The first half of 2012 has proven fairly stable for the Columbia industrial market. While the first quarter of 2012 experienced trickle over activity from the end of 2011, the second quarter tempered that with marked slowdown. Even though the vacancy rate remained relatively flat at 15.78 percent, average asking rates actually increased 5 cents to $3.53 per square foot.
The Columbia industrial market has seen significant investment during the past 12 months, with manufacturing continuing to lead the pack with major investments from Amazon.com, Mars Petcare, Nephron Pharmaceuticals, Bridgestone, Michelin and Continental Tire. South Carolina — and the Central Midlands area, in particular — has experienced significant growth.
Amazon.com delivered its 1.2 million-square-foot distribution center and Nephron is building its $313 million campus in Lexington County. Mars Petcare is constructing a 290,000-square-foot expansion in Richland County, in the Southeast corridor.
South Carolina is fast becoming the North American capital for tire manufacturing, with most of those facilities located throughout the Midlands region. Bridgestone is expanding, adding 474,000 square feet to its current facility and the company is constructing a new 1.5 million-square-foot manufacturing facility in Aiken. Continental Tire continues construction on its $500 million plant in Sumter County and Michelin continues its $1 billion expansion in Lexington County, both in excess of 500,000 square feet.
Most transactions for existing property needs average 25,000 square feet. Industrial brokers are seeing more activity and requirements for greenfield sites to accommodate projects exceeding 100,000 square feet. Indicators show these deals will transact and be realized in 2013.
In Northeast Columbia, the vacancy rate increased almost 1 percent to 26.98 percent, while average asking rates increased to $3.71 per square foot. In this submarket, big box properties are behind the high vacancy: only seven properties are responsible for 70 percent of total vacancy in the submarket. The majority of smaller properties consist of occupied warehouse or high-performing flex space with higher rates. This is how the submarket has managed to increase the average asking rate despite the vacancy.
The Northeast submarket is well positioned to experience positive activity in the second half of 2012, as it possesses the sole remaining large Class A industrial space in the area, as well as its prime position in the path of continued growth toward the Charlotte area along the Interstate 77 corridor.
The Lexington submarket continues its successful reputation of industry recruitment and continues to be a target area for new investment. Proof includes the Amazon.com distribution facility opening, coupled with Nephron’s construction of its more than 500,000-square-foot facility and Avtech’s recent ground-breaking on a 46,000-square-foot facility.
The Southeast submarket showed the most growth in the first half of this year. The average asking rate in the Southeast submarket increased to $3.34 per square foot from $3.26 per square foot and vacancy has decreased from 19.93 percent to 19.54 percent. This rate can be described as artificially high due to a large percentage of functionally obsolete or outdated space. At the present time, FedEx continues the construction of its 126,079-square-foot building.
The industrial market is strategically located to experience significant economic growth during the next 12 to 18 months. This is a direct result of several events, with the most noteworthy being the pending deepening of the Charleston Port, located less than 100 miles away, as well as the expansion of Charlotte’s airport and rail hub to accommodate the port deepening.
Overall, forecast for future growth for the Columbia area is positive for the balance of 2012 with an expectation of continued economic investment through 2013.
— Ben Brantley, SIOR, is the senior vice president of industrial brokerage services for CBRE/Columbia.