Strong Market Leads to Further Expansion
- A resurgence of manufacturing in Charleston is leading to utilization of formerly empty facilities and new developments designed to meet the needs of 20,000-50,000 square-foot tenants.
- Planned Infrastructure improvements will improve Charleston’s logistics. Industrial development in the market will begin to stretch to Ridgeville near Volvo. Construction has already begun on several of the infrastructure projects.
- Uncertainty in global and national economies will cause tenants to be more cautious when making decisions in the market.
Competition In A Tightening Market
The Charleston Industrial market is growing quickly with interest from companies outside of the market intensifying. Not only are external companies looking to enter the Charleston industrial market, existing companies are expanding their operations. Labor migration to Charleston and logistics infrastructure supports a growing market but growth is outpacing supply encouraging developers to deliver large buildings to the market as quickly as possible. In the meantime, older, vacant buildings are being absorbed.
Demand for space is not limited to large users. Smaller warehouse users are absorbing spaces in multi-tenant buildings while flex space users are struggling to find leasable spaces due to competition with office users whom are avoiding the historically high rental rates for traditional office space. Projects of all size ranges are under construction to deliver inventory to the market quickly. The second quarter of 2016 saw no change in the 6.9% vacancy rate from last quarter due to the delivery of several buildings to the market, however vacancy is down from 7.3 % a year ago. Charleston industrial rental rates have consistently ranked among the highest in the state, reaching $5.18 NNN per square foot per year (PSF/YR), up from $4.98 NNN PSF/YR at the end of the first quarter of 2016.
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