Upstate Industrial Market Begins 2015 with Investments and Construction
- Speculative construction is gaining momentum throughout the market.
- Investments continue to pour into the Upstate.
- South Carolina Inland Port (SCIP) exceeds expectations for first year.
The Greenville/Spartanburg industrial market continues to grow and improve, attracting manufacturers and automotive suppliers to the region, which is home to major companies, BMW Manufacturing and Michelin North America, among others. Companies excel in the market and are supported by a skilled workforce, low unionization, favorable operating costs and the presence of the South Carolina Inland Port (SCIP) in Greer, South Carolina.
SCIP, which opened in November 2013, offers daily service to the Port of Charleston via Norfolk Southern rail lines. The inland port exceeded expectations during its first full year of operations, moving 42,555 containers in 2014. August 2014 was the most active month with 4,770 lifts. BMW Manufacturing and Adidas are among more than 10 port users. Last year, BMW Manufacturing relocated its export operations to a new 413,000 square-foot building on property owned by the Greenville-Spartanburg International Airport. Land remains available and is expected to attract other users and distributors. The presence of SCIP is expected to bring new manufacturers and distributors to the market, which can benefit from efficient logistics and cost effectiveness.
Strong interest and activity in the Upstate is evidenced by the consistently high occupancy in the market. The overall vacancy rate for combined industrial and flex space was 7.9% at the end of the first quarter of 2015, down from 8.4% one year ago. The market has been more than 90% occupied for over 3 years, providing a diminishing supply of available industrial and flex space and limited options for tenants.
An apparent demand and need for new supply is motivating new construction throughout the market, both build-to-suits and speculative construction. Increasing market rental rates are encouraging developers, which were once reluctant to break ground given the higher rental rates and long-term leases required for new construction. The gap between market rates and those for new industrial space is diminishing, making new space a feasible option for many tenants.
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