South Carolina Commercial Real Estate Market Trends Analysis

Industrial properties are a class of commercial real estate that is utilized by companies that do business with other businesses (B2B tenants). B2B companies either manufacture or deliver goods to other manufacturers or retailers.

The exception is the quickly expanding category of fulfillment centers that store and deliver goods sold by online sales websites directly to their buyers.

Industrial property investors will hang onto the property long-term and serve as the landlord. Their investment projections depend on revenue from both rent and the future liquidation of the asset. Their lease agreements could either collect pass-throughs such as property insurance and property taxes in one check (gross) or separately (net).

Annual and 10 Year Population Growth

Industrial property investors require population statistics for purposes that are different from residential investors. They don’t lease to the general population, but they have to see an expanding number of taxpayers in the community. If the local municipality can’t collect enough taxes, it is unable to keep up its responsibilities to sufficiently administer the infrastructure that industrial tenants need.

All property values, commercial and residential, are impaired in places that are dropping citizens. The tenants for industrial properties require a consistent local workforce. The best industrial renters will not locate in a region that is losing potential workers.

Property Tax Rates

Industrial investors use real estate tax history as an indicator of the strength of a community, just like multifamily home investors. Unstable tax rates prevent you from correctly predicting your predicted returns in that market.

Investors may want to read more on industrial and commercial property taxation and commercial property tax reduction methods from our guides.

Accessibility

The tenants in industrial properties make or disburse high numbers of products that are bulky. Tractor-trailer trucks are routinely employed to do this. Industrial real estate investors look for assets that are adjacent to main roads that big tractor-trailer trucks can get to easily.

Many industrial renters need to access railroad or airport freight terminals. This means that being near an interstate, which typically takes traffic close to airports and train hubs, a large benefit for industrial assets.

Utilities

Manufacturing properties often need significant levels of electricity and water. If a property doesn’t contain adequate amounts of these utilities, some tenants will hunt elsewhere.

Retail facilities rent units to companies whose clients are ordinary citizens in the region. Those buildings could contain a single tenant (single-tenant) or several renters (multi-tenant). Single-tenant real estate might house a bank, a pharmacy, a restaurant, or an automobile repair center.

A building that contains a couple or more renters is considered multi-tenant property, as are “neighborhood” shopping centers, “strip” centers, grocery store anchored shopping, or malls with significant national stores called “big box” centers. Centers that incorporate condos or apartments, offices, and retail shops are considered “lifestyle” shopping centers.

Retail lease agreements are “net” with renters being responsible for the landlord’s tax, insurance, and maintenance of common areas as additional rent. Tenants are responsible for maintaining the facility as well.

Retail renters have specific site criteria that retail investors follow when considering demographic data.

Population Growth

The overall data for the market being considered isn’t sufficient for retail investors. The vital data will relate to the particular area surrounding the possible investment asset. Retailers need to locate where their clients live, drive past, or work.

Population growth is important, but retailers require a minimum amount of clients now. Investors in retail assets will consider all aspects of populace data including population size, annual and 10 year growth numbers, and how many people are employed in the area.

Median Income

Income standards tell retailers where their shoppers are. Median income data is a lead to the customers who can pay for costly products from luxury retailers or those on a smaller budget who require discounted prices.

Median Age

Age information is more critical to retail investors than other investor types. If a retail asset is placed near the age groups that potential tenants require, it is simpler to recruit tenants.

Property Tax Rates

Retail real estate buyers use real estate tax rates the same way as both apartment building and industrial investors. Larger taxes equal larger rents which inflate vacancy rates, and markets with increasing tax rates frequently have declining property prices.

You lose even a higher amount of money if the municipality’s tax assessor’s estimate of your real estate market worth was unfair. Protesting property value assessment can be delegated to the best commercial real estate lawyers in South Carolina.

Office space is leased to companies that need a place for their workers to conduct business. Office space can be large enough for a single person or tens of workers. Big businesses often lease office locations from others rather than use their own cash to acquire or develop space.

The lease utilized for office renters is a gross lease agreement, occasionally called a “full service” lease. These types of contracts add the landlord’s costs, including real estate tax and insurance into the payment. This agreement can be customized to meet the requirements of the owner and the tenant.

Office landlords are long term investors who expect revenues from lease income and the appreciation of the real estate.

Population

The populace demographic data that office space investors hunt for needs to indicate a sufficient supply of employees for office renters. This often includes the total residents residing there, their education, and median age. In order to rent to reliable renters, landlords have to mirror the renters’ specifications in their site conditions.

Property Tax Rates

Growing cities that are home to a desirable group of possible office workers will have expected, predictable tax rates. An acceptable labor pool attracts desirable office tenants.

Incomes/Cost of Living

Office tenants acknowledge existing wage levels as one sign of the qualifications of the workforce. It also gives them an idea of the wage levels needed to contend for the optimum workers.

Education

The level of education achieved by the potential market’s population is specifically significant to large office lessees. Some renters don’t have to see college degrees while others do.

BRRRR, which means “buy, rehab, rent, refinance, repeat”, is an investing method to expand your assets by taking advantage of the improved value of the asset. It’s a category of Buy and Hold strategy where an income creating property is owned for a significant period. The benefit is that the property creates revenue while you hold it and can be sold later on for a profit when its worth has grown.

The investor picks up a residential property, repairs or renovates it, and rents it out. As soon as they can, the investor gets a “cash-out” refinance that enables them to pull funds out of the asset in cash. The investor utilizes this cash to obtain more property which is rehabbed, rented, refinanced, and so on.

To buy and fix up commercial real estate, investors prefer nontraditional financing. Banks and other traditional lending firms can’t finance this kind of deals because of a higher risk.

Use our directory of commercial real estate vendors to find the top commercial rehab lending companies in South Carolina and the top South Carolina commercial private and hard money lending companies.

From one of the best commercial real estate brokers in South Carolina, you can get an expert opinion about the benefits and drawbacks of the location for your project. Read on to understand what stats it’s best to discuss with them.

Median Gross Rents

You want to see acceptable current rental rate standards and a history of acceptable rental rate increases. Rental rate levels are a critical factor in an investor’s decisions.

Property Value Growth

Real estate values have to be increasing in the community for a buy and hold strategy to be successful.

Population

The speed of the population’s increase is a critical indicator to BRRRR investors. Without a growing populace, rental units will stay unoccupied and depreciate.

Income

Housing investors must understand their targeted tenant, notably their income levels. If you are satisfied owning mid-priced properties, you don’t have to see high incomes.

Property Tax Rates

Expanding taxes obviously cut into your profitability. Stable tax rates are a sign of a strong, growing economy.

This is even worse when your property is incorrectly valued by the government tax assessors. The top-rated South Carolina commercial property appraisers and the top commercial property tax appeal firms in South Carolina are employed by thrifty investors to reduce your taxes.

Professionals in the real estate industry consider development as creating whole residential neighborhood projects or any kind of commercial real estate. Developers buy property that allows the creation of building sites sold to builders or commercial structures that are rented.

Property development includes dealing with zoning authorizations, managing sitework plans created by civil engineers, working with engineers and architects on construction plans, and leading the project through the local government for authorization. Once permits are received, the property is developed, and the finished product is marketed to the intended users.

It could take a year or more from the start to completion of a development project. A lot can occur, before the development is completed, that can harm the developer’s profitability. This instability makes real estate development the most speculative sort of real estate investment.

Development can be interrupted by different factors causing a considerable delay before renewing construction work. Even if the site is guarded against thieves, you won’t prevent weather disasters from damaging the unfinished building. Nevertheless, you can use the best commercial property insurance companies in South Carolina to ensure that you receive a proper compensation in this event.

Insurance is a service you are likely to need to show lenders if submitting documents for a loan. Ask the best commercial construction lenders in South Carolina what local insurance companies they recommend.

Population

To make certain that their residential and commercial development ventures are located in promising areas, developers utilize the identical populace size, population growth, household incomes, and education achievements of the populace that their end users need to see.

Income

The income amounts of the market’s citizens will dictate the type of retail development that the market will support. A neighborhood that does not attract a high-end retail store could be exactly what a low priced company is searching for.

Office and industrial renters will want to see the pay rates that their possible employees will require. Those developers analyze wage statistics as one indication of a location’s possibilities for success.

Education

Companies that rent office and industrial real estate hunt for different educational factors in the area. Many office occupants want college graduates for their workforce. Industrial employees do not want any more than high school grads.

Age

An older populace that more often uses public accommodations isn’t what developers are looking for. These are the employees that office and industrial companies have to have. Retail facility developers require families and labor pool participants who dine out and shop more regularly.

Growing households turn into homebuyers serving the foundation of a vibrant residential market.

Investing in mortgage notes entails paying less than the payoff amount for a loan that is in place so that the investor becomes the lender. Lenders sometimes liquidate loans to increase capital, but they typically liquidate them due to them not being paid as promised.

A part of promissory note buyers will renegotiate the loan to enable the borrower to make their loan payments — for a long-term profit. If the borrower defaults, the investor maintains all the foreclosure rights of the first lender and can foreclose to recover their invested money.

Population

One of the most basic indicators in real estate investing of all kinds is the size of the market’s population and whether it is growing. Investors understand right away if a market is doable by looking at population statistics.

Property Values

Increasing real property values are the most significant indicator when promissory note investors assess an area. The note purchaser is lending on the strength of the collateral and not the borrower’s ability to pay.

Property Tax Rates

If real property taxes rise, the larger housing cost will be troublesome for struggling borrowers to maintain. This picture hurts long-term investors, but it helps short-term note investors who like to turn around their investment sooner.

A REIT (Real Estate Investment Trust) is a company that owns and operates revenue generating property. They create revenue from lease payments and create long-term asset appreciation.

These trusts have to distribute 90% of net income to shareholders as dividends. The capability to place and withdraw your funds as your demands dictate make REITs a valuable method for a typical person to invest in real estate.

REIT shareholders are considered passive investors which dictates that they have nothing to do with the purchase or management of any properties.

Real estate owners wanting to become passive investors consider buying REITs. They acquire REIT shares once they liquidate real property.

A like-kind exchange is created to save money for investors who intend to do this. Study our experts’ resources to understand how to benefit from it: Can You Do a 1031 Exchange to REIT Shares? and A-to-Z Guide to Delaware Statutory Trust (DST) 1031 Exchange.

For this procedure, you will be required to hire a 1031 Exchange facilitator. Our directory suggests the best 1031 exchange Qualified Intermediaries in South Carolina to help you in your search.

One more method in which funding is pooled for real property investments is a real estate investment fund. They don’t own real property — they possess interest in ventures that do, such as REITs.

This investment choice does not pay dividend income to their investors. The shareholder’s return is generated by the valuation of the fund’s stock.

An investment fund might be a mutual fund, a private equity fund for wealthy investors, or exchange-traded funds (ETFs). Shares in real estate funds are bought and unloaded on the open market which is helpful for starting investors.

Since they are passive investors, fund shareholders are not involved in any decisions such as property acquisitions.