Commercial Real Estate Trends for 2024 |
In the real estate industries, both commercial and residential, the last five years have played out like a way-too-long suspenseful movie. There was conflict – such as rising interest rates, supply chain disruptions and labor shortages – and, of course, the bad guy – the pandemic –- which affected the ability for anyone to have a happily ever after ending. The good news is that things are on the upswing, especially in the Charleston area, which has become one of the most popular places in the country to live and work.
According to Charleston County Economic Development, 30+ new residents move into the community daily, making the region the 74th largest among all U.S. metros. Population growth has also contributed to the region’s labor force growing three times the national average. In the past year, dozens of businesses announced plans to expand or relocate to the area, investing millions of dollars into the economy and creating hundreds of new jobs.
“Charleston has seen so much growth in the last decade, just because of the lifestyle and the weather here,” says Rob Bennett, co-founder of The Inns in Charleston, who has specialized in Airbnbs and commercial real estate development since 2016. “But COVID came and completely changed the way we worked and lived.”
As a result, Bennett explains that there was a plot twist – many real estate investors had gone big on developing and building commercial office space, 50,000 square feet plus, which was a speculative business. “It was good for Charleston in a lot of ways, but it was not necessarily good for office space because a lot of people worked from home. Now there’s a lot of vacancy, especially in the office sector,” he explains.
This has created an interesting trend in the commercial space and a bigger issue for Charleston. According to Bennett, there is a whopping $2.2 trillion in debt nationwide maturing before 2028. “With commercial debt, there is usually a loan term of 5, 7, or 10 years, so when you mix the value of commercial space going way down because no one’s going to the office, with high-interest rates, you now have a debt wall. This wall is forcing developers to refinance at lower values but significantly higher rates.”