Greenville-Spartanburg, South Carolina
The Palmetto State’s “Emerald City” is Still a Prime Location for Investors
By Carole VanSickle Ellis
The Greenville, South Carolina, real estate market has normalized, and that means the Palmetto State’s “Emerald City” is looking more alluring than ever in 2023. Ranked fifth on Realtor.com’s “Top 10 Real Estate Markets to Watch in 2023 and Into the Future,” Greenville boasts a combination of “better housing affordability, greater numbers of renters who can afford to buy a median-priced home, stronger job growth,” and more according to NAR analysts.
“Job growth is robust in this area, but job growth in the information industry is even stronger,” wrote NAR’s research group, headed by chief economist and senior vice president for research Lawrence Yun. Information industry jobs, those that deal with data and its management or strategic analysis, are among the most well-paying jobs in the country at this time. These positions pay about 50% more than average, occupy prime positions in a variety of rapidly growing business sectors, and boast an employment multiplier of 5.7, meaning that for every information job in an area, nearly six additional jobs are created. In both the Greenville and Spartanburg areas of South Carolina, information employers are congregating in increasing numbers.
Of course, the presence of technology and engineering companies in the Greenville-Spartanburg area is nothing new, which makes it a straightforward process to extend the state’s expertise on courting these industry sectors to information and high-tech operations. Nearly 40 years ago, Lockheed-Martin opened its first South Carolina site. Today, that location is the sole location for assembling F-16 fighter jets and is in the process of hiring to bring its employee total to 1,200.
The state has long recognized the value of bringing in employers operating on the cutting edge of technology, offering millions of dollars in support to target industries and even adjusting how air and freight facilities operate in order to make companies’ existence easier and more profitable. This dedication, recently brought to bear on the information industry in particular, is paying off.
Last year, Spartanburg’s BMW headquarters for North American car manufacturing announced it would make a $1.7 billion investment to begin building all-electric vehicles “for the U.S. and world markets.” BMW employs 12,000 in the Spartanburg area, and will bring in an additional 300 tech jobs to support its $700-million, 1-million-square-foot high-voltage-battery plant.
“BMW and Michelin anchor a strong manufacturing base in South Carolina’s Upstate [where Greenville is located],” said local investor and broker Arn Cenedella, who specializes in multifamily and single-family residential investments. “The Michelin North American headquarters are located here as well, and dozens of manufacturing firms that support BMW, Michelin, and GE.”
He noted that as new residents continue to move into the Greenville-Spartanburg area, home prices and rental rates are both still rising. “Average single-family home prices were up 18.4% in 2022 over the year prior,” Cenedella noted, “and our multifamily developments are showing a 94.4% occupancy rate with average rents at $1,340.”
Bosch, a leading global supplier of technology and services, is investing $200 million in Greenville and creating 350 new jobs. Soon thereafter, Diversified Medical Healthcare, a holding entity “dedicated to providing solutions to improve patient care,” announced it would also invest $51 million to create 185 new jobs in the Greenville area.
Bryan Grady, director of labor market information at the South Carolina Department of Employment and Workforce (DEW), predicted that valuable job opportunities like these are likely to increase in 2023. In fact, DEW predicted in January of this year that the number of jobs available could increase by nearly 13% by the end of 2023.
“There is a wide range of occupations that will fuel this increase,” Grady observed, making particular note of healthcare-related jobs and information technology jobs. “Jobs like information security analysts and software developers [are] expected to be in high demand, as are other technical professions like supply-chain experts, statisticians, and market analysts,” he said.
For Donnie Chandler, an investor specializing in the redevelopment of older homes and a realtor with Keller Williams Drive in the Greenville area, the incoming population and those households that will come to fill job positions in other roles supported by these high-tech roles represent ideal residents for his company’s “mill homes,” which, he explained, can still be purchased at discounted prices.
“This often allows for enough equity after forced appreciation to qualify for the BRRR [buy, rehab, refinance, repeat] strategy, but most of the mill homes on the west side of Greenville are resold as the values have been crazy in that area,” he said.
Chandler focuses on the older, lower-priced mill homes in surrounding communities as well. South Carolina’s mill homes were originally built as early as the late 1800s throughout the state to house mill workers and families. Although many of those initial structures are long gone, the mill village communities that formed in counties like Greenville and Spartanburg remained.
These communities often are the last to appreciate and, as a result, are an ideal place for investors to look for deals proximal to higher-value housing and development. They also offer affordable options for new residents hoping to rent or buy near the city centers.
The Perfect Combination: A Top Place to Live & Highly Affordable
The Greenville-Spartanburg area is attractive to real estate investors, homebuyers, home-sellers, and employers because it is highly affordable relative to the rest of the country, is located in the temperate southeast, meaning employees can enjoy year-round outdoor activities, and offers a vast array of employment opportunities. “I have said that if people can afford to live anywhere, Greenville is the place [they] are choosing more and more,” said Jackson Herlong, chief strategy officer for Joan Herlong and Associates Sotheby’s International Realty. He added that the housing market in the Greenville-Spartanburg area is also unique because it is neither a buyers’ market nor a sellers’ market.
“We are going back to normalcy,” Herlong proclaimed. “A smart, calculated marketing strategy is what you really need to sell your home for top dollar [in Greenville-Spartanburg].” That “return to normal” without evidence of a serious correction or market “dip” makes the Greenville-Spartanburg area particularly attractive to investors seeking economic stability in their target markets.
For real estate investors interested in renting or flipping homes for top dollar, the area offers a variety of options. According to Black Knight and NAR data, about one in four renters in Greenville and the surrounding areas can afford to buy a median-priced home, should they wish to do so, and would likely be able to find a home available on the market to buy. This is despite the fact that Greenville-area homes are still appreciating. Nationally, only about one-sixth of renters can afford to buy a home in their own current home city.
“Greenville, S.C., homes are selling in an average of five days,” TheState.com contributor Lyn Riddle reported in October of last year. For investors able to access deals below market value, this creates an opportunity to continue engaging in fix-and-flip and rehab-to-rent strategies as well as simply acquiring cash-flowing long- and short-term rentals.
Because the market is more affordable than most markets elsewhere in the country, renters also have a higher likelihood of successfully saving up for a down payment on a home. On the whole, most Sun Belt markets are currently far more affordable for buyers than other comparable markets in other parts of the country.
According to the Federal Reserve Bank of New York’s “Survey of Consumer Expectations,” most Americans expect their rents to increase by about 10% in 2023. Even with interest rates rising, that could be impetus for many renters to make the leap to homeownership. With prices on all goods and services still rising due to rampant inflation, securing a mortgage – even if that mortgage is on “less home” than a buyer might have hoped for — could be seen as a viable way to make the financial future more predictable for young, professional households who have, thus far, postponed a home purchase.
Bruce McNeilage, co-founder of Kinloch Partners, LLC, a rent-to-own developer that builds new homes and acquires and renovates existing properties in bulk in order to offer high-quality single-family rental properties at affordable rates, entered the Greenville-Spartanburg market in 2017 with a 20-home, $4 million purchase. “Kinloch partners purchased our first rental house in Greenville over five years ago, and we have grown our single-family rental business over the years because of the area’s vibrancy and the many things it offers,” he said.
Kinloch Partners has continued to buy and build throughout the southeast, including in the Greenville-Spartanburg area, because, McNeilage said, “Greenville is no longer a hidden gem. People are relocating to Greenville, and it is no longer a secret.”
“An Appeal All Their Own”
When most people think of the “Emerald City” of Greenville, they do not necessarily think of bright lights, hustle and bustle, or even much of a “big-city” vibe. However, according to the U.S. Census Bureau, more and more city dwellers are finding that South Carolina’s metropolitan areas like Greenville and Spartanburg have what The Post and Courier reporter Jodi Shafto described in September of last year as “an appeal all their own.”
Incidentally, Greenville boasts nearly all the same amenities as bigger cities, like access to an international airport, plenty of retail and entertainment options, big businesses, multiple universities, and a thriving downtown area.
Additionally, cities like Greenville appeal to young professionals which, in turn, makes them appealing to the employers that want to hire those young professionals. “Companies want a place where younger people are moving,” explained Laura Ullrich, an economist for the Federal Reserve Bank of Richmond. Greenville added 12,300 new jobs during the third quarter of 2022 alone; that made up 15% of the total jobs added in South Carolina during that quarter.
Another appealing aspect for many employers was South Carolina’s willingness to classify manufacturing as an essential service during the COVID-19 pandemic. This enabled companies to remain open and operational during 2020 and 2021 lockdowns, and rewarded Greenville, alone, with about $495 million in new projects from existing and inbound employers.
That advantage brought in a 1.4% increase in the state population as a whole in 2021 alone, and most of that growth occurred in areas like Greenville and Spartanburg. “As the population grows…like the Pied Piper, companies are following the crowd of young workers and taking advantage of other amenities the state has to offer,” Shafto said. Likewise, real estate investors seeking opportunities in stable, growing markets that still have the potential for more expansion in 2023 should look carefully at the Greenville-Spartanburg region.
Side Bar
The Revitalization of Downtown Greenville
Today, Greenville’s downtown offers vibrant parks, restaurants, hotels, offices, and events that showcase the area’s natural beauty,” said Josh Woodward, chief financial officer for Lima One Capital and long-time Greenville resident. Not long ago, however, the area looked very different.
Five decades ago, Greenville’s downtown area was in decline. The city center had a sprawling, four-lane roadway, little parking, and next to no green elements. Local businesses were struggling and departing in droves. In 1968, a Downtown Development Plan was unveiled to make Main Street a pedestrian-friendly environment.
The project began in 1979 with the reduction of the four lanes of Main Street to two. The “extra” space was used to create free, angled parking and install trees, decorative light fixtures, and wider sidewalks. This permitted local restaurants to install outdoor dining areas, a surefire hit in the pleasant, southeastern climate. By 1981, the first round of streetscape improvements were completed, and the city began to attract new “anchors” for the downtown area, including the Greenville Commons. Today, the city cites The Commons as “the initial catalyst for the downtown revitalization.” The second anchor project, the Greenville Peace Center for the Performing Arts, is a $42-million development which includes a public plaza, an amphitheater, multiple common areas, and connectivity to the Reedy River, which flows through the downtown area.
In 2008, the city revamped the entire downtown masterplan to identify new areas of interest and potential for investment, including strategies for accommodating new development, transit, pedestrians and cyclists.
“Because of its unique blend of entertainment, commerce, and quality of life, Greenville has attracted hundreds of new businesses and tens of thousands of new residents over the last 10 years,” Woodward said proudly. “This inflow has caused many bedroom communities and neighborhoods to develop and expand in dramatic ways.” He cited Cherrydale, Simpsonville, and Greer as areas growing particularly rapidly, and noted, “The west and north portions of the city have seen quite a bit of infill and redevelopment of businesses and housing, cap-stoned by the opening of 60-acre unity park.” Woodward concluded, “I suspect these portions of Greenville will continue to grow and further interconnect for a long time to come.”
