Charleston’s Industrial Market Constraints
Q2 2013 Recap
Charleston’s industrial market continued to improve in the second quarter, however, the market experienced a change in the types of users leasing space in the market. Major changes in incentives offered to film production operations have led to production operations looking for space; tightening in Northeastern states gun laws are leading fire arms assemblers to consider relocating to the Southeast from the Northeast; logistics companies specializing in non-traditional cargo are securing locations; and regional suppliers to the housing industry continue to fill empty small to mid-sized buildings. Niche manufacturers are continuing to grow and expand, especially if their product relates to the housing industry.
Vacancy rates decreased to 9.8% from 11.1% in the previous quarter. The market absorbed 439,610 SF in the second quarter with year-to-date absorption at 546,035 SF. Most of the transactions completed this year have been in Class B product in North Charleston.
The market is constrained due to the lack of available Class A buildings. No new spec construction is imminent although developers will build if they can achieve partial lease commitments. This has put pressure on rental rates to move upward.
Straight down the fairway, retail goods import distribution center activity appears light even though TEU increases at the port are steady. Exports such as paper and heavy equipment are increasing. Non-container facilities in Charleston handling bulk and breakbulk cargo realized a 30 percent jump in activity over the previous fiscal year and intermodal moves significantly increased.
Container business at the Port of Charleston was up 9% in the fiscal year that ended June 30th, with 1.56 million 20-foot equivalent units (TEUs) handled during the past 12 months. The inland port in Greer has made strong headway towards completion and should be operational by the end of the year. BMW is constructing a 414,000 SF warehouse near the site now. BMW has committed to using over 20,000 containers per year shipping its vehicles to the Port of Charleston. The Port anticipates that over 100,000 containers will be moved at the inland port in the next few years.
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