2015 welcomed the greatest construction activity in recent years in Charleston and surrounding areas. This trend was in response to significant increases in demand for space in the market, according to a 2015 Colliers International research and forecast report. Significant investments by major automotive manufacturers have had a positive effect on the industrial market and overall economy. The industrial market has the tightest conditions seen in recent years, with a total vacancy rate of 6.5 percent at the end of 2015, down from 9.1 percent last year.
Demand for space larger than 100,000 square feet is very strong, but only a few options are available. Demand exists for larger buildings greater than 450,000 square feet, but none were available at the end of 2015.
DEVELOPERS RESPOND TO ROBUST ECONOMY
Market conditions have led some developers to turn to speculative construction, while others are investing in build-to-suit construction. Approximately 984,000 square feet of industrial space was completed and delivered in 2015. 2016 will continue this strong construction activity with an additional 1.5 million square feet expected to be completed.
THE ABUNDANCE OF CONSTRUCTION ACTIVITY EXCEEDS HISTORIC TRENDS
There are an historic number of construction projects underway in Charleston.
- Gerber Childrenswear will move into a new distribution center in early 2016. The 470,000 square foot facility is being built in the Foreign Trade Zone.
- A 350,856 square foot speculative industrial building is nearing completion at North Point Business Campus.
- Construction was finished in 2015 on a 278,720 square foot, front loaded, speculative industrial building at the Charleston Regional Business Center.
- A 273,000 square foot speculative building was completed last year in the Palmetto Commerce Park and is already at 50 percent occupancy.
- A 142,000 square foot speculative industrial building is being developed for delivery in early 2016 at Palmetto Commerce Park.
- A 340,000 square foot build-to-suit distribution facility will be completed soon at Palmetto Commerce Park. The new facility will create over 80 new jobs.
- Fruit of the Loom is expanding its existing warehouse and construction of this new 402,000 square foot space is almost complete.
OUTLOOK IS STRONG FOR CONTINUED GROWTH AND DEMAND FOR SPACE
The industrial market is poised for further improvement and strengthening in the second half of 2016. As delivered space is absorbed by the market, speculative construction activity will likely continue. Investment activity will remain solid as investors take advantage of high occupancy rates and low interest rates. Build-to-suit construction will be strong as demand for space exceeds available inventory.
The historic trend for industrial space will result in tightened markets and higher rental rates throughout South Carolina. In 2016, Greenville and Columbia will experience growth in build-to-suit construction and speculative industrial construction.
Source: South Carolina Research & Forecast Report/Q4 2015/Colliers International
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