EXCLUSIVE: Prices for downtown land skyrocketing

The influx of eight student housing projects, along with a general building boom in the Capital City, is driving land prices in downtown Columbia through the roof.

Two one-acre lots – one on Assembly Street adjacent to Richland Library and another on Park and Lady streets – are being offered for $3.5 million each, listings show.

And two new projects – the proposed 15-story student housing tower on south Main and a planned 12-story student tower on Assembly Street – could push the price of land to new heights, maybe as high as $5 million to $6 million an acre, some experts say.

If true, that would be nearly double the recent prices for undeveloped land or tear downs.

“It wasn’t that long ago that we were celebrating that we could get $1 million an acre,” said Fred Delk, executive director of the Columbia Development Corp., which encourages and guides investment in the Vista and other downtown areas.

“Student housing is the top driver,” he said. “But there is so much more. There’s a lot of development pressure. We’re going to see a lot more market rate (non-student) residential coming in as well.”

Efforts to reach the representatives of the buyers and sellers of the EdR tower – planned for the site of Sandy’s hotdogs and the Baptist Student Ministeries at south Main and College streets – were unsuccessful. But if the lot is set for a $5 million closing, the price would be unheard of in Columbia, experts say: $91.82 per square foot.

That figure dwarfs the previous record, which was also a residential tower on south Main. The land for the Adesso mid-rise condo complex at Blossom Street sold for $66.78 per square foot in 2006, as a partnership between the University of South Carolina and Atlanta developer John Holder, records show.

South Main, it seems, is fast becoming Columbia’s magic mile for one simple reason: It is in the middle of a growing USC campus.

“We try to buy properties that are adjacent to campus and it’s just harder and harder to do,” said Russ Meekins, executive director of the USC Development Foundation, the quasi-independent organization that buys and sells property for the university.

Meekins noted that one property owner was asking $1.3 million for a quarter acre near campus.

“Unless you want to build something tall, it’s not worth it,” he said.

Going vertical

Presently, the price of land in downtown is a crap shoot in a city where land traditionally has been inexpensive.

For instance, undeveloped land in downtown Greenville goes for $70-$80 per square foot, according to Mike Dodds, senior managing director for Integra Realty Resources-Columbia, a land appraisal firm.

“Things are definitely going up” in Columbia, he said. “But I don’t see any consistency. There is no rhyme or reason.”

For instance:

▪ Land for the Meridian building on Main Street sold for $57.03 per square foot in 2002, while land for the Main & Gervais/NBSC building a block away sold for $36.29 in 2008, according to a study conducted by CBRE commercial real estate brokers for The State.

▪ Land for the new Hyatt Place hotel on Gervais Street in the Vista sold for $56.86 per square foot, while the lot for the new Aloft boutique hotel across Lady Street from the Hyatt went for $33.64.

▪ Land for the EdR tower on south Main is rumored at more than $90 a square foot, while the property for the Park 7 student housing development at Huger and Blossom streets sold for $37.20.

Much of the divergence of price is due to parking. Projects that locked in parking in city garages – such as the Hyatt – can afford to pay higher prices, said Ben Johnson, an analyst with CBRE.

“You don’t want to build a parking garage,” he said.

What’s driving the student housing market however – nearly 6,500 beds are built or planned – were changes in the city boarding house ordinances years ago and a newly enacted adjustment to the tax code that halves the property tax bill for student housing for 10 years.

Still, the new projects by the Memphis-based EdR on south Main and Manhattan-based Park 7 on Assembly, have to go vertical to make the numbers work. Enough floors of students paying $1,500 a month or more for top flight amenities and proximity to campus offset the high price of property and any structured parking.

“You got to put some volume on there to make it pay for itself,” the development foundation’s Meekins said.

Growing student population

Also, there are new tenants coming. USC has grown by 5,700 students since 2007, and more are on the way.

In January, USC President Harris Pastides told the S.C. House Ways and Means Committee that the university needs to grow to fill the state’s burgeoning job market.

“I can tell you we intend to continue to serve South Carolina by growing enrollment at the Columbia campus, enhance the ability for all our campuses and other South Carolina universities and technical colleges to reciprocate with USC and work toward educating and graduating more South Carolina residents for years to come,” he said.

While no numbers are projected, USC officials say that growth will be controlled and carefully monitored over the next decade and will come with plans for more faculty and academic advisers, additional classrooms and labs, enhanced parking and transportation options and more on-campus housing.

Also, the number of freshmen, who must live on campus, grew by 1,262 since 2007, to 4,981. There are only bout 6,500 in dorms and 700 in Greek housing.

So USC, too, is getting in the enhanced student housing game, creating on-campus facilities that rival the private housing in amenities and style.

Already, the university’s 919-bed development with Atlanta’s Holder is fully booked for the first phase, Meekins said. That’s 86 beds.

CBRE’s Johnson said that despite the competition from private student housing firms, USC will be a player, as more student move from outlying private housing to the new USC complex or future projects.

“They’ll make a boatload of money and not even have to bring in new students,” he said.

This story was originally published April 23, 2015 at 9:25 PM with the headline "EXCLUSIVE: Prices for downtown land skyrocketing."