Q2 2023 Charleston Industrial Market Report - Bridge Commercial

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INDUSTRIAL MARKET REPORT

Q2 CONSTRUCTION & DELIVERIES

Q2 TRENDS & HIGHLIGHTS

•LEASING ACTIVITY AS OF QUARTER END REMAINS ON TRACK WITH 2022.

•WHILE SPECULATIVE DELIVERIES ARE AT THEIR HIGHEST, NEW CONSTRUCTION STARTS ARE DOWN SIGNIFICANTLY

•SUBLEASE ACTIVITY INCREASES OVER THE PAST QUARTER FOR INDUSTRIAL SPACES IN THE REGION.

•VACANCY RATES HAVE INCREASED, BUT ARE STILL WELL BELOW HISTORIC FIGURES.

•MANUFACTURING GROWTH CONTINUES TO DRIVE OCCUPANCY NEEDS FOR MANUFACTURERS AND THEIR SUPPLIER BASE.

BRIDGE-COMMERCIAL.COM
Q2 2023 | CHARLESTON, SC
Q2 MARKET
OVERALL INVENTORY* 67.2 MILLION SF VACANCY 2.96% TOTAL MARKET BULK (100,000 SF+) OVERALL INVENTORY* 44.7 MILLION SF VACANCY 3.08% *67.2 Million SF does not include 22.3 Million SF of specialized buildings. CONSTRUCTION 10.4 MILLION SF YTD DELIVERIES 4.9 MILLION SF
SNAPSHOT

Q2 SUBMARKET SUMMARY

Bridge tracks buildings 10,000 SF and greater.

Bridge uses only internal research within its Charleston office for its market research.

*Other includes Ridgeville, St. George and other outlying rural areas within +/-50 miles of I-26/526.

**Total market statistics do not include specialty or specialty manufacturing buildings (22.3 Million SF).

Class A Class B Class C BRIDGE-COMMERCIAL.COM
SUBMARKET RBA SF # OF BLDGS TOTAL VACANT SF VACANCY RATE UNDER CONSTRUCTION SF YTD DELIVERIES SF Charleston/N. Charleston 17,029,093 498 459,274 2.70% 80,000 34,032 Hanahan/North Rhett 5,114,565 48 13,300 0.26% 0 127,000 Ladson/Palmetto 9,552,518 107 78,100 0.82% 1,521,885 651,760 Clements Ferry 5,847,138 109 42,448 0.73% -Summerville/Jedburg 19,958,293 199 935,244 4.69% 4,735,441 3,170,041 Goose Creek/Moncks Corner 3,537,057 49 - 0.00% 135,200Other* 6,153,024 88 461,793 7.51% 3,958,466 961,464 TOTAL MARKET** 67,191,688 1,098 1,990,159 2.96% 10,430,992 4,944,297 14% 39% 46% Distribution / Warehouse Manufacturing Other 35% 55% 10% Distribution/Warehouse Manufacturing Other INDUSTRY TYPE +500,000 SF 100,000 - 499,999 SF 10,000 - 99,999 SF SIZE PERCENTAGE BREAKDOWN BASED ON OVERALL SQUARE FOOTAGE BY TYPE, SIZE & CLASS Class A: 166 Buildings Class B: 430 Buildings Class C: 502 Buildings OVERALL CLASS ALL NON-SPECIALIZED BUILDINGS (+10,000 SF)
Source: Bridge Commercial
Q2 2023 charleston industrial MARKET REPORT PG. 2 AVERAGE ASKING RENTAL RATES BY BUILDING TYPE/CLASS CLASS A BULK WAREHOUSE CLASS B WAREHOUSE SHALLOW BAY 100,000 - 350,000 SF $7.50 - $8.25 PSF NNN 350,000 SF + $6.50 - $7.50 PSF NNN 50,000 SF - 200,000 SF + $7.50 - $8.50 PSF NNN 10,000 - 20,000 SF $11.00 - $14.00 PSF NNN 20,000 - 40,000 SF $10.00 - $14.00 PSF NNN 500,000 200,000 - 499,999 100,000 - 199,999 28% 29% 200,000 SF + $6.25 - $6.75 PSF NNN 43%

RECORD SETTING DEVELOPMENT DELIVERING IN CHARLESTON’S INDUSTRIAL MARKET

Q2 RECAP

• Charleston’s industrial market has experienced the largest development pipeline in the region’s history, pushing the vacancy rate from 1% over the past two years to approximately 3%.

• Three of the largest speculative buildings in the market’s history will deliver within the next 12 months. There are currently seven buildings under construction greater than 400,000 SF.

• End users and/or 3PL’s have brought new sublease opportunities to market as cargo volumes have stabilized; adding to the forthcoming supply.

• Rental rates are averaging $7.00 - $8.00 per square foot for larger scale buildings and $12.00 - $15.00 per square foot for smaller scale buildings, a 50% increase from pre-COVID rates.

• Leasing activity has remained strong with gross absorption closely mirroring the midpoint of 2022.

• Due to rising interest rates and need to accommodate rising cap rates on exit, the investment market has cooled.

ECONOMIC INSIGHT

• Rising interest rates to hedge inflation has trickled down to the Charleston region. Ports, retailers, 3PL’s, and manufacturers witnessed the impact of higher costs to the consumer.

• Higher interest rates have translated into higher costs for industrial development and speculative developers are reconsidering starting projects.

• South Carolina gained tremendous ground relative to largescale manufacturing. Existing OEM’s such as Volvo, Mercedes and Boeing have continued to ramp up as new companies have made large scale capital investments into the state.

• South Carolina has been the beneficiary of ‘reshoring’ of manufactured goods utilizing advanced processes and technology.

PATH OF GROWTH

• The Charleston region needs to continue the capital reinvestment in infrastructure, specifically, toward safe, clean water and waste water treatment plants and sewer lines.

• Sound planning for the next generation and instituting good legislative policy will ensure our future success.

Q2 2023 charleston industrial MARKET REPORT PG. 3 BRIDGE-COMMERCIAL.COM
UNIS OPENS A NEW 575,000 SF DISTRIBUTION FACILITY IN SUMMERVILLE/JEDBURG. STOCKBRIDGE CLOSES ON A 430,000 SF DISTRIBUTION FACILITY IN SUMMERVILLE/ JEDBURG LEASED TO SAGEBROOK.
© 2 23 M T h g g 02 M © 2 23 A b g © 02 A b 02 A RUSHMARK
PURCHASES ±294 ACRES IN SUMMERVILLE/JEDBURG FOR A 2.5MSF+ DEVELOPMENT. KAPSTONE ANNOUNCES ITS PLANS TO CLOSE THE NORTH CHARLESTON PAPER MILL ON THE WANDO RIVER AFTER 86 YEARS OF OPERATION. Photo courtesy of WCBD.

INDUSTRIAL OPPORTUNITIES

LOGISTICS CENTER

INDUSTRIAL ADVISORS

HAGOOD MORRISON, SIOR, MBA, CRE Executive Vice President hagood.morrison@bridge-commercial.com

PETER FENNELLY, MCR, SIOR, SLCR President peter.fennelly@bridge-commercial.com

SIMONS JOHNSON, SIOR, MCR, CCIM Executive Vice President simons.johnson@bridge-commercial.com

JOHN BEAM, SIOR Vice President john.beam@bridge-commercial.com

WILL CROWELL, SIOR Associate Vice President will.crowell@bridge-commercial.com

INVESTMENT ADVISOR

HAGOOD S. MORRISON, II, SIOR Senior Vice President hs.morrison@bridge-commercial.com

PROPERTY MANAGEMENT

MEREDITH MILLENDER, CPM Vice President of Property Management meredith.millender@bridge-commercial.com

SIGN UP FOR MARKET REPORTS AT

www.bridge-commercial.com

NEED PROPERTY MANAGEMENT EXPERTISE? PORT 95 St. George ±1,219,772 SF Available (3 Buildings)

BRIDGE COMMERCIAL 25 Calhoun Street, Suite 220 Charleston, SC 29401 +1 843 535 8600 info@bridge-commercial.com

Bridge Commercial uses only internal research within its Charleston office for its market data.

Bridge Commercial makes no guarantees, representations or warranties of any kind, expressed or implied, including warranties of content, accuracy and reliability. Any interested party should do their own research as to the accuracy of the information. Bridge Commercial excludes warranties arising out of this document and excludes all liability for loss and damages arising out of this document.

Q2 2023 charleston industrial MARKET REPORT
PORT CITY CENTRE Summerville/Jedburg ±646,230 SF Available (3 Buildings) OMNI INDUSTRIAL CAMPUS Summerville/Jedburg ±364,700 SF Available DORCHESTER COMMERCE CENTER Summerville/Jedburg ±534,081 SF Available (2 Buildings)
2660 CARNER AVENUE Charleston/North Charleston ±50,000 SF Available CHARLESTON
BRIDGE OFFERS PROPERTY MANAGEMENT, ACCOUNTING & PROJECT MANAGEMENT SERVICES Summerville/Jedburg ±228,784 SF Available

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INDUSTRIAL MARKET REPORT

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