Loyd Daniel, founder of Strand Capital Group, said his company bought the land five year ago for the new oceanfront lodging tower it recently started building, but local market conditions and the economy wouldn’t support the project before now.
In 2007, the company completed Anderson Ocean Club, another oceanfront highrise, but had 200 units unsold when the building opened. In May 2011, Strand Capital sold the remaining 152 units in the building to Hilton to market as a vacation club, or timeshare, and the success of that has led to the new building.
The 24-story, 308,000-square-foot Hilton Grand Vacations Club is one of the developments people point to when they talk about the pockets of commercial real estate activity along the Grand Strand now. Others include the 348,000-square-foot Coastal North Town Center in North Myrtle Beach and The Jackson Companies’ redevelopment of the land across U.S. 17 Business from Ocean Lakes Family Campground.
A different kind of commercial activity, but recognized as a hub of activity, is downtown Conway, which has gone from dozens of vacancies just a couple of years ago to a situation where prospective tenants are standing in line for space.
Buddy Hucks, whose E.F. Hucks Co. is a consultant to the commercial real estate industry, said the Grand Strand commercial market “is on the rebound but still suffering from distressed sales, reduced rents and high vacancy in many places.”
Hucks said there were 172 sales of land with buildings through October this year as compared to 127 in the same time last year. Just land sales alone totaled 192 through October, up 31 over 2012.
Together, the two represented $300 million in sales for 2013, nearly double the $160 million total in 2012.
Commercial development is driven by retail sales, Hucks said, and that will naturally increase as more people move to the area because of the renewed vigor of residential real estate.
Daniel said the units Hilton bought at Anderson Ocean Club will be sold out next spring, about the same time Hilton will start advanced sales of the 220 units in the new tower. He said that his company started talking with Hilton last year about the new project and that the building is expected to open in the spring of 2015.
Daniel said that while hotel rentals and vacation club sales are in a growth mode, the same isn’t true of condominiums, particularly those on the oceanfront. He said that there are now 1,300 to 1,400 vacant condos on the first and second rows of the beach, about the same inventory as in 2001 through 2003.
There was a huge jump in condo construction between 2004 and 2006, a situation that only recently has begun to resemble normality.
“We’re just back to a normal inventory with one year on the market,” he said.
And within another year, he won’t be surprised to see someone invest in new oceanfront condominiums.
The hold back now is that the average price for available units is still 20 percent to 30 percent under cost. There have been some increases this year, but more gains are needed before anyone will want to gamble on more stock.
Robbers Roost Revival
The Coastal North Town Center is an example of a project that fell a couple of times and now finds conditions right for renewed development.
The area was originally developed as Robbers Roost, but that went under in 2003. Then, another company moved in to revive the project in 2007, but that too was unsuccessful, said Phil Wilson, principal at RealtyLink, a shopping center development based in Greenville.
RealtyLink has been involved with the development for the last 18 months, and likely at least partly to its relationship with retailers from other shopping centers it has built, put together the package that will debut the Strand’s first Publix grocery store as part of its offerings. The shopping center -- which also will include the area’s first Hobby Lobby, Ulta, Dick’s Sporting Goods, PetSmart and others -- is on track to open in mid-September, about a month ahead of schedule.
RealtyLink also was involved with some of the retail development near U.S. 17 Bypass and S.C. 544, and Wilson said the company’s downtime didn’t follow the model of others in commercial development.
He said that RealtyLink had a pretty disappointing year in 2009. But things picked up in 2010 and then doubled in 2011.
“We were one of the few that could still get money,” he said of RealtyLink’s success.
The same activity can be found in some areas such as downtown Conway.
“We have our lowest vacancy rate since 2008,” said Hillary Howard, executive director of Conway Downtown Alive, which was formed to boost business in the town’s historic downtown.
Howard said there were at least 30 to 40 vacancies downtown when in 2009, she hung 50 posters in the windows of vacant buildings touting the advantages of business there. She said that she noticed a significant uptick in activity in February, which has built to a pace that’s seeing several ribbon cuttings a month at new businesses.
“I really can’t point to one specific thing (that signaled a turnaround),” Howard said. “As you know, we do a lot of pushing and promoting the downtown.”
Increased retail spending
At least part of the revival, no doubt, is increased confidence in the economy by many people, which is translating into higher sales and the demand for space to take advantage of it.
One recipient of increased spending has been Craig Smith, who in April opened the first location of Papa’s General Store in a 900-square-foot space on Conway’s Main Street.
He hadn’t planned on a business at all. He owned another business in Conway for 27 years and retired in 2000, he said. He originally got his first new space to store a doll collection his daughter had inherited and his stock of things that he sold on the Internet.
He said that as he was moving into the space, people would come up to him and ask, “What are you doing? What are you doing? What are you doing?”
Since April, he has moved to a 2,400-square-foot space on Main Street’s primary shopping block that he has begun to enlarge to 4,600 square feet.
“My thinking is every dog has its day,” he said. He explained that more and more shoppers are looking at the personal service they can get from smaller retailers that may not be present in big box stores.
Howard and Larry Biddle, president of the Burroughs Co., downtown Conway’s biggest landowner, said that the situation is so good there that it isn’t unusual to have more than one prospective tenant for any new space that becomes available.
“We don’t have any vacancies,” Biddle said.
While the commercial real estate activity now is significant because of its departure from the recent hard times, Hucks said that it’s not evenly spread across the area.
For instance, he said, about a mile from The Jackson Companies’ new development at U.S. 17 Business and Glenns Bay Road is about 100,000 square feet of vacant space and an area that still looks down on its luck.
But that might be just the space that some are looking for, said Realtor Gerrie Watson, who specializes in commercial real estate.
“Commercial is just like residential,” she said, “people are looking for deals.”
Watson, who just brokered the deal that put Myrtle Beach Mitsubishi on U.S. 501 just outside Myrtle Beach, said her business has doubled this year, but it’s still nothing like the good old days.
“You still have to work twice as hard to make half as much as five years ago,” she said.
Watson and others said the area’s commercial real estate didn’t suffer the way that residential did, and she noted that more people are looking now than in the recent past. December 2012 was real slow, she said, and January to April this year the busiest she’s seen in a while.
And, she predicts, the commercial market will continue to strengthen and return to a robust normalcy in 2015.
Contact STEVE JONES at 444-1765.