Charleston’s Industrial Market on the Brink of the Next Building Boom
- The overall vacancy rate declined to 11.4% at the end of the first quarter, down from 11.7% from the end of the fourth quarter of 2012.
- Lease rates for Class A and B product remained steady, with upward pressure effecting rates.
- The market will absorb mostly Class B space in 2013 and push average asking rental rates upward if tenant activity remains strong.
- The manufacturing sector continued to be a key driver in Charleston’s industrial market as two facilities opened during the first quarter.
- Industrial sales picked up in 2012 and will continue in 2013. The opportunity exists for the sale of non-core assets in well-located areas with rising rents.
- Boeing activity trended upwards. Recent news announcements have heightened excitement about the prospects for Boeing and Boeing suppliers.
- Port related activity statewide remained strong. S.C. leads the country in exports increases over the last 10 years with export values tripling. Construction on the Inland Port is underway and scheduled to open this September.
- The next speculative development could be as soon as the fourth quarter of this year if tenant activity and demand for Class A product remain strong.
Q1 2013 Recap
Charleston’s industrial market accelerated in the first quarter with increased tenant activity. As tenants and owner-occupiers positioned themselves for future growth, many companies secured longer term leases, contemplated the purchase of their current facility and consolidated facilities to improve efficiency. The surge in activity led to improved overall market fundamentals in the first quarter - vacancy rates decreased, average asking rental rates increased, new supply delivered and net absorption was positive.
Three buildings were delivered in the first quarter 2013 which added approximately 327,000 SF of new supply. Only 104,000 SF out of the total new supply delivered was speculative. More manufacturers opened doors in the Lowcountry in the first quarter. Tighitco, a subsidiary of the InterTech Group, supplies parts for Boeing, and in February began operations at their new facility in Palmetto Commerce Park. Morgan Olson, a van-outfitter for Daimler, also began operations at their new facility in Palmetto Commerce Park.
Warehouse rents showed signs of growth as existing, Class A product diminished and demand for this type space continued to rise. Additionally, Class B warehouse space saw increased demand which pushed average asking rental rates up slightly.
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