10/24/22 South Carolina Mastermind Group Meeting

South Carolina October 2022- Key Take Aways

• In deals that involve tax credits, some vendors are pulling away. An out-of-state group called Cedar Rapids is closing up their tax credit shop, presumably permanently. (Josh Workman – Tax Credit Marketplace)
• City View project mushroomed from $2 million in costs when it was first penciled out to $4 million and has gotten stuck. Development team is now looking to change it from a retail project with apartments to only quadruplexes. (Josh Workman – Tax Credit Marketplace)
• There are a lot of “Main Street” revitalization projects in the works in various cities and there is a lot of movement in North Charleston. (Josh Workman – Tax Credit Marketplace, Andrew Porio – Tax Credit Marketplace)
• There was a national historic tax credit conference in St. Louis this month and included a lot of banks, law firms, etc. working in that industry. There is a slight waver on hospitality projects and a lot of interest in affordable housing. (Andrew Porio – Tax Credit Marketplace)
• Historic tax credits include federal credits, state credits and (in some cases) abandoned building credits. (Andrew Porio – Tax Credit Marketplace)
• Connections can be arranged for meetings with Global Location Strategies consultants Cedric Colbert in Columbia, Kornelia Kostka – location research analyst, or Nicolette Ross in Charlotte, who did recruitment in Munich for SC Dept. of Commerce. (Susan Donkers – Global Location Strategies)
• Seeing a lot of requests for proposals and generally feeling busy, though some of that may be people getting requests in before the holidays. (Susan Donkers – Global Location Strategies)
• DOE funding is still fueling a lot of the mega projects, especially in the EV sector. (Susan Donkers – Global Location Strategies)
• Seeing a lot of activity in existing buildings. Many companies don’t want to take the risk or time of a ground up construction. However, organizations are trying to fit into a space that wasn’t built for their needs. (Susan Donkers – Global Location Strategies)
• Bigger deals are getting bigger and smaller deals are getting squeezed. Construction companies are saying they can’t even look at small deals (less than $1 billion), which may be a concern as larger projects are less likely to result in construction. (Susan Donkers – Global Location Strategies)
• Firms remain busy and are not seeing a slowdown, especially in education as there is lots of money coming through the CARES Act. North Carolina has done a good job going after those funds. (Alita Webster – Young Office)
• Next year and in 2024 funds will be increasing and they’re looking at more active classrooms and focusing on furniture and what that can do to support students. (Alita Webster – Young Office)
• Companies are struggling with getting people back to the office and working on strategies that mimic the comfort of employees’ home environments. Lots of focus on spaces that support collaboration but also offer private spaces for focused work. Technology is also important to support hybrid work. (Alita Webster – Young Office)
• Struggles with staffing has been a big issue and does not appear to be going away. Have to be creative about working with younger people. Mentorship and training is a struggle. (Laura Turner – Cherry Bekaert)
• Firms are trying to adjust their model of working employees during the busy time to something that expands the busy time and requires fewer 80+ hour weeks. Investors still want a March 1st deadline for K1 and tax returns, but developers are not normally ready until February. (Laura Turner – Cherry Bekaert)
• Have a new SALT consultant in the Greenville office and their goal is to marry tax credit work with SALT consulting practice in the near future. (Laura Turner – Cherry Bekaert)
• Bonus appreciation is not 100% in 2023, which allows for more creativity. (Laura Turner – Cherry Bekaert)
• Expecting deal sizes to start getting smaller and some new construction deals to be sidelined. Some deals are in a holding pattern right now and everyone is expecting another rate hike. (Will McCauley – Creative Builders)
• Multi-Family is still a strong market, and medical has a lot of activity with many doctors opening their own practice. (Will McCauley – Creative Builders)
• There has been a gradual shift by utility companies to require more from construction companies. Power company is now requiring construction companies to run secondary lines. (Will McCauley – Creative Builders)
• Fees from municipalities have gone up in all areas. (Will McCauley – Creative Builders)
• Shortages continue and prices remain high with no signs of coming back down. (Will McCauley – Creative Builders)
• Some of the pieces for transformers had been manufactured in Ukraine. Dry wall manufacturing companies in the US were slow to expand and have environmental impact issues to deal with. (Susan Donkers – Global Location Strategies)
• As construction delays continue to be an issue and delays due to weather can exacerbate issues, The Demex Group offers consulting regarding weather predictions and the best times to set schedules. They can also connect companies with weather related insurance products. (Charlie Eadie – The Demex Group)
• Not seeing a slowdown in business in tax credits and affordable housing. Lots of upcoming projects happening. (Holly Douglas Schaumber – Douglas Development)
• It’s necessary to create overhang reserves due to interest rates going up. This makes it difficult to model deals. (Holly Douglas Schaumber – Douglas Development)
• Rents are going up 10-15% but tenants’ salaries are not going up close to that. (Holly Douglas Schaumber – Douglas Development)
• There is an equity gap with credits and the state is not communicating well. There is a lack of understanding of the importance of the tax credits. There is a concern that the state credits could go away completely. (Holly Douglas Schaumber – Douglas Development) 
• Wilson Kibler is a full-service commercial real estate firm that works primarily in office and industrial, and does some multi-family. (Edward Wilson – Wilson Kibler)
• Because construction prices are so high and unpredictable, there is more focus on existing buildings. (Edward Wilson – Wilson Kibler)
• Seeing more team orientation with offices for 5-6 people who rotate days in the office. Also seeing some who want to be in a team environment starting their own companies. (Edward Wilson – Wilson Kibler)
• There are several clients working on redeveloping abandoned textile mills. (Megan O’Neill – Wyche, P.A)
• There have been a few deals that have been terminated, but not due to costs or timing. For the most part, things are still busy. (Megan O’Neill – Wyche, P.A)