2015 Q4 Investment Charleston Report

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Investment Sales Top $1 Billion in 2015

Key Takeaways

  • Investment sales in Charleston, South Carolina increased for the sixth consecutive year with multifamily sales leading the way, followed by shopping centers, net-leased assets and hotels.
  • Rising costs, cheap debt and compressed capitalization rates in core gateway markets continue to drive investors to secondary and tertiary markets.
  • Interest rates remain low despite a slight increase late in the year, motivating continued investments.

2015 Marks Record Year for Investment Sales

Strengthening economies across the globe are motivating investment sales in the United States.  Sales activity continues to gain momentum with investments from both domestic and foreign investors.  According to Real Capital Analytics, the national sales volume totaled $533 billion in 2015, 23% more than 2014 and the second highest level of investment since record-tracking began.  Peak investment activity was in 2007 when sales totaled $573 billion.  Strong activity and demand is pushing up prices in primary markets as investors compete for assets.  Consequently, cap rates are declining and investors are looking for opportunities in secondary and tertiary markets, such as Charleston, where cap rates remain higher and prices are more attractive to a wider universe of investors.

2015 was a significant year for Charleston’s investment sales market, exceeding $1 billion in total sales volume for the first time.  Total sales volume increased 16.1% from $865.6 million in 2014.  Investors are showing interest in all property types, but multifamily and retail sales collectively accounted for 65% of total transactions.  Healthy commercial real estate conditions, a strengthening economy and robust job creation are helping attract out of market investors.  Occupancy rates for Charleston’s office, industrial, retail and multifamily markets were each over 90% at year-end 2015.  The stability of the market and high barriers to entry provide a secure investment environment.  In fact, the Urban Land Institute and PwC’s 2016 Emerging Real Estate Trends ranked Charleston the number 25 market to watch in 2016, a testament to the market’s continued growth and improvement.

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Charleston investment report

2015 Q4 Investment Charleston Report

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