NEW PLAYERS EXPAND THE BENCH: WHY CHARLESTON ATTRACTS A NEW CLASS OF INVESTOR

By: Mike White, SIOR, CCIM, Broker-in-Charge

            I recently teamed up with several very sophisticated and well-capitalized investors from New York and New Jersey to successfully outbid others and secure a trophy commercial property here in Charleston. It was a true Art of the Deal experience that I thoroughly enjoyed from start to finish. Despite doing a great deal of work with the lender and my new partners, the easiest portion of a complicated transaction was actually “the selling of Charleston”. Getting traditional NYC skyscraper developers to want to invest in a tertiary market like ours would have been impossible just three or five years ago.

New players are drawn to our market for a variety of product types, yet all come seeking these same thing: being on the front side of a rising tide. Despite high barriers to entry, most notably a lack of net income product for sale, most outside investors have already come to grips with doing business in the Slow Country. The Selling of Charleston is now accomplished well before investors arrive at CHS, as new technological tools and websites provide data points to back-up the claims of what we local brokers have known all along.

Sophisticated investors are constantly searching for the “outsized gain”; particularly when they are investing their own money. In this new normal of cheap money, low interest rates and foreign capital seeking US real estate, traditional investors are facing a tougher, more competitive Seller’s market in the top tier cities. Cap rates continue to compress, as The Fed shows no sign of further tightening in this current election year.

Charleston welcomed new investors in every class of commercial real estate during the past 12 months, which is pretty remarkable and difficult to replicate in other places these days. For the first time in our market’s history, Buyers “from off” established record high sale prices in each segment of hotel/hospitality, office, retail and industrial properties.