If you build it, they will come!

Shift to apartment living spurs growth

The Factory at Garco Park will be a new apartment complex in North Charleston. (Provided by The Beach Co.)

By Ashley Heffernan 
aheffernan@scbiznews.com 
Published March 4, 2015

 

There has been a fundamental shift in how people are choosing to live, and it’s being spearheaded by the millennial generation, according to Dan Doyle, vice president of development at The Beach Co.

On the surface, the Lowcountry appears to be experiencing a boom in construction of new apartment complexes. But Doyle sees it as more than just a temporary change in demand.

“For so long, people would strive and have this end goal of owning a home. I don’t think that’s the case as much today as it used to be,” he said. “A lot of it is related to the age demographic. The millennials, they are really driving this. There is a huge population coming into the workforce, and they’re really wanting a different type of lifestyle.”

 

930 NoMo will be College of Charleston housing. (Provided by CampusWorks) 
Heitman Capital Management LLC is planning to build 105 additional units of The Boulevard on 2 acres on the corner of Pherigo and King streets, according to town documents. (Provided by Jason Stemple/The Beach Co.) 
Crowne at Maybank Village will include nearly 300 units with one-, two- and three-bedroom layouts. (Provided by Crowne Partners) 
The Beach Co. and MWV broke ground on the 320-unit Parks at Nexton apartment complex in January 2014. (Provided by The Beach Co.) 
Shade Tree Apartments on Maybank Highway are part of a 355-acre master-planned development. (Provided by the Kalikow Group)

Millennials — classified by the Pew Research Center as the generation born after 1980 — tend to not focus on the amount of space within an apartment, condominium, town house or single-family home.

They typically prefer to live in communities that are within walking distance to their favorite locations.

“They’re more transient. Oftentimes, you’d work at a company for 30 years and then you’d retire from that company,” Doyle said. “Today, this age group has more of a tendency to go from job to job. They want the ability to pick up and move to another part of the country. Apartments are more suited to them.”

The increase in apartment construction is not just a Charleston-area phenomenon. Thecountry’s annual effective rent growth reached a 4.9% pace in December, according to data fromAxiometrics Inc., a Texas-based analytics firm that tracks the nation’s apartment housing market.

The last time the growth pace was that high was in August 2011. The company said 2014 was the nation’s strongest year for apartments since the Great Recession ended, as measured by its 5% year-to-date effective rent growth.

“The national apartment market continues to outperform all expectations,” Jay Denton, senior vice president of research and analytics for Axiometrics, said in a statement. “The combination of an improving job market and a growing percentage of the population that prefers renting to owning continues to boost apartment demand.”

Axiometrics ranked Charleston as the 12th-highest metropolitan statistical area in the country for annual effective rent growth.

In December, Charleston’s growth rate was 6.7%, up from 3.2% in December 2013. Occupancy rates were up from 94.7% in December 2013 to 95.1% in December 2014, and revenue growth increased from 3.2% to 7.3%, the company said.

Five California metro areas — Oakland (No. 1), San Francisco (No. 2), San Jose (No. 4), Sacramento (No. 5) and Los Angeles (No. 14) — were in the top 15, and Denver took the third spot. Charleston was the only metro area breaking the top 15 in South Carolina.

 

All about location

Location is a major factor driving the explosion of the “luxury” brand commonly attached to the description of new apartment complexes across the Lowcountry.

Doyle said it’s hard to describe “luxury” because various developers see it differently. He said developers often use the word because the lender requires it to ensure the project will be competitive with other projects.

“When you look at your target market, the big question is always, ‘What do I have to do to be competitive?’ ” Doyle said.

Five years ago, luxury units often featured granite countertops. They may have had a special type of flooring and, particularly in suburban areas, they would have included a standalone clubhouse with a large fitness center and club room in which residents could gather, Doyle said.

Today, luxury units may have more standard interior finishes but garner the classification based solely on location.

“Direct walking access to restaurants and other entertainment and grocery shopping, that’s being able to afford a sense of lifestyle that you may not get at a community where you have to get in a car and drive somewhere,” Doyle said. “Making it easier and making residents less dependent on automobiles is what a typical consumer now conceives as luxury.”

The increase in apartment units could eventually become a problem in some areas of the country, but Doyle doesn’t think the Charleston market will experience an apartment bubble.

“To focus on Charleston, I think there are a number of different things going for it. Job growth, in-migration of population, those are two key drivers to keeping a positive absorption rate for apartments coming online,” he said.

Doyle predicts the apartment market will remain competitive as long as the population in the Lowcountry continues to increase and the number of jobs keeps growing.

“You have to remember, some projects won’t come to fruition, others will,” Doyle said. “Those that may be further along in process will happen and some just starting out may find that a submarket in the area becomes built to a point where a project may need to be delayed simply because of the supply.”

Lowcountry projects in the works

Charleston

In Charleston, a new, 430-bed, $35 million apartment complex catering to college students is under construction on Morrison Drive.

Charlotte-based CampusWorks Development is building 930 NoMo, which will have a pool, clubhouse, rooftop lounge, emergency phones, gated parking and a community shuttle to the College of Charleston. A tanning salon, bocce court, cycle center and fitness center will also be built.

Rent prices for 930 NoMo are expected to start at $899, and fully furnished two-, three- and four-bedroom floor plans will be available.

Apartments will also be built in a mixed-use development at the corner of Meeting and Columbus streets on the peninsula.

Evening Post Industries, the parent company of The Post and Courier, has been approved by the city to build 220 units in Courier Square. The entire 12-acre site will eventually include apartments, office space, commercial space and a parking deck.

Residents of the peninsula’s 14-story Sergeant Jasper apartment building vacated the structure last year, and Broad Street Market, which had a lease on the bottom floor, closed last month. Demolition of the first-level commercial section is scheduled to begin this month.

The Beach Co. wants to tear down the 1950s-built Sergeant Jasper and replace it with three buildings, collectively known as The Jasper, that would include 450 apartments, 35,000 square feet of commercial space and more than 700 parking spaces within hidden parking decks. Hundreds of angry residents spoke against the plans during a recent city Planning Commission meeting.

In West Ashley, Continental Properties Co. is building the Springs at Essex Farms apartment complex at 3245 Glenn McConnell Parkway. The complex will include 284 units and is expected to open this spring.

Less than three miles away, the Avenues at Verdier Point, a 288-unit complex, recently opened off Bees Ferry Road.

On the other end of the city, on Daniel Island, a 269-unit complex called Simmons Park is under construction on River Landing Drive. Spectrum Properties broke ground in the fall of 2013, leasing began in late 2014 and the project is expected to be complete in mid-2015.

The city has also given initial approval to a 312-unit project on Daniel Island called Woodfield and a 315-unit project called Faison Daniel Island. Both will be located on Island Park Drive, according to city planning documents.

Two apartment complexes are also under construction on Johns Island.

Shade Tree Apartments, developed by the Kalikow Group, will include 11 buildings with nearly 250 units once complete. That is expected by the end of the year. The property on Maybank Highway is part of a 355-acre master-planned development.

Crowne at Maybank Village, a Crowne Partners development on Maybank Highway, will include nearly 300 units with one-, two- and three-bedroom layouts.

On James Island, Woodfield Investment’s The Standard will open 280 units on Maybank Highway when it’s complete in the third quarter of this year. Woodfield is also building Cooper River Farms on Clements Ferry Road. The 290-unit complex is expected to open in the first quarter of 2016.

This spring, Broadstone at Folly Beach, under construction by Alliance Residential, will open on Folly Road with 296 units. The complex will offer floor plans with one to three bedrooms.

Mount Pleasant

In Mount Pleasant, impact assessments and conceptual plans have been approved for phase two of The Boulevardapartments. The first phase of the controversial complex was built by The Beach Co. on 5.95 acres along Coleman Boulevard. The company sold the complex for $66.5 million to TR Boulevard Corp., an entity of Heitman Capital Management LLC, in February 2014.

Heitman is planning to build 105 additional units on 2 acres of property on the corner of Pherigo and King streets, according to town documents.

Real estate development firm Daniel Corp. is working on a luxury apartment community called Bridgeside at Patriots Point. Nearly 575 multifamily units are in the works on 45 acres of property along Harry Hallman Jr. Blvd., between the Ravenel Bridge and the College of Charleston baseball facility at Patriots Point.

Town documents also show CDM of Charleston LLC was approved to build The Grove at Carolina Park, a 280-unit complex near the intersection of Park Avenue and Carolina Park boulevards near Wando High School. The 1,600-acre Carolina Park master-planned community where the apartments will be built was approved for 2,030 multifamily units, which the apartments will count toward.

The Haven at Midtown, a 300-unit apartment complex, is under construction, according to town documents. Hassell Tract Associates LLC is building on 9 acres at Central Haven Drive. The apartment units are counting toward the maximum of 719 approved residential units at the 100-acre Central Mount Pleasant mixed-use development at Hungryneck Boulevard and Midtown Avenue.

The Beach Co. also recently finished building the Riviera at Seaside Farms apartments and town houses. The 252 units are mixed with retail establishments near Rifle Range Road and the Isle of Palms Connector.

Other residential and mixed-use projects in various stages of development include:

  • Gregorie Ferry Landing, a 240-unit residential and retail development at the intersection of U.S. Highway 17 North and Porchers Bluff Road.
  • Johnson Tract, a 456-unit mixed-use development at U.S. Highway 17 North and James Nelson Road.
  • Phase two of Mount Pleasant Square, a 254-unit residential and retail development near the intersection of Rifle Range Road and Ben Sawyer Boulevard.
  • Snee Farm Village, a 38-unit development near the clubhouse in Snee Farm.
  • Final phase of The Tides, a 55-unit condominium tower along Wingo Way.

North Charleston

In North Charleston, The Beach Co. is planning a 271-unit apartment complex called The Factory at Garco Park off East Montague Avenue.

The project is still in the design phase, but Dan Doyle, vice president of development, said the complex will likely be mixed-use with residential units above retail stores.

He said the company is planning to start construction this spring and open the first units in early 2016.

A 56-unit apartment complex called Harbour Station Apartments is under construction at 6935 Rivers Ave., 
according to city documents. The complex is being developed by Douglas Rivers Ave. LLC.

Permitting is underway for Centre Pointe Apartments, which is expected to have 174 units, at 4986 Wetland Crossing. Eagle Landing Apartments, a 201-unit complex at 2055 Eagle Landing Drive, and The Atlantic on Rivers, a 210-unit complex at 6880 Rivers Ave., are also in the permitting stages.

Jamestown Properties has proposed adding 60 units to the Flats at Mixson, located at 4500 Mixson Ave., and an undisclosed company is working with the city on a 296-unit complex. The city said the complex has been proposed but the location and name of the site have not been decided yet.

In the past year, several apartments have been completed in the North Charleston area.

The city issued certificates of occupancy between August 2013 and March 2014 for Abberly Crossing, a 320-unit complex at 9698 Patriot Blvd., and between January and July 2014 for Cypress River Apartments, a 280-unit complex at 9325 Blue House Road.

Ansley Commons Apartments on Shipley Street are partially complete, according to the city. Some certificates have been issued for the 270-unit facility being built by Hathaway Development Partners LLC, but others are still being finalized.

Summerville

Lucy Dreyer, a planner for the town of Summerville, said the town currently has no new apartment projects in the review stage.

The only complex under construction in the town is within the 4,500-acre Nexton development off Interstate 26 and 17A. The Beach Co. and MWV broke ground on the 320-unit Parks at Nexton apartment complex in January 2014.

Residents will have access to the Nexton community’s gigabit Internet service, which provides data speeds as much as 100 times faster than average Internet services.

“We are quite excited to bring a new pedestrian-friendly, urban living experience to the Summerville marketplace,” Kent Johnson, vice president of development at The Beach Co., said in a statement. “Our high level of amenities — coupled with cutting-edge Internet technology — should make the Parks a unique home for our future residents.”

Parks at Nexton will offer studio to three-bedroom floor plans along with a fitness center, saltwater pool and garages.

The most recently completed complex in Summerville, Dreyer said, is Arbor Village Apartments at 10825 Dorchester Road. The 240-unit complex was developed for $26 million by North Charleston-based Applegate & Co. and opened in the fall of 2014.

Reach staff writer Ashley Heffernan at 843-849-3144 or @AshleyBHeff on Twitter.