third quarter | october 2015...
TRANSCRIPT
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Third Quarter | October 2015 Newsletter
PREPARED BY:Coldwell Banker Commercial
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3506 W. Montague Ave. Suite 200
Charleston, SC 29418
(843) 744-9877 www.cbcatlantic.com
CHARLESTON | SOUTH CAROLINA
The LooP
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• Tradd Varner of Coldwell Banker Commercial Atlantic represented the Seller, McCorquodale Properties, LLC, in the Sale of a 18,570-square-foot Distribution Warehouse at 1871 King Street in Charleston for $1,400,000.
• Mike Rose, CCIM and Kathleen Boswell of Coldwell Banker Commercial Atlantic, represented the Tenant, Rain for Rent, in the Lease of 14,230-square-feet of Office/Warehouse Space at 1507 West 5th North Street in Summerville.
• Brent Case, CCIM of Coldwell Banker Commercial Atlantic represented the Seller, Fred Weil, in the Sale of a 9,442-square-foot retail space at 3545 Mary Ader Avenue in Charleston for $1,300,000.
• Brian Aiken of Coldwell Banker Commercial Atlantic represented the Landlord, Heritage Seven LLC, in the Lease of a 2,000-square-foot Retail Space at 111 South Highway 52 in Moncks Corner.
• Ben Johnston of Coldwell Banker Commercial Atlantic represented the Buyer, Palmetto Medical Initiative, in the Purchase of a 2,184-square-foot office suite at 2-D Gamecock Avenue in Charleston.
RECENTTRANSACTIONS
A WORD FROM OUR PRESIDENT, BRENT CASEThere is no place like the Lowcounty during the fall. Whether you’re cheering on your favorite football team or sipping cider at Boone Hall, Charleston proves to be a perfect mixture of business and pleasure. Aside from being a top destination, Charleston has been cited as #4 for “Best American Cities for Foodies” by Conde Nast Traveler magazine and a “job market leader” by Bizjournals.
Over the last quarter, Coldwell Banker Commercial Atlantic participated in area business events such as the Mount Pleasant Business Expo, Summerville Business Expo, Chamber meetings, and the Business Journal’s Power Breakfast series. The recent expos have been a friendly reminder on what’s on the horizon. As chair to the North Charleston Business Expo committee, I am pleased to announce that next year’s event will take place on April 21st 2016. We are currently taking sponsorship inquiries and potential partnerships for 2016 in to consideration!
A few notable announcements were made during the third quarter. Volvo announced that it will be exclusively producing the S60 sedan at its new Berkeley County automotive campus. Also, Boeing officially opened its 104,000-square-foot Research & Technology-South Carolina Center Crosspoint at Palmetto Commerce Park. We look forward to the year’s last quarter and continuing this positive economic spiral.
For more information on the commercial real estate market or available properties, you can reach Brent Case at [email protected] or by phone at 843-725-6255.
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MARKET WATCH:
MULTI FAMILY BY JOHN TRUE
12907 Eutaw SpringsCommercial
Sale Price: $1,600,000MLS: 1500953
Marlena Franklin 843-725-6894Lea Givens 843-725-6893
1037-100 Chuck Dawley Blvd.Office/Commercial
Lease Rate: $20.00/SFMLS: 1501471
Tradd Varner 843-725-6897
0 Dorchester RoadCommercial/Land
Sale Price: $449,000MLS: 1501582
Brent Case, CCIM 843-725-6255
The Charleston multi-family market continues to thrive with development and growth and vacancy rates im-proving over the past 6 month to 5.4% . There was positive absorption for the overall market as well, with Mount Pleasant being the submarket that has seen the most growth in the rental community. New con-struction activity continues to boom with the number of under-construction units and proposed units on the rise again. Subsequently rental rates have continued to
Photo Credit: Post & Courier
increase by 4.3% during the last six-month period. One thing we need to watch for is whether demand will keep pace with the new supply that is coming online. Only time will tell…2016 should be an interesting year in the Charleston market.
So far in 2015 we have seen over six multifamily communities totaling 1,242 units trade for collectively $156,900,000. Several other communities projects are under contract and poised to be traded before the end of the year. The Charleston Metro multifamily market continues to be on the radar of many national developers and asset managers.
For more information on the Charleston market or available properties, please contact John True at [email protected] or by phone at 843-568-3140.
AccolAdes
“2014 Best American Cities for FoodiesCharleston ranked #4 by Conde Nast Traveler”
- Conde Nast Traveler
“Charleston ranked #11 as Top Performing Cities in the U.S.”
- Business Insider
“Charleston voted #13 in the 2014 as Best Destinations in the U.S.”
- Trip Advisor
“Charleston listed as Best Places to Retire”- Forbes
“South Carolina ranked as the #3 state for doing business”
- Area Development
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OFFICE BY TRADD VARNERCharleston continues to be an attractive option for Technology, Biomedical, Manufacturing, Tourism and Trade related industries. The office market continues to perform well through the third quarter of 15’, with that there are several speculative office developments slated. The most recent planned development is Montague Oaks Office Park located at 3520 West Montague have begun preleasing for its spec. building 300 which is a planned 22,590 SF Class A office building to be delivered late 2016. By the numbers, the Charleston office market has taken a step back from the previous 3 quarters, posting surprisingly low data. Through the third quarter of 2015 we have seen a steep decrease in both the number of transactions and square footage absorbed. I believe this not to be a sign of a weakening market but rather an
indication of the short supply of suitable Class A & B Inventory. According to CMLS Data office sales totaled $22,268,500 (23 transactions), representing 163,367 square feet at an average of $136.30 per foot. During the same period a total of 196,984 square feet of office (79 transactions) were leased, down 6% from the previous quarter transactions and down 1.11% in square footage leased.
For more information on the Charleston market or information on available property, you can reach Tradd Varner at [email protected] or by phone at 843-725-6897.
LAND BY JAMES DINGLEUnder All Is LAND
In my last post, I identified growth patterns and the standard deviations of what is available on the market vs what is selling. Values are sometime at question because land value is commonly a comparison of like kind properties that have sold within a particular radius. This is a traditional method for us real estate professionals to pinpoint a marketable price. As this holds true, today we are embarking on the world of cold offer negotiations being made from local and not-so-local buyers. I was recently made aware from an out of town buyer that everyone now “Wants a piece of Charleston.” The development is among us, just drive through King Street, Highway
17 Mt. Pleasant, Park Circle, Maybank Highway, Ladson Road and a host of other areas.
Building code heights have also come into play as well, meaning the vertical is just as important as the horizontal adding to the sale volumes for land in the third quarter at $67,945,936 with median price of $85,500. Fueled land acquisitions is a future predictor of high potential growth areas and while the exodus to Charleston continues, we are sure to be experiencing a high demand in acreage. The common denominator is supply. From West Ashley to Cainhoy and from atop the Ravenel and Wando, Under all is Land.
For more information on the Charleston market or available properties, you can reach James Dingle at [email protected] or by phone at 843-822-4311.
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RETAIL BY LISA LOESELThe Retail market in Charleston continues to expand with the favorable economy and to accommodate the new residents and businesses moving into the market with the new Volvo plant under construction in Berkeley County, the new 104,000sf Boeing Research & Technology Center in North Charleston, and the increased Port of Charleston activity.
New retailers entering the Charleston market for the first time include Nordstrom Rack and DSW, in the Bowman Place redevelopment of the 126,000sf former Kmart shopping center with Dick’s Sporting Goods and Kitchen & Company in Mount Pleasant. The 1st location in South Carolina for the 50,300sf Field & Stream outdoor specialty retail store opened in August in North Charleston. With the average of 43 people a day moving to
Charleston, grocery stores are also expanding to meet the retail demand. ALDI grocery stores, with over 1400 stores in 32 states, opened its first Charleston location on Dorchester Road in Summerville. Earthfare is opening soon with its location in the Summerville Marketplace on North Main in Summerville. While Whole Foods recently announced its expansion with a proposed store in downtown Charleston, Harris Teeter continues to expand with a new store planned for the renovated 186,930sf Westwood Plaza on Sam Rittenberg in West Ashley, and is under construction with an extensive remodel of the former Piggly Wiggly store in the James Island Shopping Center.
Retail activity continues to generate new excitement in the market as customers look for the expansion of their favorite chain whether the new Tropical Smoothie on Daniel Island, Starbucks on Savannah Highway in
West Ashley, or Chipotle Mexican Grill in Tanger Mall in North Charleston.
For more information on the Charleston market or information on available property, you can reach Lisa Loesel at [email protected] or by phone at 843-725-6897.
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By: Grayson Hanulcik
Commercial real estate (CRE) lingo can be overwhelming for all but the most seasoned brokers. Hundreds (literally) of terms and acronyms make up this intimidating bowl of alphabet soup also known as the CRE dictionary. Fortunately, we narrowed down a comprehensive list of need-to-know terms that will make you and your CRE colleagues sound like you actually know what you’re talking about during your next meeting.
1. Absolute Triple Net LeaseA net lease under which the lessee assumes all
expenses for operating a property, including:fixed and variable expenses, taxes, insurance, andmaintenance (including roof and structure).
2. Common Area Maintenance (CAM)This is the amount of additional rent that
is charged to the tenant to maintain thecommon areas of the property shared by thetenants. Typical examples involve work such aslandscaping, snow removal, exterior lighting, aswell as insurance and property tax. In most cases,this does not include capital improvements madeto the property.
3. Pass-ThroughsRefers to the tenant’s pro rata share of operating
expenses (taxes, utilities, repairs) which are paidin addition to the base rent. These are expensesincurred by the landlord, however the tenant isproportionately responsible due to measure,interest, or liability.
4. 1031 ExchangeBroadly stated, a 1031 exchange is a swap of one
business or investment asset for another. Whilemost swaps are taxable as sales, a 1031 exchangewill either have no tax or limited tax due at thetime of the exchange.
5. Usable vs Rentable Square FeetUsable square footage is the amount of space
rented and used exclusively by the tenant, withno exclusions for entry/exit doors or structuralcolumns. Rentable square footage is the area ofthe enclosed interior space of the building other
than holes in the floor, such as stairwells, and elevator and mechanical duct space.
6. Letter of IntentThis is an informal and preliminary agreement
between the tenant and the landlord indicatingintent to move forward with negotiations. Theprimary utility of a LOI is to set binding groundrules for a negotiation. A secondary use is toraise issues or allude to special circumstances ina nonbinding fashion to provide context to theinterest of the parties.
7. Escalation ClauseA clause in a lease which allows the landlord
to raise the rental rate in the future to reflectchanges in expenses paid by the landlord, suchas real estate taxes, operating costs, etc. Thiscan take three forms: fixed periodic increases,adjustments based on the Consumer Price Index(cost of living increases), and an increase tied toincreased operating costs of the property.
8. Net Operating Income (NOI)The amount of annual income generated from
an income-producing property after taking intoaccount all income collected from operations.NOI equals all revenue from the property minusall reasonably necessary operating expenses.
9. Efficiency FactorThis number represents the total percentage of
net rentable square feet devoted to the buildingscommon areas (lobbies, restrooms, corridors,etc). This factor can be computed for an entirebuilding or just a single floor of a building. Alsoknown as a core factor, it is calculated by dividingthe rentable square footage by the usable squarefootage.
10. Full Service Gross LeaseIn a gross lease, the rent is all inclusive. The
landlord pays all or most expenses associated with the property, including taxes, insurance, and maintenance out of the rent received from the tenant. The tenant is still responsible for paying their own property insurance and taxes.
Read more here.
CRE Lingo:10 Need-to-Know Terms
Employee Spotlight:
Name: Jim Warrington
Title: Commercial Broker
Specialty: Investment & Development
Experience: More than 35 years
Favorite News Publica-tion: The Economist
“Outside of work, you’re most likely to find me...”:“...skiing!”
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