S.C. Industrial Real Estate Remains Strong, with Help from Port

Richard Breen

Tuesday, May 15th, 2018

Industrial real estate markets across South Carolina continue to show strength, thanks in no small part to the growth of the Port of Charleston.

“As global trade products are shipped through the Port of Charleston and delivered by rail and air throughout not only South Carolina but also the nation, the need will increase for South Carolina manufacturing facilities and warehouses,” states Colliers International Group Inc. in a recent report.

The commercial real estate firm issued quarterly analysis for the Charleston, Columbia and Greenville-Spartanburg-Anderson industrial markets. It also put out a statewide report and an analysis of U.S. industrial seaports.

In its seaport outlook, it refers to the Port of Charleston as “the top economic driver for South Carolina.”

“The Port of Charleston is a gateway port for automotive companies as well as the growing manufacturing industry in the southeast U.S.,” it states.

With a harbor deepening project underway, recent upgrades to the port’s cranes, and a new terminal set to open in 2020, Colliers states the port “is well positioned to compete with other East Coast ports for the increasing number of large container vessels crossing the newly expanded Panama Canal.”

If that leads to continued industrial growth, it will be fueling already strong markets across the state.

In the Midlands, industrial real estate vacancy stood at 8.24 percent during the first quarter, down from 11.28 percent at the same time in 2017, according to Colliers. There is a little bit more than 1 million square feet of industrial space under construction, but 818,056 of that is tied to the China Jushi manufacturing facility in Richland County.

CBRE Group Inc., which also recently issued its Q1 industrial market reports, states the lack of modern, available industrial space is a challenge.

“The success of new speculative construction could help attract additional developers to the market, which would bode well for the economic growth of the region,” it said.

Spec success is happening in the Upstate right now, according to CBRE. It said vacancy rates there are at an all-time low.

“As the market tightens, it is important to monitor the relationship between industrial supply and demand to avoid delivering too much industrial product at one time,” it said.

In the Upstate, vacancy dropped to 5.81 percent during the first quarter compared to 6.62 percent at the same time last year, according to Colliers. The tightening market came while 19 new buildings with more than 3 million square feet were being added. Colliers reports another 10 warehouse/distribution buildings that would add approximately 1.77 million square feet are being proposed.

In the Charleston area, Colliers reports that 18 new buildings totaling 1.09 million square feet were completed over the past year. The new product caused vacancy rates to edge up to 10.46 percent in Q1 2018.

“The market is performing strongly and is still absorbing space within the warehouse and manufacturing sectors; however, the manufacturing sector is not absorbing space at the same rate it is being built,” Colliers states, adding that it expects demand to catch up to supply.

CBRE describes the industrial growth in the Charleston market as unprecedented.

“Fortunately for industrial users, the steady trends in the marketplace have attracted a number of new-to-market institutional developers prepared to deliver a significant amount of space,” it said.

In other S.C. markets, Colliers found that:

  • The South Carolina portion of the Aiken/Augusta market absorbed more than 160,000 square feet of industrial space during the quarter.

  • The South Carolina portion of the Charlotte market absorbed more than 150,000 square feet.

  • Vacancy rose to 14.60 percent in Florence/Myrtle Beach.

  • The South Carolina portion of the Savannah market absorbed more than 45,000 square feet.