4Q16: Regional Economy Continues to Thrive, Industrial Market Sees Surge in Activity
February 8, 2017
Charleston, SC – The fourth quarter of 2016 saw the culmination of yet another prolific year of economic activity for the Charleston metropolitan area. With the Port of Charleston achieving record-high cargo volumes, companies including Thorne Research, Mercedes-Benz Vans, Boeing and Volvo announcing expansions and construction of new facilities—not to mention the aggressive investment activity from both domestic and overseas sources—the industrial sector remains a core contributor to Charleston’s growth, and a steady economic driver for the region. The Charleston region does have its challenges, however, as constant growth tests the limits of transportation and infrastructure networks.
As Charleston continues to transform into a more knowledge-based economy, concerns remain with regards to the availability of skilled human capital required by ever-expanding industries such as Aerospace, Automotive, IT and Medical R&D/Medtech. Fourth quarter 2016 ended with close to one million square feet in net absorption, continuing a nearly yearlong trend of growth. This reduced the overall vacancy rate to 5.9% at the close of the fourth quarter from 7.3% at the close of the third quarter. Charleston is seeing the lowest vacancy for Class B Warehouse space at 7.1%, with a rate of $4.33 per SF, while Class A Warehouse space has the highest vacancy at 11.9% and a rate of $5.59 per SF. The Dorchester County and East Islands/Mt. Pleasant submarkets are both seeing vacancy rates of less than 2.5%, the lowest they’ve seen all year by far.
However, vacancy rates in the Charleston MSA have fluctuated over the last two years but are not always an accurate representation of the strength of the industrial market. As more speculative buildings were delivered to the market to meet demand, vacancy rates sometimes grew and space was absorbed at a later quarter.
Today, the strong demand for warehouse/flex space in the region has led to never-before-seen levels of speculative construction. Fueled by the automotive and port related industries, a pipeline of new product will be available soon to absorb the market’s growth. During the fourth quarter, four buildings totaling 491,530 SF were completed and, in all, twenty buildings, totaling 2,067,852 SF, were delivered to the market during 2016, while another 3,711,502 SF is currently under construction. The Charleston region is primed to meet the demands for more space and speculative development with the increasing growth in the city and large amount of land available in the North Charleston submarket.
Overall, even with the region’s vigorous leasing activity and tightening available space, average asking rates remained relatively stable, closing the quarter at $4.85 per SF, compared to $4.89 at the close of the third quarter. However, over the course of the year, the rates steadily rose, up from $4.33 in mid-2015, attributable to the quality of new space delivered.
Please see the attached 4Q16 Industrial Market Report for further insight into quarterly trends and statistics, market highlights and the industrial market forecast.
For more information, contact Shep Benjamin, MRED, at 843 518 5381 or [email protected].
About NAI Avant
NAI Avant’s commercial real estate business is one of the largest in the Southeast. With over 65 professionals, the firm provides comprehensive brokerage, leasing, development, property and project management services. For nearly three consecutive decades, the group has had more of its brokerage professionals recognized as top producers or recipients of the top awards than any other firm in South Carolina. As a member of the NAI Global Network, NAI Avant is affiliated with more than 375 offices strategically located throughout North America, Latin America, Europe and Asia Pacific, with over 6,700 local market professionals, managing over 380 million square feet of property. NAI Global is the single largest, most powerful global network of owner-operated commercial real estate brokerage firms and is a wholly owned subsidiary of C-III Capital partners. NAI Global Member firms, leaders in their local markets, are actively managed to work in unison and provide clients with exceptional solutions to their commercial real estate needs. NAI Avant’s Property and Project Management Group currently manages a multi-million square foot portfolio of properties across South Carolina, North Carolina, and Georgia. Through its Avant Healthcare Division, the firm provides comprehensive services to hospitals, clinics, and physician groups. NAI Avant, founded in 1966, is headquartered in Columbia, SC with an office in Charleston, SC. Find out more about NAI Avant and its services at www.naiavant.com. Be sure to follow us on Twitter @NAIAvant and like us on Facebook.
