Market Demands More Investment Product
- Investors are seeking opportunities for return-on-investment in secondary and tertiary markets, leading to the growing institutionalization of the Charleston investment market. Development is increasing across multiple property types. Developers are seeing more liquidity as the market becomes a hotbed for institutional investors.
- While investment velocity remains strong and real estate fundamentals remain favorable, supply of investable product is not growing at the same rate, causing an increase in property prices.
Investment Sales Continue to Trend Upward
Investment sales in Charleston reached $239.3 million for the first half of 2016, considerably lower than the $365.7 million of investment sales in the first two quarters of 2015. Lack of existing investable product is causing slower investment activity; however, interest from institutional and private investors remains strong. Charleston is gaining the attention of more institutional investors looking for steady and secure cash flow investments, due in part to the shift of investors from saturated and competitive primary markets to secondary and tertiary markets.
Driving investments are the strengthening economy, booming population and favorable market conditions. Stable capitalization rates and high occupancy and rental rates are in turn creating a lower-risk environment with higher returns than other comparable secondary and tertiary markets. About 35 people a day are moving to the region, making it one of the fastest-growing metropolitan areas in the nation. Since the turn of the century, nearly 200,000 people have moved to the three-county area. Employment has jumped 28 percent over that same period, driven by tourism, defense contractors, the automotive sector (Daimler-Benz and Volvo) and the construction of Boeing’s first production facility outside of the Seattle area.
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