The Charleston industrial market remains strong in the second quarter despite a slight increase in vacancy and negative net absorption. A few companies consolidated space, leaving huge vacancies in larger, antiquated buildings. Average asking rental rates seem to be holding steady and have increased slightly for Class A industrial space. Due to the lack of quality buildings many companies are purchasing or doing a build-to-suit rather than trying to upfit outdated space. Signs of a need for spec development.
Key Trends & Drivers
- Fewer larger transactions are completed due to the lack of space.
- Potential requirements are larger, however, these prospects seem to be waiting for stable economic conditions before moving forward.
- Overall and Class A rental rates continue to increase.
- Large vacancies in older buildings are pushing up the vacancy rate.
- More companies are seeking to buy instead of lease.
- An e-commerce trend is emerging in the region with companies such as Amazon and Belk securing larger distribution facilities to meet this demand.
Port & Distribution
- Container count TEU’s up 2.7% (fiscal YTD- June to April); Breakbulk tonnage up 24% (fiscal YTD- June to April).
- South Carolina is committed to Charleston being Post Panamax ready. South Carolina Legislature has committed $300 million to fund the construction of a post-45-foot harbor project for the Port of Charleston. This fund will cover the cost to deepen the harbor to 50 feet.
- The new estimated completion date for the Harbor Dredging Project is 2019. This is five years earlier than initially estimated.
- Exporters in the southeast have seen an increase in demand from Asia. This translates to Asian Carriers committing to the Port of Charleston- CKYH, which includes carriers COSCO, K-Line, Yang Ming and Hanjin have made this commitment.
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