Industrial properties in the Upstate region of South Carolina continued to perform at a steady if unspectacular rate through 2008, and this trend is expected to continue through 2009. The market will continue to see good activity on the leasing side of the business. This activity, while driven by the confusion of the credit market, has still reflected the desirability of the area as a place for new businesses and the continued growth of key industries.
The current expansion of BMW’s facilities has heightened the likelihood of both secondary and tertiary suppliers opening or expanding locally in anticipation of the plant’s growth. This is further intensified as the International Center for Automotive Research complex continues to grow. The recent opening of the Carroll A. Campbell Jr. Graduate Engineering Center will further improve local research and development capabilities. This strategic investment was cited as one of the reasons the Upstate area was chosen for a multi million-dollar titanium manufacturing facility. Equally impressive has been the announcement that Fitesa, a Brazilian manufacturing company, also plans to establish a presence in the region.
Another source of growth has been from foreign-owned corporations that view this as a good time to expand in the United States. South Carolina’s centralized location in relation to the growing Southeastern seaports, such as Charleston and Savannah, Georgia, makes the region favorable for distribution centers or strategic call facilities. Samsung recently announced it would open a call center in Greenville County, and a distribution center for Adidas is in the final phase of construction in Spartanburg County. Additional distribution centers in Anderson County are coming online because Interstate 85 bisects the county and will provide tenants with easy access to the Charlotte, North Carolina, and Atlanta metro markets.
The availability rate for industrial/warehouse space as of December 31, 2008, was 14 percent. While this is a challenging number on its surface, net absorption for the full year was modestly negative at 164,117 square feet. With the exception of an extremely poor third quarter at –618,945 square feet, there was positive absorption in the other three quarters of last year. Fourth quarter absorption stands at 39,719 square feet. Considering the severity of the fourth quarter nationally, this has to be viewed as a positive indicator. This positive read is further confirmed by a rising average asking rate. Year end was at $3.41 per square foot, which represented a 1.9 percent increase in quoted rental rates from the first quarter of 2008.
The portions of the market that will remain the most active will be space that is less than 50,000 square feet in size, and there will be a particular vibrancy in the category of 10,000 square feet to 20,000 square feet. This will allow a company to establish a presence in the market and then to plan for future expansion as market conditions improve.
Major transactions in 2008 include the sale of the 128,000-square-foot Kemet Electronics Corporation building, located at 1224 Old Stage Rd., to MBVB LLC in September. Major lease signings occurring in the Greenville market for 2008 included the 625,000-square-foot lease signed by Louis Dreyfus Company at Donaldson Distribution Center in the Greenville market; the 187,000-square-foot deal by Southern Cotton on Rutherford Road in the Greenville market; and the 160,000-square-foot lease signed by UTI Integrated Logistics at 2819 Wade Hampton Blvd., Building 2. O. Gas Turbine Efficiency leased 49,225 square feet at 240 E. Parkway; Iron Mountain leased 45,000 square feet at 125 Caliber Ridge Dr.; and Earth Protection Service signed a lease for 15,000 square feet at 109 Twenty Nine Court in Anderson.
— Richard Barrett is a broker with Greenville-based Bentley Commercial.