Charleston’s Industrial Market Poised for Next Wave of Development
The Charleston industrial market is showing healthy positive absorption. The overall market is 10.9% vacant at the end of the third quarter, a decrease from 11.5% at mid-year. Net absorption was positive with 189,117 square feet at quarter end and 35,802 square feet year-to-date. Average asking rental rates hold steady at $3.96 per square foot on average compared to the previous quarter. Rental rental rates continue to increase for Class A industrial space due to the lack of quality buildings available. The market has just over 1 million square feet currently under construction with all of the projects build-to-suits; no speculative development. Larger distribution clients greater than 500,000 square feet are considering new facilities in the Southeast region, however, these projects do not appear to be progressing rapidly.
- Shortage of Class A bulk facilities is leading to larger Tenants seeking shorter renewal periods. They are anticipating more product in the future.
- Several smaller warehouse facilities have been purchased by users leaving a shortage of 25,000 – 50,000 SF functional facilities.
- Influx of regional residential building supply distributors. They are anticipating serving the growing residential market.
- Recent repositioning of Freight Forwarders into larger and more modern warehouses with a larger more open office concept.
- The next phase of Class A bulk absorption will be priced substantially higher given the underlying land and site work costs and shortage of space.
- Tier 2 and 3 Boeing suppliers are investigating the market seeking 35,000 – 75,000 SF buildings with manufacturing attributes including modern lighting and dehumidification.
- Strong marketing efforts of State Ports Authority staff is driving up container count.
- Well located but older facilities are being evaluated by developers for large scale renovation and repositioning.
- The Greer Inland Port project is creating national buzz among shippers.
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