Report: Industrial Real Estate Market Brisk across S.C.
Thursday, October 26th, 2017
Industrial real estate activity is brisk across South Carolina and major employers could spur additional activity, according to a series of recent reports.
Colliers International Group Inc. issued quarterly analysis for the Charleston, Columbia and Greenville-Spartanburg-Anderson markets. The author, Ron Anderson, Colliers vice president of administration for South Carolina, reported that construction pipelines are full of projects and there is a hunger for more.
“Developers are responding by developing speculative product in our largest markets,” Anderson said in an email response to questions from South Carolina CEO. “Local communities are also providing a limited amount of speculative product that is being absorbed.”
Speculative development – facilities built in response to market trends, but without a specific tenant in mind – is particularly active in the Upstate, according to Anderson. However, there is also a 200,000-square-foot spec warehouse building underway in Lexington County, with more expected.
“New construction is beginning to keep up with demand,” Anderson said.
Colliers reported that in the Upstate, more than 5 million square feet of space has been added to the market in the past 12 months, with another 5 million-plus currently in the construction pipeline.
“Construction remains near its historic high,” Anderson wrote.
The Charleston market added 603,000 square feet in the second quarter alone and has 3.7 million more in the works.
“Manufacturers, warehouse users and logistics users will continue to accelerate their search for space in the Charleston market,” Anderson predicted.
In the Midlands, the story is about a vacant existing building coming off the market. Samsung announced it would establish a home appliance factory in Newberry County in the 453,000-square-foot former Caterpillar facility.
In addition, a combined 1.5 million square feet is under construction for facilities belonging to China Jushi in Richland County and Continental Tire in Sumter County.
“The Samsung, Continental and Jushi facilities may draw additional development to the region to support their future growth,” Anderson reported.
While construction continues on manufacturing facilities for Volvo (Berkeley County) and Mercedes Vans (Charleston County), the Charleston market saw some space open up when Husqvarna vacated a 512,000-square-foot building in Summerville. Anderson said Colliers believes that building can be marketed by economic developers to attract new jobs.
Warehouse/distribution space makes up the majority of industrial real estate across South Carolina. It is at a premium in the Charleston market, where vacancy was 4.29 percent.
Overall vacancy rose in the Upstate in the second quarter, which Anderson attributed to new construction. Colliers reported that the Upstate has benefited from the statewide growth of logistics and automotive and aeronautical manufacturing.
An area near the Greenville-Spartanburg county line is particularly busy. That spot is close to the BMW plant, Michelin’s North American headquarters, the Inland Port and the intersection of Interstates 85 and 26.
Anderson said a “substantial” portion of development is being supported by the Inland Port, “although proximity to Interstates 85 and 26 continues to be the main driver of regional growth.”
Looking ahead, Colliers forecast industrial leasing to remain busy across the state, with rising rents expected in the Charleston market until supply catches up to demand.