So everyone has heard the old saying, “Build it and they will come”. But in Charleston we are dealing with a new reality, “If we don’t build it, they are still coming.” As I have stated in other BLOG postings, Charleston is experiencing the most significant level of growth it has seen in decades. The Charleston Region is being recognized by countless publications and media outlets for everything from our thriving tourism industry to the tremendous growth of our economy. It is because of our region’s success that we are seeing a tremendous amount of development and for many development fatigue is at an all-time high. The reality is that Charleston is going to continue to grow whether we like it or not. But like in business, if a City is not growing it is dying. So I would contend that growth is not bad, as long as it is done in a meaningful way that is sustainable, adds value to our community and enhances the quality of life for our residents.
Because of the growth we are seeing in Charleston, demand for investing in real estate in our City is going to continue to grow exponentially into the future. Moreover, with the continued growth of Self Directed IRAs more individual investors are choosing to invest in alternative assets in their retirement accounts such as real estate. In our current macroeconomic environment raising interest rates and inflation are realities that individual investors must be prepared to contend with. And investing in real estate can be a great hedge against inflation.
One most recent example of demand driven development in Charleston is the West Edge project located on the west side of the Peninsula. When the project is complete it will contain 1.5 million square feet of residential housing, 880,000 square feet of office space, 290,000 square feet of retail space and 280,000 square feet of hotels. Needless to say this is a massive project that will change the landscape of the west side of the peninsula. And this is just one example of development in our City. Next time you are driving over the Cooper River Bridge count how many cranes you see and compare that to the number of church steeples. It is staggering.
So given all that, how do we encourage sensible growth that preserves the charm and character of our City? First, we must come to the realization that when you are named the number 1 City in the South people are going to want to move here. So the reality is, “If we don’t build it, they are still coming.” Second, if developers focus their efforts on re-purposing existing building stock versus trying to squeeze every ounce of profit out of a project to justify the cost of the dirt they can enhance the charm of our City’s current building inventory. Lastly, every project needs to operate from the philosophy that it will be an asset to the community and not a liability.
Our investment team does ongoing market research and site analysis to determine the best locations geared towards our investment strategy.
We perform site inspections and consult with general contractors and architects to identify property improvement opportunities and cost estimates.
We do extensive property analysis including underwriting property historical cash flow, three tiered income modeling, future cash flow projections and IRR and cash on cash return profitability models.
Our team underwrites the current tenants and reviews all current lease agreements to determine an appropriate credit grade of the property and identify opportunities for improvement.