John Darby of Beach Company Last February, informed from a request through the Freedom of Information Act, The Columbia Star reported the City of Columbia appeared to be losing over $5 million on the CanalSide property. That conclusion was based on pending offers from two development teams, The Mungo Company of Irmo and The Beach Company of Charleston. The February prices were averaging about $4 million, and the city had spent over $9 million on CanalSide for the previous 10 years. That was about $3.3 million to purchase the property and another $5.7, roughly, in design and pre–development fees and property improvements.

The $4 million purchase offer was in context of the city’s request to subsidize homes for the less advantaged. The city saw successful residential real estate development defined as something for everybody. The two competing development firms saw it somewhat differently, and they were willing to pay more for the property if they didn’t have to participate in a subsidized housing component.

Placing subsidized government–financed modest housing on the same project parcel as high–end buyer– financed luxury housing ran counter– productive to the market potential. In other words, why should a home buyer risk hundreds of thousands of dollars in purely private capital down the street from a government subsidized house? Like likes to live among like.

The city agreed with the winning development team, The Beach Company, and accepted their $6 million purchase offer. The Beach Company plans on no subsidized housing. Also, Beach wasn’t as optimistic as city council over prospects of risking real estate in retail and commercial ventures down on CanalSide.

There is no retail anywhere nearby, and there is no potential aggregation of activity where retail properties feed off each other as partners in the same destination designation.

To carry the cost of the property purchase, The Beach Company upped its number of planned residential units to 750, and Beach lowered its area of office and retail space to 35,000 square feet.

What remains to be done is the property preparation for development, the infrastructure necessary for a fully occupied project. The city figured on another $10 million for roads, gutters, drainage, utilities and the like.

But the city balked at such an investment on top of at least $9 million already spent. It was hearing the $10 million that pushed the city to sell.

The Beach Company has to figure on the city’s same $10 million on top of their purchase price of $6 million. Once Beach has put in the $10 million in necessary improvements, the roads and rights–of–way should be deeded back over to the city, leaving Beach with 18 developable acres.

For the 18 acres properly prepped for development, Beach is paying $16 million, or more than $20 a square foot. For high–end housing in the Columbia market, $20 a square foot (or almost $900,000 an acre) for the land is a reasonable price.

Had the property been in a retail district facing a four–lane thoroughfare, even more money per square foot could be absorbed by the development project. In that context, $30 per square foot might work, which is what Lt. Governor Andre Bauer’s ribbon of real estate running along Lake Murray Boulevard brought under condemnation by SCDOT last year.

But The Beach Company knows the difference between what’s a predictably successful retail strip and what works for high–end housing.

CanalSide is finally under the control of practiced and successful developers, and if all 750 housing units get built and sold under current Columbia market conditions, the total package has a potential sales value of possibly $200,000,000.