Activity Strengthens in Industrial Sector.

The Columbia, South Carolina, industrial market absorbed 128,900 square feet during the third quarter of 2010, which resulted in a vacancy rate of 8.59% as of September 30, 2010. Year-to-date, the market has absorbed 58,400 square feet, which bodes well for the health of the market and economic recovery of the region.

Industrial activity for the year has been a healthy mix of local tenants looking at expansion and new tenants entering the market. The majority of new tenants looking for industrial space have been from the Northeast or Midwestern region of the United States. These industrial users view South Carolina as a pro-business, cost efficient, and strategic geographic location for manufacturing and distribution. At the end of third quarter 2010, there were approximately 2,000,000 square feet of potential users looking for space in the Columbia market.

Asking rental rates experienced a decline during the first part of 2010 as tenants took advantage of a “buyers market” to negotiate lower rental rates for longer terms. While the vacancy rate in Columbia remained at healthy levels during most of the recent recession, regional and national companies comparing rates between Columbia and more depressed markets resulted in a need for landlords to be aggressive in rental rates in order to remain competitive with these regional markets. Only recently have the expectations between tenants and landlords been more closely aligned. This should result in a more robust transactional market during the remainder of 2010 and into of 2011.

Speculative development was non-existent in 2009 and during first half of 2010, and will likely remain so through the better part of 2011. As industry continues to grow, however, increased demand will put upward pressure on rental rates and possibly spur new build-to-suit construction. While most companies prefer existing buildings, attractive pricing and construction timelines as short as 26 to 28 weeks could spur build-to-suit developments similar to the 206,000-square-foot distribution center constructed by Miller-Valentine Group for RNDC in the Lexington County Industrial Park.

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