The Greater Charleston Industrial Market enjoyed enlivened activity in 2004 and grew by 1,536,666 square feet, while experiencing a positive absorption of 1,389,000 square feet. The resulting overall vacancy dropped from 19% to a healthier 18%, and rental rates dropped to $4.39 as the bulk property inventory grew. Much of the market activity centered around users of bulk space, including the expansion of existing tenants and the influx of new tenants to the market; however, flex properties also fared well with the expansion and addition of defense and homebuilding related businesses. The three predominant drivers of market activity were manufacturing recovery, growth of the Port of Charleston and increased national defense contracts geared toward homeland and international security. Secondary drivers were population growth and retail development. Though somewhat unrelated, all of these drivers combined to create a greater need for warehousing, distribution and lab space. With the increase in leasing activity and the strength of long- term tenants, many industrial facilities became investment targets.
Additionally, undeveloped industrial land was purchased by end users for the construction of owned facilities. For the year, land prices increased to an average of $72,000 per acre and sales prices for industrial buildings increased to an average of $36 per square foot.
The driving forces for bulk warehouse space were increases in port related traffic, manufacturing recovery based on consumer spending and increased retail development. With a fairly healthy economy and population growth, consumer spending increased for both typical household products and big-ticket consumer goods. This demand helped to fuel the manufacturing recovery, increased shipping through port terminals and increased warehousing needs for the distribution of durable goods.
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