Olde Town Rental Market Update

 

 

 Hi, Today we are talking about a rental market update for the Old Town neighborhood.

 

Overall, in Old Town, we see rental rate rising.  We see young professionals increasingly being tenants in the Old Town neighborhood. They want to be close to downtown work. We’re seeing a trend that buyers and tenants tend to be overwhelmingly young and female. Tend to be young professionals.  And we’re also seeing more families with children moving into the neighborhood.  

In the video you’ll see a diagram of the rent rate curves.  The curve can help you visualize rental rates as a function of size, so you  can deduce that if you have 500 SF apartment, on average your guessing about 80 cents a foot.

The next chart is a diagram of rent per SF against average score–we gave each unit a ranking from one to five for condition and location.  And so we averages those two numbers together to give us and average score and of course, you can see here that there is a correlation between location and the rental rate.   Now, it’s not as tight as you would expect. so there are some people that are leasing units that are not quite that nice or not in a great location and their still getting $1.05 a square foot.

You know, so I think would tell you if it’s not a perfect market in Old Town and that there’s a lot of demand and sometimes people are making due with units that aren’t quite that nice.

The overall trend of the rental rates is rising, so here you see that over the past four years the rental rates have gone from an average of 80 cents a square foot to about 87 cents a square foot. So your seeing slow and steady increase in the rental rate.

We also have a shown the changes in the rent curves over time.    You see a for a 500 square foot apartment it would give you about $1.10 and then these are the two curves for 2019 and 2020. So you see pretty evenly spread here. We actually removed a few rentals form 401 Broad, listened to their legacy, rents, they actually brought the curve down so when you remove those outliers, the curve actually fits pretty steadily in there.

So, that is our Old Town rental market report. Overall, a great trend, we are seeing a lot of good things happening in the neighborhood.

We would love to hear from you. What are you seeing Downtown?  What are you experiencing with rental rates? Please like and share, comment below, subscribe. We’d love to hear from you and thanks for watching, and have a great day.

 

Lessons from Sharedspace in Augusta

Today we’re going to talk about SharedSpace and Coworking with John Cates, COO and General Counsel at Meybohm Real Estate

 

Jonathan Aceves (JA): Tell us a little about your prior experience with the coworking business model.

John Cates (JC): When i was in Atlanta, coworking was just starting to take off.  Not just from a office space model but also as a model of entrepreneurship.  Coworking space like WeWork and others that were purely office tenant landlords but also incubator space.  We were involved with helping the Atlanta Technology Village to get started.  We got to see in Atlanta over a six or seven year period,  the coworking model take shape in all its different forms.  

JA: What was your connection to SharedSpace?

JC: I was approached by the SharedSpace group before they got started as they were looking for different space in Downtown Augusta.  We had some mutual connections from my time in Atlanta.  And they really reached out to me to try to get some advice as to pricing and location and what I thought would work and what wouldn’t work here. I guess a little bit like a sounding board.  They actually approached us about potentially getting involved both from a personal and company standpoint. 

JA: What was your advice at the time in setting up that business?

I think the first thing is that coworking takes different forms depending on the area that you’re in.  So coworking in place like Augusta or you call a secondary market is very different from coworking in Atlanta.  Your pricing needs to be different. Your sizing needs to be different.  The companies yo are going to attract are very different.  And pricing is probably the most important because when you’re dealing with a space like SharedSpace over on Greene Street when you can go over to Broad Street and get a comparable office space.   So i think Coworking is an asset class in and of itself outside of office space and is very unique.  And one of the things I really tried to explain to them was that Augusta is not like Atlanta. That’s not a good or bad thing–it’s just a fact.  Some of the other things were that you need to be really, really careful about how you program the space, because coworking space really only works when it’s programmed properly.  Nobody wants to be in a coworking space by themselves.  You have to create a pretty inviting and exciting entrepreneurial community where you’ve got several people doing different things.  There has to be a good energy there.  And so i think that you really have to do a good job of programming certain events to give people a reason to want to be there, because a lot of people who are there are likely either working at home or they’re working somewhere else.  So you want to build that community, I think that was it.  And one of the parts where I initially tried to offer some advice in addition to that was getting the size correct.  

JA: Do you think we’re seeing a paradigm shift in the coworking space?  Are consumers changing the way they office?  We’ve seen the fall of WeWork, and now this.  What are your thoughts in general about the coworking model?  

JC: I don’t think so. I don’t think it’s the model. I don’t think wework’s struggles through their IPO are really a true reflection of the health of the coworking space and the coworking industry.  Again i think it works, but it has got to be done smaller, then growing larger. That was one of the biggest things that I didn’t necessarily agree with about SharedSpace was that I thought they went too big too fast.  Nobody wants to go into one of these spaces to be alone and what my advice was initially was pick a smaller space, maybe 3000, 4000, 5000 square feet–to be bursting at the seams.  Program it, get people in there, and have a waiting list.  Then once you’ve got that demand there and that community built, then you can transport it to a bigger space.  But by not having the right programming up front, by taking a space that was too big, I think this deincentivized people from wanting to be in there, because nobody wanted to be in there and hear their own voices echo.  So you’ve got to balance the cultural aspect of coworking space with the size of it itself.  Then the other thing is that if someone can go to Broad street, which is two blocks from there and a potentially more desirable location than Greene Street,  and get a location for about the same price for a company of three or four people, then that’s what they’re going to do.  So there’s still a decent amount of good office like that one on Broad Street.  So I don’t know how appealing it would be to me as a small business or as a freelancer to locate my business in there.  And I think what happened was that they ended up getting a few smaller versions of call centers.  And that goes against the whole entrepreneurial atmosphere that you’re trying to create.  

JA: What implications does this business case have for downtown business and retail?  

JC: Well I think the first thing is to understand why it happened.  Just because the concept didn’t work, doesn’t mean that coworking can’t work in Augusta.  There’s a significant demand for it.  And I think one of the things that we saw when I was involved in the Augusta Innovation Zone was that we also got to the point where we were almost going to be in a place that was too big.  And that’s why it didn’t work in the Woolworth building when we were were looking at that a few years ago, and we felt that there was a huge need for it.  And we had a waiting list.  But you had to start smaller to prove out the concept.  So I don’t want people to take away that this model doesn’t work in a market like Augusta.  It does.  You just cannot start to big and your pricing needs to be reflective of the market–it’s got to be lower than what you can otherwise get on Broad street or somewhere else.  The other thing is that the model really should work when you’re trying to also use the space to create new businesses.  So i think it’s one thing that the Clubhou.se has done really well.  And you know–they’re bursting at the seams, and as you know they’re located in the Cyber Center and doing great.  But that’s because the pricing is right.  The location is right, and I think they’ve proven that if you can partner with the right people and get entrepreneurs in that space and activated, that it works.  So that would be my only big takeaway is don’t look at this and say that the concept doesn’t work because it is working.  It just has to be done right.  The Clubhou.se has done a really good job proving that the concept does work. 

JA: Those are great lessons.  

 

A big lesson is the value of good advice–and how important it is as advisors to tell the hard truth to our clients.  What other lessons can you learn from this business case?  What are your thoughts about Coworkign in Augusta?  What is working?  What are lessons you’ve learned in launching a new enterprise? 

Downtown Residential Market Report

https://www.youtube.com/watch?v=CGggUa-lkUw&feature=youtu.be

Today we’re going to cover one of our pet subjects, the Downtown Augusta residential market, specifically Olde Town.  Click here to download Olde Town Q4 2019 Market Report

 

What’s going on:  Prices are rising–homes bought at retail (livable, decent condition) have risen from about $63/SF on average to just under $80/SF on average over four years–that’s about a 26% increase.  As a whole, the average price has risen from about $30/SF to about $57/SF–almost double–over the past four years.  

 

Part of what’s happening is that there are lots of abandoned and derelict homes that have been purchased, along with the rise of young professionals moving downtown.  The average buyer in Olde Town today is a young, single, professional female.  She is educated, trendy, and wants to be connected to the neighborhood and the downtown.  

 

In 2010 when I bought my home in Olde Town, things were much different.  The neighborhood was ‘busier’–more foot traffic, and there was a significantly higher percentage of section 8 housing in the neighborhood.  Over the past ten years families have moved downtown–many connected to First Presbyterian Church and Christ Community Health Services (a non-profit heath center located in the middle of Olde Town).  The rents started rising, investors started buying and renovating the homes, and soon things started changing.  

 

In the past two years is when I’d say I’ve seen the most change.  The main section 8 property in our neighborhood, Olde Town Apartments, had their tax credit expire and has been renting and selling their properties at market rate (primarily to young professionals).  Many of the derelict properties on the southern edge of the neighborhood have been demolished, and plans are underway for new homes to be built.  

 

My prediction is that the trends we see will continue, and that home values will continue to climb.  I think that if the trend continues, in the next two years prices/SF for homes sold at retail will surpass $100/ft, at which time we will hit a tipping point which will open the neighborhood to new construction, and we will see many of the functionally obsolete homes demolished and new homes built.  All this is great for our city, and for the greater urban community in Augusta, GA.  

 

What are your thoughts?  Where do you see the market downtown headed?

132-Unit Student Multifamily Housing Development given Preliminary Approval

2715 N Davidson
Photo is of the 2715 N Davidson Apartment Development, another project that College Acres was involved with.  –Charlotte Business Journal

 

 

132-Unit Student Multifamily Housing Development on Druid Park Ave given preliminary approval. Myrtle Beach Developer College Acres has proposed to build a four-story #apartment development aimed at Paine & AU students. David Despain, the developer, has developed a number of similar properties, and was also involved in working with Coastal Carolina University for the development of the HTC Center in Conway, SC.

 

It is great to see developers take notice of what’s happening in Augusta. This looks like a great project and should have a big positive impact in that neighborhood!

 

Augusta Chronicle Article: https://www.augustachronicle.com/news/20191202/developer-proposes-student-housing-complex-on-druid-park-ave

 

Info on Charlotte Project: https://www.bizjournals.com/charlotte/blog/real_estate/2015/07/developers-planning-147-unit-apartment-complex-in.html

 

Info on Wilmington Project: https://www.starnewsonline.com/news/20190103/more-student-housing-proposed-near-uncw

Wilmington Project Approved in October: https://www.wect.com/2018/10/18/wilmington-planning-commission-approves-college-acres-townhome-development/

 

Horry City Council Minutes RE: Tiff Bonds for HTC Center:

https://www.horrycounty.org/Portals/0/Docs/council/archives/min04-0518.pdf