According to a Colliers International’s second quarter report, 3.01 million square feet of industrial construction was completed with vacancy rates climbing from 7.09% to 7.35% due to speculative property deliveries across the state.
The report also predicts an increase in demand for housing in submarkets, to the benefit of South Carolina companies facing a workforce shortage.
Overall, the market saw 14 new buildings, or 3.01 million square feet, along with 19 existing buildings of 4.12 million square feet, during the second quarter, despite concerns of construction delays. Plans have been made for an additional 6 million square feet, 35 proposed industrial buildings, to be built in the months to come.
Nine of the buildings under construction, adding up to 1.8 million square feet, are in the Greenville-Spartanburg industrial market with almost 2 million square feet proposed for future projects. The vacancy rate increase was even more strident in the Upstate market as it rose from 6.2% in the last quarter to 7.1% during the second quarter following the delivery of 208 million square feet to the market. Over 117,100 square feet were absorbed, according to the report, with rent decreasing to an average $3.61 per square foot.
While vacancy shot upward with new speculative properties across the state, Columbia’s market, particularly Orangeburg County’s submarket, led in terms of absorption at 479,072 square feet out of the state’s more than 1.6 million occupied square feet. The quarterly vacancy rate for the Columbia market dropped from 4.86% to 4.47%, according to the report.
Two buildings under construction will add 245,000 square feet to the market, joining a 200,720-square-foot industrial building at 145 Millennium Drive in Orangeburg delivered during the past quarter. Rent averaged at $4.12 per square foot during the second quarter in the Columbia market.
More than 58 million square feet of industrial inventory was in the Charleston market during the second quarter, with 1.67 million square feet under construction and 18 proposed construction projects, expected to add 4.7 million square feet. Due to construction deliveries, the vacancy rate rose from 8.6% in the first quarter to almost 10% during the past quarter, according to the report. Charleston submarkets experienced a negative absorption of more than 154,800 square feet thanks to two nearly vacant industrial properties, adding up to 545,000 square feet, hitting the market during the second quarter, according to the report.
For the Charleston market as a whole, the average triple net weighed rental rate dropped to $5.95 per square foot of industrial space.
In the Florence and Myrtle Beach market, more than 465,900 square feet of the 38.37 million square feet on the market were absorbed during the second quarter. All positive absorption occurred in manufacturing space, decreasing the vacancy rate from almost 8% to 6.7%, the report said, with no new deliveries on the market.
Construction continues on two warehouses, set to add 309,400 square feet to the Florence and Myrtle Beach market. Rental rates increased to $3.34 per square foot this quarter, according to the report.