As the economy picks up in Columbia, South Carolina, the area’s multifamily market shows improvement.
Columbia’s unemployment rate has declined steadily over the last year to its current rate of 8 percent. The largest employers in Columbia — which is the largest MSA in the state of South Carolina — are the state government, the University of South Carolina, Fort Jackson, Palmetto Health Baptist, and Blue Cross and Blue Shield of South Carolina. Columbia also showed an increase in manufacturing jobs over the past year.
The area also benefits from recent economic development announcements. In May 2011, Michelin North America announced a $200 million dollar investment in its Lexington facility with 270 new jobs. Nephron Pharmaceuticals plans to build a $313 million manufacturing and research campus in Cayce’s Saxe Gotha Industrial Park, creating 700 new jobs.
The University of South Carolina plans to build a state-of-the-art $91 million Moore School of Business to be located downtown at Assembly and Green. The former business school location will be leased to the Department of Justice for 20 years, which will bring in an additional 250 jobs. Amazon.com built a distribution facility in Columbia, which currently employs 600 workers, will eventually create up to 2,000 jobs, with an estimated payroll of $60 million.
The multifamily market in the Columbia MSA consists of approximately 36,835 apartment units with a total market occupancy rate of 90 percent and average rent of $775. Although Columbia is still experiencing rental concession activity, occupancy rates and rents have increased steadily since 2009, and this trend should continue throughout 2012.
The downtown Columbia submarket is not the largest submarket by number of units but it is the strongest submarket regarding occupancy with an occupancy rate of 96 percent and the highest average rents of $1,000 per month. The most recent developments are the Lofts at Lourie’s on Main Street (30 units); The Palms on Main, which has 54 units under construction; and Canalside, where an additional 200-plus units will be built in downtown.
With 10,145 units, the Northeast Columbia submarket is the second largest in unit count. Currently the submarket’s occupancy rate is 90 percent and rents average $798. The Northeast Columbia submarket also has more units slated for development than any other submarket. There are more than 1,000 units planned or under construction in the Northeast submarket.
With more than 11,000 units, the Northwest Columbia submarket has more units than any other market. The submarket’s occupancy rate is 91 percent, and rents average $635. This submarket also has the highest count of older properties (15 years-plus) in Columbia. This submarket includes Harbison Boulevard, the largest retail submarket of Columbia, and parts of Lake Murray.
The Cayce/West Columbia submarket has the fewest units with 1,782. The occupancy rate is 90 percent and rents average $855. This submarket will benefit from Amazon.com and the Nephron Pharmaceutical announcement.
The South/Southeast submarket has approximately 4,702 units, including several new student housing developments. The submarket’s occupancy rate is 89 percent, and rents average $875.
Columbia should continue to experience an increase in sales activity in 2012 thanks to improving rents and occupancies as well as the availability of attractive financing for apartment acquisitions
— Drew Babcock, CCIM, is an associate in Marcus & Millichap’s Columbia office.