Industrial Market on the Rebound in 2012

Market Overview

Despite a slow start to 2012, the Greenville/Spartanburg Industrial Market gained momentum in the second half of 2012 ending the year with a total vacancy rate of 9.1%, 70 basis points lower than year-end 2011.  The market absorbed over 2.1 million square feet in 2012, over half of which was absorbed in the fourth quarter alone.  Construction was strong this year with almost 2 million square feet being delivered to the market.  Rental rates remained steady throughout 2012 ending the year with an average rental rate of $3.07, just $0.02 less than year-end 2011.

Current Conditions

Greenville/Spartanburg’s industrial market owes much of its success to large automotive manufacturing plants.  The presence of BMW and Michelin manufacturing plants in the Greenville/Spartanburg market continues to put South Carolina on the map as a leading automotive manufacturing state.  Low labor costs, tax break incentives and a lack of large union groups makes the state attractive to companies looking to expand and grow.  Equally attractive is South Carolina’s supply of a skilled technical labor force.  As a result, manufacturing job growth is on the rise throughout the state and as of November 2012 had grown 2.2% from the previous year.

As of December 2012, BMW’s manufacturing plant in Spartanburg county was the 2nd largest production plant for BMW in the world.  Earlier in the year, BMW Group announced a $900 million investment plan to expand the plant by 1.6 million square feet.   Michelin has been awarded a tax incentive by the state of South Carolina and is in the deciding phases of whether or not to implement their expansion plan.

Construction completed on the Amazon Distribution Center in Spartanburg County during the fourth quarter of 2012. The 1,015,740 square foot distribution center was sold in December for $63.3 million to Cole ID Spartanburg SC LLC, a subsidiary of Cole Corporate Income Trust Inc.  The majority of the largest lease signings from 2012 occurred in Greenville and Spartanburg counties.   In the fourth quarter, Higher Source Aviation signed a 155,847 square foot lease at 46 Beechtree Boulevard in Greenville county.  A tenant moved into 1 Brozzini Court occupying 72,000 square feet in the warehouse.  Another noteworthy lease signed in the fourth quarter was 47,047 square feet at 560-562 Gilliam Road in Spartanburg county by an undisclosed tenant.

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