Spotlight: Real Estate Brokers Have Eyes on Booming Upstate Industrial Market
Thursday, March 7th, 2019
The industrial real estate market in South Carolina’s Upstate has been a stalwart for more than two decades, and it may be about to have a moment.
Colliers International thinks so, at least. The real estate firm named Greenville/Spartanburg/Anderson one of its “10 Emerging U.S. Industrial Markets to Watch in 2019.” The Upstate joins communities such as Sacramento, California, and Savannah, Georgia, on the list.
“The Greenville-Spartanburg industrial market has always been a strong market, buoyed by a strong workforce and manufacturing base,” said David Feild, Colliers’ market president for Greenville-Spartanburg-Anderson. “What makes 2019 different is the growth in our distribution sector.”
Inland Port Greer helps make the area attractive for distribution and e-commerce businesses, according to Feild. The S.C. Ports Authority reported the facility’s January volume was its strongest since August 2017.
The Upstate’s heat is attracting developers. Feild gives three examples:
Inland 85 Logistics Center (by Clayco Realty Group), a 500,280-square-foot distribution center expandable to 1.3 million square feet.
Fort Prince Commerce Center (by Courtland Development), a 436,800-square-foot distribution center
Spartan Exchange (by SunCap Property Group), a 213,200-square-foot warehouse
“Speculative development is at an all-time high and is being rapidly absorbed thanks to robust demand,” Feild wrote in his market analysis for the Colliers report.
Low asking rents and plentiful, developable land are positives for the region. Location, location, location is also in the Upstate’s favor.
“The Greenville-Spartanburg market is located in the center of the ‘Charlanta’ mega-region which is one of the fastest growing regions in the U.S.,” Feild said.
It’s a trait similar to other members of Colliers’ list, he said.
“What they all have in common is that they are located in cities or regions positioned to take advantage of population changes in the U.S. and the effect of e-commerce on supply chains,” Feild said.
The full list includes:
Interstate 4 Corridor, Florida
Las Vegas, Nevada
Lehigh Valley, Pennsylvania
Minneapolis/St. Paul, Minnesota
Seattle/Puget Sound, Washington
Shenandoah Valley/Interstate 81 Corridor, Virginia
Colliers expects 2019 to be strong for industrial real estate nationally, but there could be some “tapering off.” Feild said that could be due to overbuilding in some markets.
Meanwhile, industrial real estate activity remains healthy across the Palmetto State, according to a Colliers recap of 2018’s fourth quarter. Fifty-seven new industrial buildings, accounting for 9.05 million square feet, were completed in 2018.
“There are currently 13,093,069 square feet of buildings under construction,” the report states. “In addition, another 6,046,920 square feet of industrial buildings are proposed to be built statewide.”
Industrial construction is strong in the Charleston market and Colliers said demand will have to race to keep up with new supply. In its research reports, real estate firm CBRE Inc. said 90 percent of the industrial product under construction in the Charleston market was begun prior to the developer having secured a tenant.
“Expect to see vacancy increase in the short term as several existing speculative facilities continue to remain vacant,” CBRE reported.
The opposite may be the case in the Midlands, where Colliers said fewer industrial projects are underway despite high demand. CBRE points out that recent spec projects in the Midlands have been successful and several more are underway. It is concerned about construction costs, however.
“In response to widespread industrial development across the U.S., both building materials and qualified labor are in short supply,” CBRE reported.
The South Carolina industrial market consists of 6,778 buildings totaling 417.95 million square feet, according to Colliers. Of that, the Upstate accounts for 2,996 buildings totaling approximately 198.4 million square feet.