Industrial Market Overview
Columbia’s industrial market continued to show improvement and strength throughout 2005 with the absorption of 1,744,800 square feet, greatly surpassing the level achieved in 2004. Since 2003, when occupancy rates dropped below 85%, the market has shown significant improvement with almost 3,000,000 square feet of industrial and warehouse space being absorbed and with year-end 2005 witnessing a 94.9% occupancy rate.
There was limited new product coming into the market during the year. The recently completed Carolina Pines II, a 178,000 square foot speculative industrial building in the northeast area on I-77 and marketed by Colliers Keenan, provided occupancy for both Shakespeare Company (100,800 sf) and Aaron Rents (75,250 sf). Along with occupancy, market rental rates continued to improve during the year from an average of $3.65 per square foot in 2004 to $3.78 per square foot at 2005 year-end.
Industrial Market Forecast
There are many local and national factors that will influence the industrial market throughout 2006. The current very limited supply of Class A product, together with increased customer demands and changing retail patterns, may spur the development of additional speculative industrial product in the coming year. However, recent increases in the cost of construction will require rental rates greater than the market is currently supporting and developers may decide to wait and see if rates will rise enough to support new product before they commit to additional product.
As the U.S. consumer demand for imports continues to escalate, the overall demand for warehousing and distribution space will increase. With the effects of Hurricane Katrina still very much evident in New Orleans and at its port, the Port of Charleston, as well as the midlands area of South Carolina, should see greater traffic and rising demand for storage and distribution space.
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