$1,763 2Q 2024
1.0%
93.5% 2Q 2024
10 BASIS POINTS
1,212 [YTD: 1,794]
858 [YTD: 1,800]
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
The spring leasing season in Charleston exceeded expectations, and a slight easing of supply pressures has fueled optimism among multifamily operators for the latter half of 2024. Ongoing increases in population and household numbers continue to bolster demand for apartments. Notably, for the first time in two years, net absorption exceeded new supply in the second quarter, despite a significant influx of new units.
Since 2024, Charleston’s apartment inventory has grown by nearly 30%. Although absorption has stayed positive, the unprecedented surge in new supply led to a decrease in occupancy rates. Currently, approximately 5,400 units are under construction across the market. However, construction starts have decreased to below pre-pandemic levels, as persistently high interest rates have hindered the feasibility of project starts. This reduction in construction activity is expected to alleviate supply pressures in the near term, as fewer projects initiated now will result in fewer completions by late 2025.
Renter activity in Charleston has increased as we move into the second half of 2024, helping to stabilize the occupancy rate at 93.5%, a slight improvement of 10 basis points over the previous year. Net absorption reached over 1,200 units in the second quarter, marking the strongest performance since 2021. Despite 5,400 units currently under construction, which will continue to impact the market throughout 2024, the construction pipeline has significantly diminished. A considerable decline in construction starts over the past year suggests fewer unit deliveries in 2025 and early 2026.
Among Charleston’s eight submarkets, four have shown either stable or increasing average occupancy rates. North Charleston led with the most significant annual rise, as average occupancy surged by 160 basis points. This was followed by Berkley County, which saw a 100-basis point increase, and West Ashley, with a 40-basis point rise in average occupancy.
Heading into the second half of 2024, stronger-than-expected demand coupled with a slowdown in new supply deliveries has spurred a recovery in rent growth. In the first quarter of 2024, rents in Charleston experienced a slight decline as new supply continually surpassed demand. However, with demand exceeding supply in the second quarter for the first time in two years, rents have started to rebound, showing a year-over-year increase of 1.0%. This rate of growth surpasses larger regional markets like Charlotte and Atlanta, which have both experienced significant declines in rent growth.
In North Charleston, rent growth has been notably strong, driven by increasing demand for mid-priced housing near expanding industrial areas. While the luxury segment has seen softer rent growth at 0.7% annually due to large expansions in high-end property offerings, Class B rents have climbed by 2.6% year over year. Additionally, rents for workforce housing in the North Charleston submarket are rising, currently at a 1.4% annual growth rate.
Average Monthly Mortgage Payment
Average Monthly Rent
As of mid-2024, the total value of individual asset conventional multifamily transactions in Charleston was approximately $239.9 million, representing a 7% decrease compared to the same period in 2023. The number of transactions also declined, falling from eight in the first half of 2023 to five in the first half of 2024. Two major sales accounted for two-thirds of the transaction dollar volume during the first half of this year. The Isley at Windsor Hill in North Charleston, which sold for $65.3 million in June, and Magnolia Charleston on Daniel Island, which traded for $93 million in January, were the significant contributors to this total.
* Trailing 4Q average PPU
* Preliminary Data from Costar – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
0.6%
|
-1.6%
|
-1.0%
|
0.1%
|
0.5%
|
0.4%
|
0.5%
|
The under-35 age group is the fastest-growing renter demographic in the Charleston metro area, exhibiting a notable increase of 0.6% from 2019 to 2022. This upward trend underscores a growing demand for rental housing tailored to a younger population that values close proximity to lifestyle amenities such as restaurants and shopping, as well as proximity to employment hubs.
Looking ahead, Charleston’s multifamily market is poised for continued growth, driven by a robust demand from both younger and older renters and a steady influx of new residents attracted by the area’s economic opportunities and quality of life. The reduction in construction starts is expected to alleviate some of the supply pressures, potentially leading to stabilization or even an increase in rent prices as the market adjusts. Overall, Charleston remains an attractive market for multifamily investment, with promising prospects for the coming years.
