According to a second-quarter report by Colliers International, 3.01 million square feet of industrial construction has been completed with vacancy rates rising 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, for the benefit of South Carolina companies that face a labor shortage.
Overall, the market saw 14 new buildings, or 3.01 million square feet, along with 19 existing 4.12 million square feet buildings, during the second quarter, despite concerns about construction delays. Plans were made for an additional 6 million square feet, 35 proposed industrial buildings, to be built in the coming months.
Nine of the buildings under construction, totaling 1.8 million square feet, are on the Greenville-Spartanburg industrial market with nearly 2 million square feet proposed for future projects. The increase in the vacancy rate was even stronger in the interior market, going from 6.2% in the last quarter to 7.1% in the second quarter after the delivery of 208 million square meters to the market. More than 117,100 square feet were absorbed, according to the report, with rent falling to an average of $ 3.61 per square foot.
While vacancy soared with new speculative properties across the state, the Columbia market, particularly the Orangeburg County submarket, led in terms of absorption with 479,072 square feet of the state’s more than 1.6 million square feet. The quarterly vacancy rate for the Columbia market fell 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 on 145 Millennium Drive in Orangeburg delivered during the last quarter. Rent averaged $ 4.12 per square foot during the second quarter on the Columbia market.
More than 58 million square feet of industrial inventory was on 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% in the last quarter, according to the report. Charleston’s submarkets experienced a negative absorption of more than 154,800 square feet thanks to two nearly empty industrial properties, totaling 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 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 the manufacturing space, reducing 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.