Occupancy Growth in Columbia Attracts Investors

Columbia continues to exceed the state and national average in job growth as its unemployment rate has steadily decreased to 7.4% as of September 2012 compared to 8.4% in August 2012. The relatively strong labor market has attracted discouraged workers back into the labor pool. Metro Columbia has added 8,800 jobs in the year-ending August 2012. Additionally, the University of South Carolina will be increasing their total enrollment and the number of classes in healthcare to meet the growing demand of healthcare employment. The expected retirement of “Baby Boomers” over the next ten years will drive healthcare demand.

The metro Columbia area’s multifamily market has continued to show improvement through the third quarter of 2012. Overall apartment occupancy has increased by 1.8% from the beginning of the year to 93.5% in the third quarter.

Effective market rents have increased 1.3% since 2nd quarter 2012 for a total of 3.7% year-to-date resulting in an average monthly rent of $756. Overall, rental rates in the market area have not experienced any significant changes since 2009. It is, however, projected that rental rates will improve during the next year as occupancy rates rise.

Multifamily property sales in the Columbia MSA have improved significantly in the past year as more investors re-enter the market. Their re-emergence is due to a combination of an improved economy coupled with the lower returns currently available on many alternative investments. There are 116 units approved for construction between July to August 2012.

The compressed cap rate environment make it an appetizing time to sell in coordination with the following: historically low treasuries, a dwindling home-ownership rate, eighty-one million generation Y’s in their prime renting years and a lack of new deliveries. Furthermore, the University of South Carolina’s growing student contingency has attracted investors who are seeking persistent demand and stable returns.

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