The Charleston Industrial Market, comprising Charleston, Dorchester and Berkeley Counties, grew by 815,000 square feet to 22,491,736, including manufacturing facilities. With manufacturing constant, all of the growth was in bulk warehouses, distribution or flex space. Vacancy fell by 168,048 square feet to 3,170,975 or 19%, resulting in an overall positive absorption of 983,088 square feet. Several factors drove the improvement in the industrial market. Rental rates softened in 2003 to levels slightly below 2002, encouraging much of the leasing activity to occur. Rates for bulk warehouse, distribution and flex projects average $3.43, $4.31 and $5.17 per square foot respectively. While many companies took advantage of low interest rates and moved from leased space to purchased real estate, many others took advantage of high market vacancy and moved or expanded at competitive lease rates. Much of the overall absorption occurred in the new projects in the market, but continued demand and limited plans for new product should help older facilities lease up in 2004.
The driving force for bulk warehouse space continued to be port related traffic. The Port of Charleston holds the distinction of being the fourth busiest container port in the United States and second on the east coast behind the Port of New York / New Jersey. With the shipment of containerized cargo up 11% from 2002 and break-bulk cargo on the rise, the Port of Charleston is making plans for a 250 acre expansion terminal. The increased traffic will necessitate expansions for distributors and warehousers, particularly third party logistics providers. With companies constantly trying to reduce costs, logistics providers have been very successful in helping companies reduce the cost of operating their distribution supply lines.
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