The industrial market in the Columbia, South Carolina, metropolitan area experienced declines in occupancy during 2008, albeit not with the severity experienced in many other metropolitan areas. Vacancy rates increased by 4.4% during the twelve-month period ending December 31, 2008, finishing the year at 6.78%. Although the Columbia market experienced a negative net absorption of 1.4 million square feet (direct vacant space) during 2008, which is indicative of downturns in the local as well as national economy, the vacancy rate in Columbia has remained well below the national average.
In addition to the direct vacant space available at year-end 2008, plant closures also created an abundance of sublease space in the marketplace. In the Northeast submarket alone (Zone 7), 450,800 square feet of space was available for sublease at year-end 2008. The largest facility added to the market during the year was the 350,000-square-foot Lamson Sessions building in the Northeast, which became available after Lamson Sessions was acquired by Thomas & Betts, who subsequently consolidated distribution for the company to other regions of the country.
Columbia’s employment in the sectors which most directly impact the industrial market declined during the year, although not at the rates experienced in many other areas of the state and region. From November 2007 to November 2008, employment in the manufacturing sector declined by 500 jobs (1.60%), while trade and transportation reportedly lost 2,100 jobs (3.00%). The downturn in the housing sector resulted in the greatest loss of employment during this period, as 3,100 jobs (14.20%) were lost in the construction sector. In comparison, job rates across the state declined by 3.80% in the manufacturing sector, 2.90% in trade and transportation and 17.00% in construction. While it is clear that job losses in Columbia have directly impacted the industrial market, a slightly higher rate of losses across the state gives evidence that the Columbia market may be better positioned to ride out the current economic downturn than other statewide and regional markets.
Even with signs of a slowing economy, new speculative projects continued to break ground in Columbia during 2008. With a vacancy rate of 2.4% at year-end 2007, which was the lowest in the United States, the market was able to draw attention from national developers willing to provide new Class A product. At year-end 2008, both KIRCO Development and Miller-Valentine Group had significant speculative projects under construction. Overall, there was 737,050 square feet of industrial space under construction in the Columbia MSA at year-end 2008, of which 150,400 square feet was pre-leased. This will result in the addition of 586,650 square feet of speculative industrial space to the market in 2009. The newly developed space will be a welcome addition as the market is expected to rebound later in the year. Even at year-end 2008, there was a lack of available Class A space on the market; therefore many tenants seeking Class A distribution space were forced to locate in other markets.
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