong retailer interest supports new construction.•National expansion continues into Charleston. •Tourism remains beneficial for downtown retailers.•Many large mixed use developments are on the
horizon.•All interior doors must match!
www.CharlestonCommercialMarketForecast.com
Jeffrey Yurfest, CCIM
www.CharlestonCommercialMarketForecast.com
www.CharlestonCommercialMarketForecast.com
North Morrison “No-Mo” District
•Technology Jobs
•Upper Peninsula Zoning District
•Increasing Land Values
www.CharlestonCommercialMarketForecast.com
Summerville/I-26 Corridor
•Nexton
•Direct/Indirect jobs
•Service jobs followManufacturing
•Less than 250,000 square feet class A
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What the Future Holds
•Significant development inside I-526
•Rental Rates Increase
•Values increase
www.CharlestonCommercialMarketForecast.com
Jeremy N. WillitsPrincipal, Office ServicesAvison [email protected]
www.CharlestonCommercialMarketForecast.com
CTAR-CID COMMERCIAL & INDUSTRIAL MARKET FORECAST
Derek J. Mathis, Director of Industrial Development, WestRock
www.CharlestonCommercialMarketForecast.com
NATIONAL/REGIONAL TRENDS
National:• 21 quarters of positive net absorption• 6.7% vacancy• Rental rate growth is up 3.5% YOY. Tighter
markets in the 5% range• Demand outpacing new product delivery
in most major markets • Cap rates compressed• Cargo shift• Projected occupancy gains of 380mm SF
in warehouse/distribution space from 2014-2017
Regional:• Mirrors national trends relative to
absorption, rent growth and vacancy rates• Significant speculative and BTSFL
development underway in larger regional metros such as ATL, CLT, GSP and SAV
www.CharlestonCommercialMarketForecast.com
LOCAL TRENDSTYPE OF ACTIVITY?• FDI driving SC economy• Balanced mix of manufacturing and
distributionWHERE?• Prospects prefer “project ready” locations• Infill traditionally preferred location but that
is changing • Jedburg sub-market activity has increased
significantlyWHY?• Favorable business climate• Right to Work• Infrastructure• Clustering• Reshoring trend• It’s Charleston…
Relative to prior periodMarket Indicators+
Vacancy
Net absorption
Construction
Rental Rate
+ +
Note: Construction is the change in Under Construction*Projected
Q2 2015 Q3 2015*
+Source: Colliers International
WRK – Active projects by type
54% Manufacturing 45% Distribution
1% Other
LOCAL TRENDS• Mix of leasing and sales
• Notable transactions• Rent Growth
• Class A rents pushing north of $5/sf (light mfg related)
• Class A distribution space now in the upper $4/sf range
• Speculative Development• Childress Klein• Patillo• WestRock/SunCap• Atlas Commerce• More to come???
• Strong demand for particular product types• Light manufacturing• 20,000 – 50,000 SF
conditioned space
Source: JLL
www.CharlestonCommercialMarketForecast.com
Case Study: GERBER CHILDRENSWEAR
Market Impact?• $33mm in investment• 100-125 jobs• Further reinforces/validates the Jedburg market
as viable location for large distribution projects
Why Berkeley County?• Logistical advantages (proximity to Port and growth markets)• Favorable business climate• Available economic incentives• Operational cost efficiencies to be achieved
Why Rockefeller – MWV Foreign Trade Zone Park?• Speed to market/site readiness• Confidence in Development team’s ability to deliver• Costs• Connectivity to future Exit 197 along with Nexton
amenities and housing• Class A environment and neighboring tenants help to
ensure long term valuation of asset
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STRENGTHSQuality of lifeBreadth of industryStrong PortPro-business leadership
OPPORTUNITIESMomentumAbility to attract and retain talentPublic/Private collaboration
WEAKNESSESLack of productPerception that CHS is too expensive
THREATSInfrastructureWorkforce availability
SWOT
STRENGTHS
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WHAT DO COMPANIES WANT?-Site readiness-Attractive business environment (taxes, incentives, permitting)-Labor Pool (cost, availability, education, skill level, training)-Infrastructure/global access (transportation infrastructure, energy costs, intermodal capabilities, certified sites)-Quality of life
www.CharlestonCommercialMarketForecast.com
THREATS• Workforce
• Perception among site consultants• Perfect our value proposition
backed by facts• Quantify via labor study
• Infrastructure • Needed: $1.4B per year until 2040• Estimated 1/3 of SC primary and
interstate roads are in poor -mediocre condition
• Current gas "user fee": $0.16/galUser fee has not increased since 1987
• 4th lowest in nation• User fee does not increase with
price of fuel. Revenues grow via consumption
• 50% of SC roads not eligible for Federal funding
www.CharlestonCommercialMarketForecast.com
• Recession on horizon? Indicators say yes• Feds will raise rates in 2015 – or will they?• Rising dollar makes exports less competitive• Industrial sector continues steady improvement • Continued “reshoring” trend – FDI • We will see impact from growth of E-Commerce/Omni-Channel “Ship-from-Store” trend• Locally, automotive will be dominant market driver. Temper expectations on suppliers• Tech sector growth due to clustering and quality of life for entrepreneurs• More Jobs + More People = Increased interest from “outside” investors/developers seeking yield (increased
appetite for risk)• Panama Canal expansion and Port investments bode well for our region• Inland port continues to exceed expectations• Increased development activity in the I-26 Jedburg/Ridgeville sub-markets • Additional spec product to come online in 2016• Congestion issues could cause a mini-migration from certain sub-markets• Continued rent growth• Tri-County region becomes SC’s dominant market in terms of deal flow
PREDICTIONS
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CTAR-CID COMMERCIAL & INDUSTRIAL MARKET FORECAST
Derek J. Mathis, Director of Industrial Development, [email protected] | 843.851.4722
www.CharlestonCommercialMarketForecast.com
Charleston Multifamily Report
RANDY BATES
RANDOLPH DEVELOPMENT
www.CharlestonCommercialMarketForecast.com
Target Market - Demographic Trends
• Millennials – 20 – 34 years old o Largest Demographic Group in American Historyo 85 Million to 95 Million Peopleo Staggering Student Debto Diminished Job Opportunitieso Delayed Marriageo Desire Flexibility & Job Mobilityo Opting Out of Home Ownership
www.CharlestonCommercialMarketForecast.com
Target Market - Demographic Trends
• Empty Nesters – 50 – 69 years oldo Active Baby Boomerso Less need for spaceo Desire Less Home Maintenanceo Selling Homes - Greater Equityo More Disposable Incomeo Returning to Cities
www.CharlestonCommercialMarketForecast.com
Increasing Supply
2012 2013 2014 20150
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1,423 1,6022,011 2,175
3,132
3,7794,144
4,8424,555
5,381
6,155
7,017
Charleston Residential Permits
Multifamily Single Family Total Permits
www.CharlestonCommercialMarketForecast.com
Increasing Demand
2012 2013 2014 2015F0
500
1,000
1,500
2,000
2,500
3,000
1,1241,278
1,440
2,575
703
1,8341,705
2,251
Multifamily Deliveries and Absorption
New Units Delivered Units Absorbed Linear (Units Absorbed)
Hanahan/North Charleston Berkeley County Airport/North Charleston Central Charleston Mount Pleasant0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
6.40%6.80%
5.60% 5.70%6.10%
4.00%
3.30%3.00% 3.20%
3.80%
Rent Growth
2015 Forecast 2016 - 2019
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Higher Rents
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Charleston Multifamily ReportSo What Do We Make Of All This???
www.CharlestonCommercialMarketForecast.com
Charleston Multifamily Report
FORECAST• 4,500 Units Under Construction and 6,300 Units Proposed• Continued Job Growth Increases Demand• 1 New Apartment for Every 3.5 New Jobs• Urban Demand Greatest• Supply Will Outpace Demand in the Short Run: 6% - 8% Vacancy• Rent Will Continue to Increase at a More Moderate Rate: 3% - 4%• The Urban Institute Predicts 59 % of New Household Formation Over the
Next 15 years Will Be Renters
PROBLEMS• Affordability, Affordability, Affordability
o Activist Groups Constrict Land Supply Through Pressureo Entitlement Risk – Zoning, Design Review, o Higher Municipal Feeso Building Codes – Stricter & More Expensiveo Local Conditions - Wind, Seismic, Soil & Floodo Local Construction Labor Shortage
www.CharlestonCommercialMarketForecast.com
Charleston Multifamily Report
RANDY BATES
RANDOLPH DEVELOPMENT
[email protected] | 843.849.0739
www.CharlestonCommercialMarketForecast.com
Charleston Regional Overview
Michael Graney, VP Global Business Development
www.CharlestonCommercialMarketForecast.com
Top Relocation Trends
AVAILABLE LAND &
BUILDINGS“Speed to market”
with fast-track permitting
INCENTIVES & TRAINING
PROGRAMSProviding opportunities for business growth & success
MARKET ACCESS & LOGISTICS
Fast routes that create proximity to markets &
suppliers
TALENT AVAILBILITY
Importance on attracting skilled and advanced
labor
REVENUE GROWTH
Greater focus over cost-cutting
www.CharlestonCommercialMarketForecast.com
Building Regional Prosperity
Economic Output (GDP) Growth 2005-2013Charleston MSA
United States40.5%
27.6%
Employment Growth 2005-2014Charleston MSA
United States17.4%
4.0%
Real Wage Growth (Private Sector) 2005-2014Charleston MSA
United States
6%
4.5%
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Business Development Missions
AerospaceAutomotiveLife ScienceAdvanced SecurityInformation Technology
www.CharlestonCommercialMarketForecast.com
Charleston Regional Overview
Michael Graney, VP Global Business Development843.760.4526 | [email protected]