South Carolina's industrial real estate market continues to expand at a rapid pace, with nearly 16 million square feet of space under construction statewide — and the Greenville and Charleston markets are accounting for more than half that amount.
A report from Colliers International, a commercial real estate firm, shows that while industrial construction is increasing, there is enough demand to absorb all the new space. That means costs are going up.
"As high-quality space is delivered to the market and owners upgrade dated industrial buildings, the rental rate is expected to gradually increase over the next few quarters," Colliers said.
The firm noted that rental rates rose to an average of $5.10 per square foot during the second quarter in the Charleston market. That compares to a statewide average of $3.66 per square foot.
Statewide, the industrial market vacancy rate was 7.97 percent in the second quarter — slightly higher in the Lowcountry, at 9.2 percent.
In the Charleston region, 21 buildings representing 3.25 million square feet of industrial space were under construction as the first half of this year wound down. That doesn't include the recently completed 1.5 million-square-foot Volvo Cars manufacturing campus near Ridgeville that's ready to begin production of S60 sedans next month.
The Upstate region continued to lead the way in industrial development during the second quarter, with 19 buildings totaling 6.3 million square feet of construction under way. Rental rates there averaged $3.40 per square foot while vacancy rates were at 6 percent.
The statewide growth is due to "incredible logistics capabilities," Collier said, including the Port of Charleston, rail service through Norfolk Southern and CSX Corp. and a new inland port the State Ports Authority opened in rural Dillon County during the second quarter.
The report also cites "increased regional capital investments, improving infrastructure throughout the state and the integration of workforce training and educational institutions to provide skilled employees."
Among the top projects under construction in the second quarter, according to Colliers:
- Mercedes Benz Vans is finishing its 1.2 million-square-foot manufacturing plant at Palmetto Commerce Park in North Charleston, where Sprinter vans will be built.
- The Omni Industrial Campus in Summerville has more than 1 million square feet under construction, with buildings that will be completed in stages through this fall.
- The 950,000-square-foot Ridgeville Industrial Campus in Dorchester County is under construction with a late 2018 completion date planned.
- Automotive supplier Sundaram Clayton is building a 660,000-square-foot manufacturing facility in the Summerville area.
- The 2.5 million-square-foot Michelin distribution center in Spartanburg County.
In addition, Volvo is continuing to build a 600,000-square-foot second phase to its Berkeley County campus, adding to the 1.5 million square feet already finished. The automaker plans to begin production of a redesigned XC90 SUV in the second phase by 2021.