Industrial Space Hard to Find in Upstate SC
The industrial market in Greenville/Spartanburg, SC ended the first quarter of 2013 with a total vacancy rate of 9.05%, below 10% for a third consecutive quarter. The market absorbed approximately 384,000 square feet during the first three months of 2013 with the majority of activity occurring in Greenville, Laurens and Spartanburg counties. Average asking rental rates remained flat through the quarter at $3.06 per square foot.
The region continues to attract businesses through a skilled workforce, county incentives and infrastructure, but struggles in that quality big boxes of space are becoming increasingly scarce especially in key target areas around the airport, BMW and the South Carolina Inland Port (SCIP). A demand is present for large 100,000 square foot industrial space, but developers are reluctant to begin construction projects given the current economy and high construction costs. As a result, the public sector is getting involved in industrial real estate development and beginning to give loans for speculative construction. It is hopeful that successful construction and leasing of the spaces will pave the road for developers to follow in the process.
The total vacancy rate of the Greenville/Spartanburg, SC industrial market is down to 9.05%, 21 basis points lower than the previous quarter and 120 basis points lower than the vacancy rate a year ago. The market’s success during the first quarter of 2013 is largely attributed to Greenville, Laurens and Spartanburg counties which collectively absorbed over 490,000 square feet. The vacancy rate in Greenville County is down 35 basis points from the fourth quarter of 2012 to 10.23%, Laurens County is down 135 basis points to 6.47% and Spartanburg County is down 13 basis points to 8.13%. Average asking rental rates were steady throughout the quarter with the highest average rate of $3.24 per square foot being in Greenville County and the lowest at $2.34 per square foot in Laurens County.
Lease signings occurring throughout the quarter involved renewals of larger blocks of space and new lease signings of smaller, 10,000 to 30,000 square foot blocks of space. Renewals include a 210,891 square foot lease at 513 Old Griffin Road in Greenville County and Container Design & Solutions LLC who renewed their 82,956 square foot lease at 1224 Old Stage Road in Greenville County. Phoenix Plastics signed a new 30,000 square foot lease at 200 Pate Drive, Titan Chemical signed a 30,000 square foot lease at 3040 White Horse Road and a 16,000 square foot lease was signed by Isolite Automotive GMBLT at 1 Brozzini Court in Greenville County. A 12,000 square foot lease was signed in Spartanburg County by Gateway Plumbing who will move into 1098 Asheville Highway.
The market faces the ongoing pressure driven by the demand for big box industrial space which isn’t readily available in the market. Hope for construction and development is apparent but developers are reluctant to undergo construction due to high construction costs and fear of low rental rates and short term lease signings not compensating for building costs. Until there is regained confidence in the economy and developers have tenants signing up for space, construction will be limited in the market. As a result, the public sector in Laurens County has secured a $1.5 million loan from Santee Cooper, a state owned utility company, to be given to the Laurens County Development Commission which will construct a shell building with the intent of attracting companies to the 50,000 square foot industrial building. It is anticipated that if successful in leasing and generating a positive return, future construction plans will follow in the private sector attracting further business in the area. It is feared that without new construction of industrial space, companies unwilling to wait for space to become available or developed in a build to suit fashion will enter other comparable markets.
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