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Is Charleston, SC Commercial Real Estate Affordable?
Charleston is a historical port city in South Carolina that’s also home to well-known employers, such as aerospace giant Boeing.
The nation’s military also has a strong presence, with 22,000 active duty and civilian personnel at the Joint Base Charleston.
If you’re planning to open a business or invest in the city, you’ll need to thoroughly research Charleston, South Carolina’s commercial real estate market.
This should include average pricing, potential customer data, and local employment statistics, together with your initial business and budget plan.
From Colonial Beginnings to the Holy City
Established by English colonists in 1670, the settlement of Charles Towne was renamed Charleston and named the state’s capital in 1776.
Tourists often visit the churches that earned Charleston the nickname of The Holy City.
Charleston’s Circular Congregation Church was formed in 1681.
Today, Charleston offers a variety of business opportunities to all types of newcomers.
Whether you’re planning to invest in multifamily commercial real estate, open a restaurant, or expand your office space, you must decide what’s truly affordable for your plans before researching the city’s possibilities.
Charleston’s Four Types of Commercial Real Estate
While commercial real estate for lease may be found almost anywhere in and near Charleston, the following types of real estate are considered the standard.
Retail commercial spaces are usually some of the smallest available. Pricing varies greatly, with shops and restaurants leasing space in high-traffic areas or prestigious districts commanding the highest rate per square foot.
Multifamily commercial spaces in Charleston vary greatly in size and quality.
Rent rates will be the highest in areas that offer more amenities, including a prestigious address, to tenants. For example, The Port House on Daniel Island features two-bedroom luxury apartments leasing from $2,595 to $9,568 per month.
Office commercial spaces are often combined with retail spaces.
These also vary in size, with higher-priced leases offering tenants maximum convenience and safety. Office real estate is often graded Class A, B, and C, with Class A buildings being the newest and/or highest quality.
Industrial commercial real estate is often grouped with warehouse real estate.
Typical uses include manufacturing, light assembly, warehouses, showrooms, data centers, and Research and Development (R&D) facilities.
Factors for Defining Affordability
As of mid-2022, Charleston’s commercial real estate pricing was pulling ahead of the national average.
Commercial tenants looking for Class A, top-quality office space can expect to pay hefty premiums: about 12% throughout the market and 32% on the peninsula.
While these rising prices may affect potential affordability, there are several other factors to consider.
Strong Charleston regional population growth has contributed to a labor force growth rate three times that of the national average. The Charleston region is also home to one of the most experienced, educated workforces in the nation.
Combined with Charleston’s popularity as a tourist destination, the high numbers of “big spenders” who may visit your business may add up to a better chance of success.
However, if you plan to hire locally for your business, you’ll want to explore the employment data.
Employment & Industrial Growth in Charleston
As of mid-2022, employment in Charleston is outpacing the national average. Will you be able to afford to retain the best workers by offering above-average pay rates?
If you’re planning on leasing industrial real estate, you may be able to negotiate a more affordable lease. Here’s why: During the first half of 2022, Charleston’s industrial spaces saw its vacancy rate fall by 9%. This translates into a better opportunity to negotiate a lower rate.
How to Research Pricing for Charleston Commercial Real Estate
Commercial real estate pricing is almost always defined by the square footage of an existing or proposed building, warehouse or plant.
Location is also important, with buildings with prestigious addresses usually priced higher, and sometimes much higher, than those in commercial areas with few nearby amenities.
Notable Commercial Real Estate Activity in Charleston
Let’s look at two businesses that recently expanded their presence in or near the Charleston area.
Swedish car manufacturer Volvo recently leased 500,000 square feet for about $5.50 per square foot.
While the company’s mega-lease earned them naming rights for the road nearby, staff at 1801 Volvo Car Drive have few amenities outside the plant, located 35 miles from the heart of Charleston in rural Ridgeville.
An aerial view of Volvo’s Ridgeville plant, about 36 miles from downtown Charleston.
Now, let’s compare Volvo’s lease rate to another business, one with very different prospects and requirements.
Coworking office provider Industrious recently leased about 17,000 square feet for about $38.00 per square foot.
This adds up to a rate more than six times as much as Volvo’s rate. However, Industrious chose a Class A building at 677 King Street, with prestigious restaurants and retailers as neighbors.
Also, the professionals who will lease coworking space from Industrious will be able to pay a higher rate for use of the space.
Business visitors are invited to work, meet and relax at Industrious’ Charleston location.
What’s your business personality?
Since Charleston’s history goes back literally hundreds of years, the city has more than its share of older buildings.
If you’re planning to open a cafe, restaurant, or up-market retail shop in Charleston, commercial real estate space in a historic building may be ideal.
To determine if you can afford to lease commercial real estate in Charleston, it’s vital that you determine that your business will be a better-than-average fit with the area’s visitors, workforce, businesses and personality.