Ringing in the New Year with Capital Investments & Speculative Construction
The Greenville/Spartanburg industrial market was stable through the first quarter of 2014 with low leasing velocity and a vacancy rate of 8.85%, slightly higher than year-end 2013 when the vacancy rate was 8.6%. The Greenville/Spartanburg industrial market is comprised of Anderson, Cherokee, Greenville, Laurens, Pickens and Spartanburg Counties. Anderson, Greenville and Spartanburg Counties had total vacancy rates of 4.3%, 9.0% and 8.7%, respectively for the combined industrial and flex market. Overall asking rental rates averaged a low $2.85 NNN at the end of the fourth quarter illustrating the class of product currently vacant in the market.
Several announcements of investments and speculative developments were announced during the first quarter of 2014. All of the announcements will prove beneficial to the upstate industrial market and economy, but the most significant announcement was that of BMW Manufacturing Co. The announcement made at a press conference late in the first quarter of 2014 followed the completion of a $900 million expansion which began in 2012. The company shared plans to invest $1 billion and create 800 additional jobs to build a new X7 model at the company’s plant in Greer, SC. Currently the plant manufactures X3, X5, X6 and the new X4 model which was introduced in March 2014. The company’s current capacity is about 300,000 vehicles, but the expansion will accommodate the production of 450,000 vehicles. The expansion is likely to have a positive spillover effect on the market as the production of 50% more vehicles will increase the company’s demand for supplies and labor. Automotive suppliers may choose to expand or relocate to the upstate allowing for lower delivery and transportation costs.
Approximately 171 million square feet of industrial space in 2421 buildings make up the Greenville/Spartanburg market. The overall vacancy rate was 8.3% at the end of the first quarter, up from 8.0% at year-end 2013. The market consists of major industrial corridors along interstates I-85, I-385 and I-26 and is home to manufacturers such as BMW and Michelin. Average asking rental rates were $2.85 NNN at the end of the first quarter of 2014. Anderson and Greenville Counties had the highest average asking rental rates at $3.04 NNN each. The low asking rental rates illustrate a lack of high quality class A space which typically lease around $4.00 NNN.
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