The coronavirus pandemic has had divergent impacts on South Carolina’s economic sectors, with the state’s hospitality industry taking the brunt of the financial fallout. Although every industry took a hit in the early months, some are well on the way to recovery, while others continue to lag.
Here’s a look at how COVID-19 has affected some of the Palmetto State’s key business sectors:
Even within the hard-hit tourism industry, pockets of the sector are outperforming others. That’s because, while tourism revenues have been greatly reduced this year due to the pandemic, travel never came to a full stop.
Instead, consumer behavior changed. That’s made it much more difficult to make predictions this year about what will happen month to month with key metrics such as hotel occupancy rates, said Daniel Guttentag, director of the College of Charleston’s Office of Tourism Analysis.
One trend has been pretty clear throughout 2020: Short-term rentals are filling up at faster rates than conventional hotels. That was true even early on in the pandemic. While rentals took a hit in April, bookings in the state were down just 8 percent. The same month, South Carolina’s hotels saw their occupancy rates plummet 63 percent.
And now, short-term rental statistics in the state are showing improvement over 2019 even while hotel numbers remain well below normal. In October, short-term rentals in the Palmetto State had almost 2 percent more nights booked than in 2019. Revenue per unit was up significantly, by more than 20 percent, while hotels were down more than 30 percent for the same figure.
According to the S.C. Department of Parks, Recreation and Tourism, which tracks the numbers, that indicates travelers are opting for lodging with “more space and more privacy” in 2020. It’s a trend being seen nationally and globally, a report by the hotel tracking firm STR and the short-term rental analysts AirDNA found.
Similarly, S.C. State Parks is having a record-breaking year as people flock to campsites and cabins and set out for socially distant hikes in lieu of other activities. The State Park Service has been reporting record revenue every month since parks reopened in May after a monthlong closure. Revenue in October was up 44 percent year-over-year, with camping and admissions bringing in the most.
Within the tourism industry, the jobs recovery has been uneven. Multiple destinations saw the majority of their leisure and hospitality jobs wiped out during lockdowns in the spring. Many of those jobs returned when businesses reopened, but the percentage of tourism jobs that South Carolina metro areas have recovered varies widely.
Charleston was still missing 28 percent of its hospitality jobs in October. Myrtle Beach, the state’s biggest moneymaker for tourism, logged a loss that was about half that, and Greenville’s market for hotel and restaurant jobs has recovered the fastest: It went from being down 46 percent in April to 8 percent in October.
— Emily Williams
Parts of the brick-and-mortar retail industry, already reeling before the coronavirus struck as it struggled to compete with online behemoths such as Amazon, have been hit hard while others have flourished.
National retailers of soft goods such as clothes folded up many of their walk-in shops as lockdown orders in the spring led to the demise of underperforming stores already on the edge.
But others, such as supermarkets, home-improvement shops, dollar stores, meal delivery and drive-through operations have flourished.
“As people were forced to stay home, they had time to look around and say, ‘I need to have this done,'” said Will Sherrod, a commercial real estate agent for NAI Charleston who specializes in retail properties. “A lot of contractors saw a huge increase in business. As a result, any home-improvement business did quite well.”
And because restaurants were closed or had limited seating for many months, grocery store sales skyrocketed.
That led one Charleston business to triple its workforce during the pandemic.
Grey Ghost Bakery expanded into the contract-baking business for specialty stores just before COVID-19 upended the economy. The timing proved fortuitous.
Because people weren’t going out to eat and began buying all of their food at supermarkets, sales soared for bakery owner Katherine Frankstone’s creations of cakes, pies and cookies at shops such as Whole Foods.
To handle the increased demand, in June, she moved the 8-year-old business from James Island into a 9,000-square-foot space where True Value Hardware once operated on Wappoo Road in West Ashley. She recently added a retail storefront to what was an online-only or specialty-order business.
Before the pandemic, she had about 12 employees. That dropped to about six during the shutdown, but the shop now employs 35.
“The business has really taken off,” Frankstone said. “E-commerce orders have boomed. It’s a surreal blessing in a real hard time.”
Looking ahead, Sherrod of NAI said the introduction of a vaccine will accelerate the recovery.
“People have COVID fatigue,” he said. “They understand it’s out there, but they are getting more comfortable going out and shopping with their masks on and taking other health precautions.”
While downtown Charleston’s King Street has suffered tremendously with an exodus of tenants because of the twin maladies of the pandemic and the late-May riots, grocery-anchored retail centers have not seen the same fall-off. And rental rates are likely to be unaffected for the most part in the suburbs.
As for the numerous restaurants that have had to close, Sherrod said the silver lining is that their spaces are now move-in ready for a replacement tenant.
“Restaurants will bounce back,” he said. “The advantage for them now is there are some spaces already built out and a new tenant can take advantage of that.”
— Warren L. Wise
Construction companies have weathered the COVID-19 economy far better than any other industry in South Carolina.
General contractors and other construction-related businesses have actually employed more people this year than they did in 2019. No other industry sector in South Carolina can make that claim during the pandemic.
Construction workers were deemed essential employees, even when other businesses were forced to shut down to control the spread of the virus. And work continued on most of the projects that were already underway.
“Construction didn’t see a huge downturn because we already had jobs lined up. We already had contracts,” said Keaton Green, a vice president with Frampton Construction. “This whole time, we were putting work in place.”
But that doesn’t mean that everything is operating normally for construction companies.
There were a number of supply-chain issues when construction firms tried to purchase material for their job sites, Green said, and some construction sites needed to be temporarily shut down and cleaned after workers tested positive for the virus.
South Carolina’s construction industry was still employing an estimated 111,000 workers in October, according the most recent data. But the concern now is that employment could dip in the coming months if new work doesn’t materialize.
Many of the projects rising from the ground now were in the pipeline long before the coronavirus hit the United States. Loans were in place, permitting was completed and designs were finalized, making it very difficult to back out. So they pushed forward instead.
Other developers who weren’t as far along in the planning process have scrubbed projects, Green said, and there aren’t enough new deals to take their place.
The company is currently transitioning some of its employees away from construction projects tied to the hospitality industry and retail businesses, Green said, and adding those workers to teams that oversee the construction of warehouses, trucking facilities and manufacturing plants.
“Some areas are booming and some have gone completely flat,” he said.
— By Andrew Brown
With people losing their jobs or being idled by the coronavirus, shelling out a bunch of money on a new home would seem unlikely.
But the COVID economy has turned that on its head. While mortgage delinquencies have doubled in the Charleston area from one year ago, home sales have skyrocketed.
Loan delinquencies of 30 days or more rose to 6.7 percent from 3.7 percent last year in the Charleston region, according to property information provider CoreLogic. At the same time, residential real estate purchases have soared more than 10 percent in the Lowcountry over last year’s record-setting pace.
For all of South Carolina, home sales are down slightly for the year, but nowhere near the plunge witnessed during the height of the economic lockdown in the spring when everyone was ordered to stay home.
Home sales are better in South Carolina, and especially the Charleston area, than some other parts of the country because people continue to want to live here, said Owen Tyler, president of the S.C. Realtors Association.
Tyler also said changes with families, such as having a baby, someone moving out or getting a dog and needing a backyard, drives demand for housing, too, at the same time that newcomers are looking for housing.
On top of that, big-city residents are trying to escape confinement and they are moving to smaller metropolitan areas or the suburbs where they will have more room, he said.
A recent study by the U.S. Postal Service of people changing ZIP codes during the first nine months of the year found the Palmetto State is the second most-popular destination for those moving from somewhere else. The study showed Texas and New York as the two states with the most move-outs.
Even with the record number of homes sold so far this year, Tyler said even more would be sold if inventory was available.
“There are not enough housing starts and not enough people willing to sell,” he said. “That drove up prices. It’s simply supply and demand.”
Tyler believes more houses will come on the market once a vaccine is available.
“People are not scared anymore,” he said. “They are cautious, but they are not scared. They are comfortable in looking now.”
Also, office development showed no signs of slowing down during the pandemic.
In mid-November, officials with Raines, formerly Raines Hospitality, dug their shovels into a plot behind Hilton Garden Inn at the base of the Ravenel Bridge for a new four-story office building in Mount Pleasant.
David Tart, of Raines, said the company has no qualms about moving forward with the $12 million venture at 302 Wingo Way during a pandemic.
“We are pretty optimistic coming out of the pandemic that people will still maintain office space,” Tart said. “I would have more apprehension if it was in a riskier location.”
The 36,000-square-foot structure will be called Wingo Way and open in late 2021 with Tart and his colleagues currently the only tenant lined up.
— Warren L. Wise
Vehicle manufacturers and the Port of Charleston, two of the Palmetto State’s biggest economic drivers, experienced blips during the springtime but have largely recovered since then. Even as the coronavirus is spiking again in the U.S., those sectors promise to continue growing in the coming months.
The port has benefited from the trend of homebound consumers shopping online and fixing up their living spaces, which has led to a boom in imports. Retail spending, largely due to e-commerce sales, is up 14.2 percent in South Carolina since January, and the rest of the Southeast region served by the port has seen similar increases. While the number of cargo containers moving through the port dropped by as much as 21.9 percent in the spring, the figures showed a slight year-over-year increase in September — setting a record for the month.
“You know, people are buying — I don’t want to say out of boredom — but they have not much else to do, I guess, so they buy stuff,” Newsome said when the September numbers were announced.
Volvo Cars, which builds its S60 sedan near Ridgeville, saw its year-over-year sales totals in the U.S. tumble by nearly one-fourth in the early months of the pandemic. By the end of November, sales were on par with 2019 figures.
“As we approach the end of the year, I am re-energized by our team’s capacity to recover the sales losses incurred at the start of the COVID-19 pandemic in America,” Anders Gustafsson, president and CEO of Volvo Cars USA, said in a statement. “Given the additional loss of three selling days over 2019, this success restates our strength in the segment and the hard work put in by our retail partners and employees throughout the Americas.”
German automaker BMW, one of the state’s largest manufacturers, showed “significantly improved performance” in the third quarter, both globally and at its Spartanburg County factory that makes X-model SUVs. Much of the demand has come from key overseas markets, such as China.
And the Mercedes-Benz Vans plant in North Charleston — builder of the Sprinter, a workhorse vehicle for online retailers’ home deliveries — sold 27.6 percent more automobiles in the U.S. this third quarter than last year. A surprising result of the pandemic is the surge in vans being sold for conversions into recreational vehicles as travelers want a self-contained vacation experience.
Many other manufacturers and their suppliers have rebounded from steep setbacks earlier in the year. Steelmaker Nucor, which operates a large mill in Huger, saw its earnings fall by more than two-thirds in the second quarter. It had trimmed the year-over-year losses to less than one-third by the end of September and company CEO Leon Topalian said he expects “improved performance in the fourth quarter.”
Boeing Co., which builds its 787 Dreamliner in North Charleston, suffered major setbacks this year when air travel dropped off drastically. Production rates for the jet were halved and then cut again, down from 14 to a total of six per month. On Friday, Boeing dropped the rate for a third time since the pandemic began, reducing it by one more jet per month to five.
A round of buyouts was announced, then layoffs, another round of buyouts and more layoffs after that. The company hasn’t disclosed how many of the about 7,000 Boeing South Carolina jobs that existed prior to the pandemic have been cut. An updated count of employees will be released in early 2021.
But early October was a bright spot for South Carolina’s aerospace sector. Boeing announced it will be consolidating production of its Dreamliner, which is now also built in Everett, Wash., in North Charleston starting next year. And despite the recent job cuts, industry boosters hope that change will bring more high-paying careers to the Lowcountry in the long-term.
— David Wren, Emily Williams
Ernest Andrade, director of the Charleston Digital Corridor, was met with the daunting task of securing leases for two developments during the worst unemployment crisis in the country since the Great Depression.
The City of Charleston had promised to lease space in the new 22 WestEdge development, a modern office building that was intended to attract life sciences companies, in order to help along its construction. The city tasked Andrade with filling it up once it was ready.
He told Charleston City Council’s real estate committee in mid-October the space was prepared for tenants in early April, “a time when no one really wanted to receive any real estate.”
But it was fully leased by June, he said.
“We were able to deliver a return to the city beyond the investment on a monthly basis,” Andrade noted. Specifically, the city is netting $700 on rent each month.
Vikor Scientific, a diagnostics startup, is leasing much of that space, and it has expanded by a couple hundred employees since the beginning of the pandemic, when it shifted its business to COVID-19 testing. Company officials told Mayor John Tecklenburg they would have chosen a different city if the WestEdge space was not available.
Tecklenburg said during the meeting the city’s decision to lease part of the private development was a risk.
“I believe the dividends have paid off,” he said.
Andrade also is spearheading the development of the Charleston Tech Center, a long-planned office building on Morrison Drive that will cater to technology businesses. It opens in January, with 70 percent of the space leased so far.
— Mary Katherine Wildeman
HCA Healthcare, the nationwide investor-owned hospital chain that operates Trident Health in North Charleston, was feeling secure enough in its financial position that it returned $6 billion of CARES Act funding.
Of that amount, $10.8 million in relief grants would have gone to Trident Health.
Though hospitals are providing a vital service during COVID-19, many have struggled financially given restrictions on elective procedures imposed during lockdowns. Patients have also delayed care. Securing needed protective gear, new treatments and more has also been a test for hospitals’ supply chain managers.
Todd Gallati, CEO of Trident Health, said being owned by one of the largest conglomerates added some financial security during turbulent times. Because it owns roughly 180 hospitals, HCA’s scale has led to “some of the best supply contracts in the industry,” Gallati said. And macabre as it may be, patients arriving at Trident Health’s two hospitals this year have been sicker, which naturally leads to the company being paid more to care for them.
Even so, Trident Health is running somewhat behind where it stood at the same time last year. The volume of patients coming in remains lower, particularly in emergency departments, Gallati said.
The hospital is learning how to balance “the peaks and valleys” of the pandemic, Gallati said. He noted COVID-19 patients are faring better as health care teams learn how to best treat cases of the virus. The mortality rate due to the virus has dropped across HCA hospitals since the spring.
“I think with that clinical confidence we also gain in our financial confidence of being able to weather these storms,” Gallati said.
— Mary Katherine Wildeman