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Demand for downtown living drives surge in multifamily projects

Real Estate - Residential
Chuck Crumbo
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One might expect to find amenities like a fitness center, yoga studio and a dog park in an upscale suburban neighborhood. But these features as well as saltwater pools, cabanas and outdoor kitchens are now being offered in multifamily residential developments rising above the streets of downtown Columbia and along its riverfront.

The 339-unit Sola Station project, which is under construction by Charleston-based The Beach Co., will offer residents an opportunity to live on the waterfront in a downtown setting. (Image/Provided)“Cities throughout the country, especially in the Southeast, are experiencing an urban renaissance; with more and more people choosing to live in the denser urban areas,” said D.J. Van Slambrook, development associate at The Beach Co., headquartered in Charleston. “Fueled by the ability to walk to work, restaurants, culture and entertainment, people are trading in their cars and commutes for the convenience of an urban lifestyle.”

Indeed, downtown Columbia’s population has been booming. Just two years ago, about 1,250 people lived downtown. Now it’s pushing 7,000 people, according to observers’ estimates.
While the city and Richland County’s use of tax incentives has stoked private development of student housing in downtown Columbia, demand for traditional multifamily development is growing, according to CBRE’s real estate outlook for 2017.

“From 2013 to 2016, over 2,100 multifamily housing units have been constructed in downtown Columbia, over 80% of which is student housing,” according to the report by CBRE researcher Jim Frazier.  

The report noted that the University of South Carolina produces more than 5,000 degrees annually, but the Columbia labor market annually grows 3,200 jobs requiring degrees, thus making USC a “net exporter of talent” to other communities and states.

“The development of non-student housing in Columbia’s urban environment should help the market keep talent from moving to other markets where urban living is more readily available,” the report added.

Down by the river
Slambrook’s Charleston-based company is developer of Sola Station, the final phase of the CanalSide mixed-use community in downtown Columbia.
Plans for the $58 million Sola Station project call for 339 multifamily rental units and 30,000 square feet of commercial space. Construction on the project began in November and is scheduled to wrap up in 2018.

Located along the Columbia Canal, Sola Station is the city’s first riverfront destination and neighborhood. The property is adjacent to the existing CanalSide Lofts community, which also was built by the Beach Co.

“Everything is strategically oriented to the river, esplanade and greenway, creating a special place to call home within an urban oasis of shopping, dining and entertainment,” said John Darby, CEO of the Beach Co.

Named for the 19th century railroad line that once connected Charleston’s port to the state’s inland regions, Sola Station will offer apartment living in a downtown neighborhood within walking distance to major employers, restaurants and shops.

Downtown’s new residents are a mix of millennials and baby boomers, according to demographers. And both groups are seeking luxury multifamily apartment rentals, preferably located in and around the Central Business District of cities.

“Both millennials and boomers are looking for housing options that cater to their lifestyle,” Darby said. “Boomers (51 to 71 years old) want to live mortgage-free and lower their housing expenses and transient millennials (18 to 34 years old) enjoy the flexibility of renting.”

Also, multifamily communities provide a range of choices for renters, from 500-square-foot studios to three-bedroom townhomes, Darby said.
Another attraction of downtown location is that millennials and boomers can keep the car parked and walk to a restaurant, neighborhood market or coffee shop, Darby said. “The diversity and density of residents is what sustains walkable retail. As much as they have in common, boomers and millennials visit shops and restaurants at different times of day.”

With residents’ preference to walk to shop and eat, his company’s apartment communities are mixed-use projects with retail use on the street level, Darby said.

“The built-in number and frequency of customers support the retail, and the ability to walk to dining and shops becomes a neighborhood experience for residents. And, contrary to opinions frequently expressed by those opposed to density, every walk-in visit to a neighborhood shop is one fewer car on the road,” Darby said.

Observers add that the desire to rent in a multifamily unit is driven by a strong sense of community and residents’ desire to live near like-minded people.

Demand vs. supply
Trends indicate demand is pressuring supply.

Charlotte-based RealData, a market research firm that publishes semi-annual surveys of regional markets, reported in May that the occupancy rate for the Columbia metropolitan area improved over the past six months to 91.7%.

Meanwhile, approximately 3,600 units are proposed to be built in the Columbia area, with more than half of those units located in the Central Columbia submarket, according to the RealData report.

Rental rates also are up by 2.8% over the past 12 months, bringing the average monthly rent to $987, RealData reported. Rates are expected to increase 3.0% to 3.5% annually through 2018.

Besides Sola Station, another project planned to meet the demand for downtown living is a 15-story apartment building called The Edge. 
The $60 million, 355,000-square-foot apartment complex is designed to cater to the rising influx of residents and young professionals as well as university students looking to relocate downtown to be closer to the arts, entertainment, local offices and universities, according to a City of Columbia press release.

The building will go up next to the Richland Library in the 1400 block of Assembly Street. It will replace an existing parking lot and two-story building built in 1914 that was one of a handful remaining from Columbia’s black business district. 

The Edge’s developer, CRG, plans to memorialize the old building and the city’s African-American commercial district with a series of plaques and way-finding signs that commemorate locations of historical significance throughout the district. Construction on The Edge is expected to start in late 2017 and completed in fall 2019.

Other multifamily projects in the pipeline for downtown area include the 350-unit, $100 million Kline City Center at Assembly and Gervais streets, and a 196-unit, $35 million senior living community at the BullStreet development.

These new projects follow the lead of recently completed multifamily rental communities.

In May 2016, tenants began moving into the former Federal Land Bank building at Marion and Hampton streets, which was converted into 114 luxury apartments. The iconic building previously served as corporate headquarters for AgFirst Farm Credit Bank.

A few months later, in August, the Palmetto Compress building, a 320,000-square-foot former cotton warehouse in the heart of the Vista on Devine and Pulaski streets, began welcoming residents into 197 market rate rental units. 

Development of multifamily rental units in downtown Columbia offers opportunities as well as challenges.  

“The upside revolves around the ability to take advantage of location,” Slambrook said. “Unlike greenfield development, building in urban locations allows developers to utilize in place infrastructure and deliver a community where the primary amenity is being downtown, walkable to everything.”
The downside would be increased land and construction costs, as well as “constricted job sites” and tougher entitlement processes, Slambrook said.
“Downtown Columbia still presents opportunity in the residential market, however, with current land and construction costs, these projects will be more and more difficult to make work,” Slambrook said. 

Reach Chuck Crumbo at 803-726-7542.

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