Influx of Millennials and Empty Nesters to Charleston Spur Multifamily Development

Influx to Charleston Spurs Multifamily Development

The growing population in Charleston, Berkeley and Dorchester counties has resulted in these areas becoming one of the fastest growing regions in the country. The growth in employment opportunities and the high quality of life continues to attract an average of 35 new residents a day to the Charleston metropolitan area, according to a recent report by Colliers International.

More than 200,000 people have moved here since the year 2000, as job opportunities have grown by 28 percent during this time period.  Employers from defense contractors, tourism industry, automotive sector (Daimler-Benz and Volvo), and the new production facility built by Boeing have strengthened the local economy and created new job opportunities.

Construction is Booming in Charleston Market

Many of the new residents to the area are millennials between ages 20 and 34, and retirees between the ages of 50 and 69 years old who prefer to rent. Since 2010, the population of millennials in the Charleston region increased by 10 percent and the number of retirees by 18.5 percent.  As a result construction is booming in the Charleston market for development of multifamily dwellings.

During the past five years, the construction of multifamily developments has reached record highs, with 8,352 being delivered.  Another 2,912 units are expected to be completed by January 2018. More than half of these developments are located on Daniel Island or in Mount Pleasant.

Future construction plans in the works show that 3,702 units will be built in West Ashley, downtown Charleston and in North Charleston. As a result, the Collier International report states there is a shortage of entitled land, construction labor, and materials, which have increased overall construction costs.

Investment in Apartment Buildings Remain Strong

Economic conditions remain strong for investment sales of multifamily dwellings both nationally and in the local Charleston market.  The strong local economy has resulted in rising occupancy and rental rates, low interest rates and a demand for high quality apartments. Nine apartment buildings have sold since the beginning of 2016.  The growing population has enabled the occupancy to maintain a high rate of 94.9 percent this year, and to increase the market average rental rate to $1,100 per apartment unit this year, a 4.2 percent increase from 2015.

Source: Colliers International Research & Forecast Report, “Booming Population and Multifamily Development,” Quarter 2, 2016

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