Growth at the Port of Charleston continued to attract new manufacturers and their suppliers to the Charleston region during the second quarter of 2017, with developers buying up property both for announced projects and speculative investments, a new report by the commercial real estate firm CBRE Group Inc. shows.
Vacancy rates for industrial space in the Charleston region ticked up slightly during the second quarter to 5.4 percent compared to 5.2 percent during the first quarter.
Overall asking rates increased to $5.70 per square foot from $5.62.
"The Ladson-North Charleston and Interstate 26 submarkets continue to be the hotspots for industrial growth as major manufacturers like Boeing and Mercedes-Benz Vans attract new tenants to the area," the report states. "Additionally, the close proximity to both the Port of Charleston and the airport is an ideal location for major distributors looking to benefit from port expansions."
The State Ports Authority and state and federal governments will spend about $2 billion over the next few years on projects such as a new container terminal at the former Navy Base site, deepening Charleston Harbor to 52 feet and a new inland port in Dillon. The Port of Charleston announced a record amount of containerized cargo moved through its terminals in fiscal 2017, which ended June 30.
While low vacancy rates and high rents are attracting investors from other parts of the country, CBRE says more landlords are holding onto properties with an eye toward capitalizing on the expanding market.
The second quarter did see a pair of major land acquisitions by out-of-area developers. Chicago-based Ridge Development finalized a deal to build the Charleston Logistics Center, which will include two spec buildings on about 67 acres off I-26 near the intersection of Jedburg Road and Drop Off Drive. And Chicago-based Clarius bought 100 acres adjacent to its Omni Industrial Park being built near Jedburg Road.
Another large-scale industrial development is underway on the other side of I-26, where Charlotte-based The Keith Corp. and its financial partner, Singerman Real Estate of Chicago, are investing $19 million to launch the first phase of the Charleston Trade Center. In addition to a spec building under construction, German automotive supplier IFA broke ground last week on a $69 million manufacturing facility at the site.
Other major announcements during the second quarter include: a new package-sorting hub for FedEx at Palmetto Commerce Park; a new manufacturing campus and headquarters office for nutritional supplements maker Thorne Research in the Omni Industrial Park; and new leases by Carroll Tire and Owens Corning at the Airport Commerce Park.
"With additional land primed for industrial development, Charleston expects to continue its bullish approach to provide new Class A facilities in the form of both speculative and non-speculative developments," the CBRE report states.
Of the more than 4.3 million square feet of manufacturing, distribution and warehouse space now under construction in the Charleston region, more than 25 percent is speculative, which means there is no tenant lined up for the property. At least three more speculative projects are on the books for the coming months.
That new construction will join more than 53.2 million square feet of industrial space already available in the Charleston region.