12/12/22 South Carolina Mastermind Group Meeting

South Carolina December 2022- Key Take Aways

Matt Linville of Banker Exchange says that they are hearing a familiar strain from commercial brokers and taxpayers who are interested in 1031 like kind exchange. Hearing much more often about sellers taking back the note and the note is a significant part of the sale price. This is attributed to financing drying up and the lack of cash in a deal. Would this benefit the seller in any way from a tax standpoint? How is that note treated in a 1031? How will this affect the 1031? David Lewis of Context Design Group is still real busy but seeing a bit of slow down. Most projects now are expansions. Went to southeast Japan conference in Orlando – 350 people there from southeastern states with Japanese investors. Chuck McShane of CoStar still seeing a lot of activity up and down I-85 corridor. A little bit of slowdown of port activity. Industry vacancies are still at record low. On the multifamily side, they are starting to see a small decline in rent rates. Capital Markets have cutoff financing so not many starts. Office areas in big cities are a question mark – mid size cities doing well with office. Mid-size companies are back in the office. Holly Douglas Schaumber of Douglas Development focuses on workforce and affordable housing. Their big issue for the past 9 months has been the state tax credits. There were two meetings at the state level before Thanksgiving where the state tax credit was the only thing on the docket. Starting to see some activity where the state house will attempt to come up with a solution to fix the gaps. This remains a spooky market but on the demand side, they have never been stronger. Nitin Dudani of Terracon is seeing some drop in big box industrial warehouse projects. They have some large solar projects in upstate. BMW project will be a catalyst for growth for more big box projects in the future. On the construction side, they will be extremely busy in 2023. They continue to see more and more interest in manufacturing. Megan O’Neil of Wyche closed on 38-acre class A apartment project in Beaufort. She closed on a textile mill in Anderson as well. Alita Webster of Young Office thought they would see a slowdown in price increases, but they are seeing a continued increase in prices. Lead times are coming back to normal. Supply chain seems to be leveling off. Hope to get back to the 4-6week lead time after start of new year. They continue to see high activity in education because of the influx of money to the education sector. Andrew Porio of Credit Marketplace said that investors remain strong. Their fund outlook for 2022 is up 71% and expect a similar year in 2023. Historic credits are still very popular. Be on the lookout for website enhancement for first quarter of 2023. Ryan Wynkoop of Ashcroft Capital seeing a little transition in the market. He focuses on multifamily investment and large track land deals. Lenny Pisano of Avid Realty Partners focus on buying large multifamily projects across the southeast. Movement of capital has slowed down. When will the capital become more friendly? Matt Carter of Berkshire Hathaway says that with interest rates up and cap rates up, they are seeing owner financing coming back in some deals. Accelerated confidence by seller while confidence in buyer is going down. Residential development leading the way. This is the last year for accelerated appreciation – amazed there are not as many taking advantage of it. City zoning – Jan3 completely changing Greenville – code redevelopment. Trying to make development easier. JP Scurry of Crosland Barnes Group shared that it is hard to pencil deals right now with interest rates and construction prices. Lucas Ward of Gibbs International shared that their company is celebrating 50 years in the business. Gibbs International, Inc is a diversified company engaged primarily in Textiles, Industrial Equipment, Energy Solutions, Decommissioning and Real Estate with headquarters in Spartanburg, South Carolina and a European office in Süßen, Germany. Mike Kiriakides of KDS Commercial Properties focuses on upstate commercial real estate. They are seeing all-time highs on valuations across the board. Losing deals because valuations long term do not make sense. Appraisers are not keeping up and many lenders are sitting on side lines. Darath Mackie of Lee & Associates specializes in office and land. No slowdown in office in Greenville. Greenville having a hard time bringing in new people to office spaces. It is an issue with GSP not having international flights. Raleigh, Charlotte, Virginia, Atlanta coming to Greenville opening new office. Low inventory – no quality product. Lots of room for new construction. Rates going up in upstate – but class A rental rates are much lower than similar space in Charlotte, Raleigh and Atlanta.