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Columbia is is considered a tertiary market by definition, with more than 47 million square feet of industrial space. In the past few years, national and international companies have recognized Columbia as having a strategic position in the Southeast.
While most markets struggled in the downturn, Columbia’s steady industrial announcements demonstrated stability. Today, the city’s industrial vacancy rate is hovering at 10 percent. The Columbia market has remained attractive due to its low cost of doing business, non-union affiliation and quality of life. The city’s employment base is diverse, ranging from traditional sectors such as agriculture and manufacturing to emerging sectors such as health services, insurance and financial markets. The region is home to the state government, Fort Jackson and the University of South Carolina.
Rental rates for Class A industrial space have decreased significantly since 2008. Today, we have a 184,000-square-foot LEED-certified building with a quoted rate of $3.95 per square foot. At delivery, this building had a published rate of $4.75 per square foot. Another competing Class A property in the market is the former Lamson Sessions building, a 350,000-square-foot, cross-docked facility listed at $3.35 per square foot. The reduction in rates has been necessary to stay competitive with second-generation product in larger markets in the Southeast. Recent lease deals completed for Class B product, for space 25,000 square feet and up, ranged from $2.65 per square foot to $3 per square foot.
As space tightens and requirements increase, a larger volume of new construction projects has been announced. Construction is currently underway on a 60-acre campus in Lexington County for Nephron Pharmaceutical. The company plans to hire approximately 700 employees and invest more than $300 million in the facility. Another project underway is Avtec Inc.’s 46,000-square-foot research and development facility in Horizon Technology Park in Lexington, S.C. Koyo Corp. recently began moving dirt in the Northpoint Industrial Park in Richland County, to essentially double the size of its current plant to 500,000 square feet. The expansion will account for 175 new jobs, and a $130 million investment.
South Carolina has also benefited from recent activity in the rubber-manufacturing sector. Continental Tires started construction on a new tire plant in Sumter, S.C., in March, and Bridgestone Americas recently expanded its Graniteville, S.C., facility by nearly 50 percent. Additionally, Michelin announced a new investment in its current Lexington facility for more than $200 million. These mega-projects are expected to make South Carolina the nation’s tire capital. The projects are also having a positive impact on local companies, such as Kiswire, which manufactures steel wire cords for rubber tires. The company plans to invest $15 million to expand operations at its Newberry facility.
Another segment of the market that appears to be hot is the automotive industry. Automotive requirements have typically gravitated to Greenville, S.C., but Central South Carolina is starting to see more interest from this sector. Dana Corp. in Kershaw County has recently expanded its operations in the former 158,000-square-foot Hendrickson building. We are seeing multiple prospects in the marketplace considering existing facilities in the Midlands market.
Access to capital, along with built-up reserves, has sparked activity levels as companies flush with cash have their pick from a lending perspective. In anticipation of the recovery, counties and utility providers have been among the first to go vertical with speculative product. Newberry County currently has a 50,000-square-foot speculative facility planned for the Mid-Carolina Commerce Park. Fairfield County, just north of Columbia, recently delivered 75,000 square feet of speculative industrial space. Built within the Walter Brown Industrial Park, the building has been priced competitively and sits adjacent to the county’s previously constructed spec building, now occupied by Elites IS.
On the private sector side, speculative construction has been non-existent. There is, however, one 40,000-square-foot project in the preliminary planning stages, with an expected delivery sometime in the spring of 2014. This distribution facility will be located in southeast Columbia, in close proximity to I-77.
Recent deliveries include the new 126,000-square-foot FedEx ground facility off Shop Road, which represented a positive net absorption of 67,000 square feet. The facility combined the 47,460-square-foot Ground and 11,500-square-foot Home Advantage buildings under one roof, leaving the two vacated buildings currently available in the market. Also included in new absorption was the expansion of the XPEDEX facility next door to the FedEx building.
As we continue to see more product absorbed, the demand for new construction will increase. Rates are still not to the point of supporting new construction, but we will see a steady increase in quoted rates as space tightens up.
— Nick Stomski, SIOR, Broker NAI Avant LLC