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Regional Spotlight

Macon, Georgia

Despite COVID-19, the “Heart of Georgia” Market is Holding Strong. by Carole VanSickle Ellis Macon, Georgia, sits squarely in the geographic center of the state, a location that earned the city its nickname, “The Heart of Georgia.” And while the Georgia’s “heart” may have been historically overshadowed by its capital, Atlanta (“Hotlanta”), real estate in Macon has taken an unprecedented turn skyward in 2020 thanks in large part to a pandemic-resistant economy and the housing affordability that the entire southeastern state is known for. Although local real estate professionals in the area were initially taken by surprise when the market recovered and skyrocketed in the wake of March 2020’s near-national lockdowns, they reported that by Fall 2020 the Macon market was showing an unprecedented level of competition. “2020 has been a crazy year,” said mortgage loan officer Kacy Discher. “This is the first time I can ever remember Macon having bidding wars,” she added. The last documented evidence of this trend in Macon was around 2006. Low interest rates combined with relative affordability, proximity to drivable outdoor recreation destinations, and an emerging COVID-driven surge into the single-family housing market have driven Macon home prices upward while sending active housing inventory downward. Georgia’s history of investor and business friendly policies have somewhat insulated the state and its major metro areas, of which Macon is one, from much of the economic fallout affecting other states in the wake of the coronavirus pandemic. In fact, Macon’s employment metrics, while certainly not as positive as they were in January of this year, indicate unemployment as of September 2020 was hovering around 6 percent, below both the national average and rates in harder-hit cities of similar sizes. In fact, according to the Georgia Department of Labor, Macon’s unemployment rate is only about 1.6 percent higher this fall than it was at the same time last year. Georgia Department of Labor commissioner Mark Butler cited businesses’ increased preparedness for COVID-19 going into the fall as a positive sign that Middle Georgia, including the Macon-Bibb County area, would likely have an advantage in the post-pandemic recovery. “As long as economic conditions stay the same, I think you are going to see us get back to where we were back in February at historical lows,” he predicted at the end of September 2020. The Perfect Location to Win Homebuyers’ Hearts Prior to the emergence of COVID-19 in the United States, Macon was already “ticking the boxes” for many homeowners, business owners, and major employers. With three colleges ranked in WalletHub’s “Best Colleges in Georgia” list for 2020, employment options in a variety of recession-resistant sectors like healthcare, insurance, and education, and the close proximity of Robins Air Force Base in the city of Warner Robins just 10 miles away, home values in the area had been rising steadily since 2012, gaining nearly 5 percent in 2019 and projected (prior to COVID) to gain another 2-3 percent in 2020. In the wake of the COVID-19 pandemic, however, things in Macon shifted and the market heated up. Based on market activity between April and August 2020, Zillow analysts now predict home prices will rise another 4.5 percent. Like most other markets across the country, Macon’s available housing inventory has fallen dramatically, with available inventory down nearly 40 percent compared to this time a year ago. Demand is likely to continue to rise, particularly for what many investors refer to as “bread-and-butter” properties that appeal to first-time homebuyers and renters who value single-family housing. With Georgia tied for seventh place in the nation for the lowest unemployment rates in the country and Middle Georgia’s unemployment even lower than that, the job market in the area is sustaining the local economy and attracting new residents both to buy and rent. The municipal governments in Macon and Bibb County are working hard to make sure those new residents have the types of housing options they need, issuing nearly double the number of home-building permits in 2020 than were issued in 2019. Even the local retail sector is tentatively back in hiring mode, with one local employment agency specifically courting out-of-work and furloughed restaurant, hospitality, and retail workers to fill around 1,000 positions at local companies. Many of these positions will be considered “light warehouse jobs,” said Michael Chalmers, who owns Spherion Staffing and is helping fill this type of position. He added that the temporary employees will have the opportunity to potentially gain fulltime employment at the companies for which he is hiring. Chalmers noted that local businesses are already in “holiday shopping” mode thanks to coronavirus, which has forced many businesses to shift their focus from brick-and-mortar operations to online retail. This has necessitated an employment shift as well, with more workers being necessary to handle pulling, packing, and shipping. “Normally, we do this business pretty heavily in the fourth quarter because of the Christmas season, but we have been seeing upticks…since May,” Chalmers told The Macon Telegraph at the end of September. The city also has its own initiative to keep local businesses open and residents safe and employed. In September, local economic development agency NewTown Macon partnered with the Greater Macon Chamber of Commerce, Macon-Bibb County, the Macon-Bibb Emergency Management Agency, the local Urban Development Authority and Visit Macon to “unify businesses and residents committed to slowing the spread of COVID-19 while supporting the local economy.” Through that initiative, local businesses were able to formulate a clear plan of action to help consumers feel safe and continue to patronize local establishments. More than 90 businesses signed up for the campaign, Josh Rogers, director of NewTown Macon, reported mid-September. Local business owners say the initiative is working. “[Customers] feel safe to come here. They feel safe to eat at our restaurants and shop in our stores,” said the owner of a local brewery and restaurant. Ticking the Boxes for Post-Pandemic Real Estate Given its middle-Georgia location, Macon is primed to attract first-time, post-pandemic homebuyers and new residents participating in the

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Regional Spotlight: Pittsburgh, Pennsylvania

The Steel City’s innovative spirit keeps the market hot under duress. Pittsburgh, Pennsylvania, has not historically been a city of extremes. During the housing boom, the subsequent housing crash and the Great Recession of the early 2000s, property values remained largely flat relative to the dramatic swings in the rest of the country. During the last 30 years, unemployment rates have never ventured into double-digit territory. Instead, they have remained firmly between 4% and 7%, with the notable exception being 8.3% in March 2010. When it comes to population, the city has little to offer in the way of fireworks either. In fact, Pittsburgh’s population has been in a long, slow decline since the 1980s when the steel mills closed en masse. However, even that usually troubling metric has not created a terrible furor in the local economy. Pittsburgh has boasted substantially higher per-capita incomes than national averages since 2010, thanks to a thriving STEM (science, technology, engineering, math) economy and a supportive environment for oil and gas and natural gas businesses. For real estate investors, investing in Pittsburgh can be an extremely rewarding experience if they take the time to understand the unique dynamics of the metro area’s economy. Pittsburgh’s relatively steady metrics, both positive and negative, have created enormous opportunity in the market over the years. For example, in early 2007, Pittsburgh home values seemed to lag far behind the rest of the country; nearly a third of the city’s homes were decreasing in value while the rest of the country’s real estate values soared. Then, when the housing market crashed, the nearly flat growth created enormous opportunity for developers who purchased entire portfolios of homes in the Steel City, renovated them and sold them over the next decade as the local housing market heated up. “That is where I started,” said local developer Al DePasquale, who purchased an 18-property single-family portfolio in 2007 for $360,000. Today, those properties sell for about $475,000. Many economists and analysts believe that Pittsburgh’s slow population decline is beingoffset by the growth potential created by STEM jobs through local universities such as Carnegie Mellon and the University of Pittsburgh. Both schools sponsor tech incubators dedicated to keeping graduates in the local area by helping them start companies in Pittsburgh rather than moving to Silicon Valley or San Francisco. According to Pew Charitable Trusts data, about 7% of all jobs in Pittsburgh are STEM jobs. Along with business, management, and arts and media jobs, those STEM positions have contributed to productivity and income growth in the city even as the population continues to decline. Thanks to the presence of fracking company Marcellus Shale, which made Pennsylvania a top producer of natural gas in the U. S. after moving operations near Pittsburgh in the mid-2000s, the Pittsburgh economy may still be considered healthy even in light of its population decline. “Chilling” Uncertainty One possible cloud (or silver lining of opportunity) for Pittsburgh investors is declining new construction. Despite 2020’s rising home values and skyrocketing listing prices, the Pittsburgh market is facing a potentially troubling 2021 if construction starts do not catch up to projections. Local developer Jeff Burd, owner of the Tall Timber Group and a local publisher focusing on development and construction, initially estimated project starts in the area would reach $4.8 billion this year. However, the tally was only about a third of the way there as of June 2020. “It’s the economic uncertainty that is chilling construction,” Burd observed. Another potential fly in the ointment for the Pittsburgh economy could be the presidential election. Democrat presidential nominee Joe Biden made the city his first official campaign stop following his acceptance of his party’s nomination in August, but not everyone was happy to see him. Biden is well known as an “anti-fracking, anti-oil and -gas” candidate, explained Jon O’Brien, executive director of the General Contractors Association of Pennsylvania in a Pittsburgh Post-Gazette interview published in mid-August. Although Biden has said he does not want to ban fracking outright, his current climate proposal would ban new oil and gas permits in certain scenarios, and many believe his administration would seek to go farther once in office. O’Brien cited concerns over COVID-19 resurgence in the fall and a “wait-and-see” attitude about the presidential election for much of the construction slowdown in the area. “I think little by little, it [construction] is picking up more and more,” he said. Burd noted single-family construction is up in the area by about 5% for the year so far, although that is about 2.9% lower than this time in 2019. Pittsburgh has a shortage of available lots for single-family housing, however, so residents may have to turn to multifamily options. Either way, there is still pent-up demand in the region simply because inventory is so limited. Resistant Industry Sectors One of the reasons Pittsburgh has survived and even thrived in situations that mighthave sent other cities into a long decline is the inherent resilience of its diverse jobs market. Although the metro area lost more than 202,000 jobs in February, March and April 2020, the city had made up more than half of those positions by the end of August. “What helps us is our concentration in professional services, financial services, education and health care … industries that are rebounding quicker and will helpstabilize the economy,” said Jim Futrell, vice president of market research for the Allegheny Conference on Community Development (ACCD). He noted that many large financial employers in the area, such as PNC Bank and BNY Mellon, maintained almost all their employment base by converting to a remote-working environment. However, like most other trends in Pittsburgh, it is unlikely the recovery or economic turnaround will be particularly striking or expedient. According to a report the ACCD released in August, unemployment is dropping fast in Pittsburgh and surrounding areas, but the ongoing loss of state and municipal revenues “will likely offset some of the [economic] gains” in the area. The education sector represents another bright spot

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Regional Spotlight: Portland, Maine

The Northeastern market remains competitive in 2020. As with every other U.S. city, Portland, Maine, entered summer 2020 pulled in many directions. Fortunately for Portland, as the most populous city in Maine with just over 66,000 residents (according to 2019 U.S. Census estimates), some of the tension in the market has been due to a competitive housing market and an economy that’s tentatively recovering. That economy, which has historically relied largely on the tourism and service sectors, may well turn out to be the sort of “diamond in the rough” that truly shines and grows in value under pressure. “Portland went through a big hospitality boom that led to a second-home boom in this market,” Fred Forsley, founder and owner of the local Shipyard Brewing Company and a real estate investor, said of the pre-coronavirus market and economy in the area. “Now, even more people are thinking about buying a condo in Portland and doing business here as well as vacationing here.” “We are experiencing an influx of buyers triggered by the need to get out of their current situation,” said Nancy Carleton, a managing broker at William Raveis Real Estate in Bath. Carleton said she is seeing buyers from most of New England and as far south as Pennsylvania. “People have discovered they can work from home and realized they may continue to work from home for the foreseeable future. That is freeing them up to buy more substantial properties as they plan on spending more time in Maine,” she said. Forsley, who developed eight residential condo units as part of a larger project near his brewery noted that many of his buyers spent about half their time in the Portland area and the other half in a major metropolitan area like New York City or Boston before the pandemic. However, with COVID-19 still ravaging many densely populated areas of the country, second-homeowners could well begin making more use of their vacation location. “[This spring] people definitely came to their second homes in Maine and then stayed to work remotely,” Forsley said. The result, in Portland at least, has been that development has continued wherever possible. At present, Forsley is involved in several development projects, including a waterfront site, high-end condos and the beer-themed Cambria “brewtel,” the first of its kind in Maine. Pandemic Partnerships Keep the Market Moving With Redfin describing the Portland market as “very competitive” at the end of July 2020, the city’s real estate market seems to be holding firm during the COVID-19 pandemic. “Homes sell for around list price and go pending in around 10 days,” Redfin agents reported, and June sales prices were up just over 8% year-over-year. Much of the competition for homes comes from outside the state, said agent Rebecca Kingsley. As an associate broker for the Hatcher Group of Keller Williams Realty, Kingsley specializes in helping clients from out of state. “If they are working remotely, why not bring that national dollar to Maine and be able to continue on with their Chicago salary?” she said. However, many local housing advocates are becoming concerned those out-of-market dollars could price Portland locals out of housing options. With a low inventory of available properties, the trend in rising prices seems unlikely to change direction any time soon. Maine Realtors Association president Tom Cole told the Portland Phoenix, “Maine’s for-sale inventory is down 19% compared to a year ago.” Inventory availability is unlikely to loosen up any time soon since so many Americans arenow actively considering moving out of denser urban areas into cities like those in Maine. One advantage for real estate investors looking to acquire properties in the area is the local planning board’s ongoing work during the pandemic. The determination to keep development moving represents a certain degree of hope for local homeowners wanting to acquire an affordable residence. Despite beginning virtual meetings in April, the city has still managed to approve about 150,000 square feet of construction ranging from residential developments to medical offices to utility projects. “At the beginning of the pandemic, we established a goal here in the city to support the continuation of city development approvals and ongoing construction activities while protecting public health,” said Greg Mitchell, Portland’s economic development director. The city pivoted quickly to remote services to keep developers actively working in the area. Local developers agreed to take on “the responsibility of public safety and the public health crisis” in exchange for continuing work. The result of this was that hundreds of local workers remained employed on job sites and many developers avoided breaking commitments made to investors. The city’s Port of Portland, the largest tonnage seaport in New England, has also remained open for most forms of cargo. As in most ports, cruise service has been suspended, but Maine ports are exploring options for permitting some cruise ships to dock in the area and possibly board a limited number of passengers. The presence of a large port like the Port of Portland provides additional economic insulation to the Portland area, since shipping, storage and related services are largely considered essential services and continue running during shutdowns. Portland’s Emerging Markets Could Stabilize a Service-Centered Economy While some of the nation’s highest-profile hospitality and service-industry markets are suffering record-breaking unemployment and economic meltdowns, Portland appears to be weathering the storm relatively well. Portland’s May unemployment rate, for example, was 10.3%, below the national average of 13.3% for the same period. Forsley credits job growth in biotech companies and the “nonseasonal” second-home market for much of the market’s stability. He explained that in Portland, Maine, second homes are not generally used solely along seasonal parameters, unlike many other northern vacation homes. Portland has also benefited from its state’s emerging life science and biotech markets and is home to many of the companies that are currently on the forefront of the worldwide effort to stop COVID-19. “Maine’s biomedical and life science companies are providing crucial tools in the global fight against COVID-19. High demand for

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Regional Spotlight: Las Vegas, Nevada

“Sin City” Real Estate Posts a Summer Surprise When COVID-19 locked down the U.S. in mid-March, analysts understandably warned that economies heavily reliant on tourism and hospitality would suffer the most. With national unemployment spiraling into the double digits and remaining above 13% in June, it seemed likely that Las Vegas, Nevada, would once again secure a spot on the hardest-hit lists for the latest downturn, thanks to its dominant tourist industry. Instead, the city known for wild abandon and encouragement of behaviors that run counter to today’s “physical distancing” seems to be muddling through the pandemic and possibly even poised to bounce back sooner than many other areas of the country. In fact, many local real estate professionals and national economists are calling the current real estate situation in Las Vegas a “late-spring bloom,” thanks to May numbers that indicate higher numbers of properties under contract and at higher prices than for the same period in 2019. “What surprised us [in May] was it was not just entry-level homes we were seeing the demand for, but luxury homes,” said Lesley Deutsch, author of a John Burns Consulting report on the topic. Deutsch speculated Silicon Valley giants’ decisions to permit employees to work from home indefinitely could be playing a role in the market’s momentum. “You can afford more space in markets like Vegas,” Deutsch said. He described an emerging trend of homeowners “trading up on their luxury homes to have more space” and noted that the trend accelerated in May. In early May, Twitter and Square CEO Jack Dorsey and Facebook CEO Mark Zuckerberg announced they would allow employees to continue to work from home “forever.” Further, Facebook began accepting applications for new remote positions. While the social media platforms may opt to adjust salaries to fit the employees’ new locations, the appeal of owning a much larger, more luxurious home in Nevada is likely to outweigh the appeal of renting a small, exponentially more expensive unit in the Silicon Valley area if the commute is no longer a factor. When these high earners started home-hunting after Nevada “reopened,” they created demand for housing in higher price tiers, more so than most other markets are experiencing. Local real estate brokerage owner Ken Lowman said his firm, which focuses on luxury housing in the Las Vegas area, is seeing the strongest interest among buyers looking at properties priced between $800,000 and $1.2 million and homes priced $3 million and higher. He also reported that before the national shutdown, about one-third of his buyers were already coming from California. Today, that number has climbed to more than half. According to Realtor.com’s Housing Market Recovery Index (HMRI), in mid-June, Las Vegas has surpassed the index’s January 2020 baseline of 100 and is in official “recovery mode.” It is one of eight markets, including Seattle and Los Angeles, to have achieved that status. Las Vegas’s presence on the list has many investors feeling surprised and optimistic. “Markets with stronger job creation pre-COVID are proving to have the crucial edge for real estate activity, particularly those with a strong technology sector,” said Javier Vivas, Realtor.com’s director of economic research. He said stable jobs and incomes would “power demand for homes” and ultimately speed recovery in markets on the list. Since Las Vegas exceeded its January baseline in mid-May and has posted index measures between 100 and 105 since that time, the area’s recovery appears to be growingin stability. Multifamily Housing Unpredictable Although single-family real estate in the Las Vegas area may be gaining momentum, multifamily developments are experiencing some expected turbulence. Multi-Housing News (MHN) associate editor Adriana Marinescu observed that the Vegas “multifamily market continued to move at a slow pace through May following a sluggish April. Both landlords and renters waited for normal activity to resume in a city severely hit by furloughs and layoffs since the early days of the coronavirus pandemic” (“Las Vegas Multifamily Wrap-Up,” May 2020). Casinos and hotels have been cautiously reopening their doors up and down the Strip and in outlying areas of town since the beginning of June, but the hospitality sector remains uncertain. Local real estate investor Larry Loik, president of The Real Estate Investor Network, observed that suburban areas around Las Vegas are largely reopened and in full recovery mode despite ongoing unemployment issues in the tourism sector. “Here in Las Vegas, our economy was the hardest-hit in the nation due to tourism being a major factor. Nevada had the largest unemployment of any other state. A lot of this was due to the governor’s rulings,” Loik said. He added that in suburban areas where local economies are supported mainly by Nevada residents, “restaurants, shops, malls, parks, golf courses and more are all packed … and visitor count is going back up.” The contrast between the pace of regional recovery and the Las Vegas tourism recovery is creating some unique opportunities for real estate investors interested in holding assets long-term. The state is currently adding jobs much faster than the national average, which could translate to firmer ground for the local market and rising demand for single-family rental (SFR) housing even if the rental population’s current employment status is less than ideal. “Nearly half of the population in Las Vegas rents, and it is a beautiful city surrounded by nearly 70 parks. It is a highly attractive destination for outdoor activities as well as its more notorious entertainments,” said Marco Santarelli, founder and CEO of Norada Real Estate Investments. Santarelli said the most prevalent building type in Las Vegas is the single-family detached home, making it an attractive market for residents hoping to leave multifamily living situations. As a result of the unusual nature of the Las Vegas recovery, single-family homes in the lower and middle tiers of the market could be good investment options either to rent-and-hold long term or rent in the short term and then sell when the economy more fully recovers. Although multifamily developments are nearly always a safe long-term

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Regional Spotlight: Denver, Colorado

A strong summer could balance the Mile High City’s soft spring. It surprised no one that Denver, Colorado’s, housing market took a hit in spring 2020. After all, no market has been unaffected by the economic downturn the coronavirus pandemic brought on. However, real-estate-related behavioral trends that emerged at the end of April when some “stay-at-home” restrictions were lifted in Colorado indicate a strong summer for residential real estate could help balance out this year’s difficult spring. The Denver market’s combination of attractive qualities and resilient employers will, in conjunction with state and municipal policies regarding economic reopening, determine the future of this real estate market. “The metro’s highly skilled workforce and business-friendly environment have prompted many company relocations and expansions,” wrote Yardi Matrix associate editor Anca Gagiuc in the company’s spring 2020 report on the Denver area. She warned that although rents were up by 0.3% to more than $1,500 at the end of the first quarter of 2020, rental demand would likely record a dip and rent growth would “flatten” in the coming months. “The shock of falling oil prices and the novel coronavirus pandemic have put intense pressure on Denver, especially on its energy industry. Although tech firms brought an influx of high-paying jobs in 2019…some one-third of Denver’s employment opportunities are in at-risk sectors,” Gagiuc said. At first glance, that outlook sounds bleak. For real estate investors, however, this dip could represent a relatively short-lived opportunity to engage in a highly competitive market with two-thirds of its employment sector considered relatively less “at risk” from the unknowns associated with COVID-19. “This market is still extremely strong,” said Stephanie Walter, a local real estate investor, founder of Erbe Investment Group and a syndicator who owns and manages both single- and multifamily residential properties and projects in the area. “The suburbs around Denver are still holding firm, thanks to huge population growth over the past decade,” she said. “For example, Fort Collins, Colorado, which is about an hour north of Denver, has tripled in population in the past 40 years and is still expected to double again by 2050.” One of Walter’s properties “leased up” in mid-April of this year for $500 monthly rent more than the year prior, with built-in rent increases of $400 annually for the next two years. “That was in the very middle of dealing with COVID-19, and they still felt like the terms were to their advantage,” she said. Marco Santarelli, founder and CEO of Norada Real Estate Investments, agreed. “Of greatest importance to real estate investors in Denver is that growing population,” he said. “Jobs are increasing, and so are the number of renters. In just one year, the population of the metro area rose by 1.33% to about 2.7 million people. Greater Denver is home to about 3.5 million. The question, of course, is whether it will remain a sizzling real estate market amid the ongoing crisis in the nation.” On the residential front, it appears likely the market will rebound quickly. Even in April 2020, median home prices rose year-over-year. Because inventory has been such an issue in this market for years, the shift in supply and demand is actually creating “the opportunity to balance out,” as Matthew Leprino, a representative for the Colorado Association of Realtors (CAR), described it. Leprino noted that unlike some other states, Colorado classified construction as an essential business, which will likely help the real estate market recover from coronavirus-related softening. Changing Residential Preferences and Municipal Policies One of the most important things to watch in the Denver market is how buyer and renter preferences are changing in response to shelter-in-place mandates and business shutdowns. Responses fall into two distinct categories: (1) a change in the desire for space in the home and (2) a shift in how employers view municipal and state shutdown policies. Before March 2020, American homeowner and renter preferences had been trending smaller and sleeker, with more focus on community gathering areas and public amenities over large areas of personal space. In 2017 alone, the number of “compact townhouses” rose 13%. More than a third of homeowners were consistently expressing the desire for a smaller home rather than a large one in Trulia’s annual research surveys on homebuyer and renter preferences. In the wake of COVID-19, those preferences have shifted dramatically. Kelly Moye, another CAR representative, reported her buyers have different priorities today. “We have actually, for the last couple of years, spent a lot of time talking about downsizing—reducing your carbon footprint, getting smaller, leaner, more efficient. Whereas in the last couple of weeks, I’ve noticed people actually wanting more space,” she said. Although Moye emphasized more studies are needed to establish the emergence of a new trend, she said her buyers are expressing desires to live closer to family, have ample room to work in the home and have more space in general. Interestingly, fewer buyers are as concerned with school districts and moving before school starts, Leprino said. “Back-to-school isn’t really what it was before, so folks aren’t as worried about getting into the school district of their choice because there might not be a school to attend,” he told local news channel CBS4. The other factor that will affect the Colorado market in the coming months will be how the state implemented initial shutdown orders and how the state legislature and municipal government handled the “reopening” of the economy. Central to that is the classification of which businesses were essential and what types of services were permitted with social distancing. Denver has benefited from decades of population growth in large part because the city itself and the greater metro area is extremely attractive to employers. An effectively reopened and safe business environment is crucial to retaining existing businesses and attracting new ones. According to the 2019 CBRE Tech-30 Report, Denver is the country’s 10th largest tech market and ranks eighth in the nation for tech talent. The area is rife with tech companies looking to scale.

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Regional Spotlight: Charleston, South Carolina

The metro has a strong market structure likely to hold up under pressure. In March 2020, Charleston, South Carolina’s home sales posted a year-over-year growth of 6%, even with a coronavirus shutdown already looming on the horizon. Local businesses, including tech employers like Atlatl Software, home repair services like Punchlist, and a number of local and national commercial real estate developers, reported their outlooks for spring 2020 would remain positive and, in many cases, largely resistant to the COVID-19 shutdown. They set the tone for the city’s real estate sector as we move toward the halfway point in 2020. Justin Scott, CEO of Atlatl, reported only about one in 10 of his customers have “put a pause on purchases” from his company, which creates three-dimensional visualizations for manufacturers of complex machinery. The company continues to employ its roughly 60 employees, and its augmented reality software is filling a niche many companies need desperately as stay-at-home policies keep clients and service providers physically distant. Other Charleston industries are showing remarkable tenacity as well. For example, South Carolina’s ports in Charleston, Greer and Dillon all maintained normal operations into the second quarter of 2020 despite the coronavirus pandemic. And the Hugh K. Leatherman Terminal, located in nearby Mount Pleasant, remains on track for phase-one completion in March 2021. The facility’s five enormous cranes, all manufactured in China by the world’s only large-scale ship-to-shore crane company, are on track to be delivered in August or September. Statewide, South Carolina ports facilitate about 225,000 statewide jobs, so ongoing operations at these facilities indicate an underlying economic strength in the region. Of course, not all areas of the Charleston real estate market are doing “business as usual,” noted Bobette Fisher, president of the Charleston Trident Association of Realtors. She said March 2020 activity put the market in a strong position to face “the inevitable impact of the global pandemic on our market,” but she emphasized the housing market is likely to have “several challenging months ahead.” For example, Charleston’s available housing inventory dropped dramatically at the end of the first quarter of 2020. Homeowners removed their houses from the market to avoid showings that would expose their families to “through traffic” at a time when social distancing was becoming part of daily conversation. Interestingly, this could to some degree insulate the Charleston market from the wild price swings other markets may experience. Fisher said, “Charleston is in a somewhat unique position in that we continue to see buyer interest and demand in our market even as we progress through this highly unusual situation.” For real estate investors interested in the Charleston area, Fisher’s optimistic take on the situation can be feasibly supported with the area’s strong economic foundation. However, the positive aspects of Charleston’s “unique position” are tempered by some serious coronavirus-related issues. Is Support System Holding Firm? Investors interested in the Charleston area should look carefully at the strategic position of a potential acquisition before making a purchase. For example, Charleston led national numbers last year in terms of how many new homes were added in the area, with Construction Coverage reporting the area added more than 6,700 new homes total, more than twice the national average. Analysts expect the new construction sector of the real estate industry to weather the current economic crisis far better than the existing-home sector. So, the relatively higher availability of new construction and a preexisting trend toward new development could make Charleston particularly attractive to investors in this sector. On the other hand, certain industries in Charleston have been hit particularly hard. Employees in the area’s previously booming restaurant and hospitality industries are filing unemployment claims in record numbers. The South Carolina Department of Employment and Workforce (SCDEW) reported a 400% increase in claims the week of March 19, 2020, alone. That was the week following the state governor’s order calling a halt to all dine-in activities at restaurants, bars and cafeterias. The order also banned organized events of more than 50 people. South Carolina did take steps to protect these workers by enabling employers to file unemployment for employees infected with the virus, affected by a temporary shutdown, who have slow or smaller workloads, or who have temporary or seasonal work. Investors whose investment strategy involves housing for this currently unemployed population may have difficulty liquidating inventory at this time. Still, it is possible that investors who can hold these assets may benefit in the long run, once the state “reopens” its economy. In January 2020, the Charleston area’s unemployment was so low that SCDEW executive director Dan Ellzey said in a public statement, “More jobs are available than people to fill them. … South Carolina continues charting record levels of low unemployment while more people are earning paychecks than ever before.” Whether the state can regain that momentum will hinge largely on the fallout from the extended national COVID-19 shutdown and how the state handles its reemergence from sheltering-in-place orders. College of Charleston economics professor Frank Hefner suggested the aftershocks of the coronavirus outbreak could be like that of a hurricane in some ways, but emphasized the comparison is neither direct nor wholly reliable. “This is so unusual; anyone that tries to put a number on it is really going to be shooting blind,” Hefner said. When a hurricane hits the state, people may leave the area but then continue to spend money inland—sometimes more than they would spend if they had remained at home. Furthermore, when the storm is over, those people return and bring their buying power with them. “The local stores [in areas that evacuate] may lose a lot of retail sales, but people will need to buy from them a week later,” Hefner said. In the case of the coronavirus, consumer absence in the area could be multiplied by five times or more, depending on how long the state remains on lockdown. As a result, the financial stress on local businesses will be magnified. “Every time I have stood in [my

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