2005 Q2 Industrial Charleston Report

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Market Overview

The Greater Charleston, South Carolina industrial market covers urban, suburban and rural areas of Charleston, Berkeley and Dorchester counties and includes 18,229,435 square feet of space that is available for lease to third parties. Much of the market activity has been driven by the growth of the Port of Charleston, increases in defense contract work awarded by SPAWAR of the US Department of Defense, and a continuous growth in the area population. With growth in Asian traffic and distribution through rail, Charleston is beginning to attract larger distribution operators to the area. Defense contract work awarded by the Charleston office of SPAWAR has attracted numerous contractors to the area from around the country, increasing the demand for flex products. The demand has created opportunities for developers to bring new product to the market in areas where product has not existed before. As the port traffic and defense contractors grow, so does the population of the Greater Charleston area. Population growth is fueling retail development and putting pressure on retailers to restock merchandise quickly, demanding that housing industry suppliers have showrooms and warehouses close to developing areas for product selection and distribution. The result has been a healthy industrial market for the last few years.

Bulk Warehouse

Bulk warehouse facilities are becoming more prevalent in the Charleston market, with the continuing development of industrial parks and the combined benefits of the seaport, the airport, railroads and the highway system. Although there are only 17 facilities in the market containing at least 200,000 square feet, less than half existed five years ago and five more are planned for 2006. First class industrial parks such as Charleston Regional Business Center, Palmetto Commerce Park and Mt. Holly Industrial Park are designated foreign trade zones and contain enough acreage for additional bulk space development. The Charleston Regional Development Alliance has also done a good job of assembling incentives and marketing the Charleston region to industrial users such as Vought Aviation and Alenia Aeronautica. Suppliers and vendors related to the aeronautics industry should create additional demand for space and be one of the market drivers over the next few years. In the first half of 2005, bulk inventory grew by 859,373 square feet, while vacancy dropped by 230,800 square feet to 14.24%. Rental rates for bulk space grew by only $.18 per square foot to $3.67, despite the fact that land and construction costs have increased drastically over the past 18 months. Significant activity in the bulk market included a 600,000 square foot commitment from Fruit of the Loom and more than 200,000 square feet by East Coast Molding. Current plans exist for 1,300,000 square feet of bulk space to be developed from late 2005 to third quarter 2006.

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Charleston industrial report

2005 Q2 Industrial Charleston Report

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