Q3 2023 Charleston Industrial Market Report - Bridge Commercial

Q3 2023 | CHARLESTON, SC

INDUSTRIAL MARKET REPORT

Q3 MARKET SNAPSHOT

Q3 TRENDS & HIGHLIGHTS

TOTAL MARKET

BULK (100,000 SF+)

OVERALL INVENTORY*

OVERALL INVENTORY*

VACANCY

VACANCY

69.0 MILLION SF 46.6 MILLION SF 3.6%

4.1%

Q3 CONSTRUCTION & DELIVERIES CONSTRUCTION

8.9 MILLION SF YTD DELIVERIES

6.8 MILLION SF * 69.0 Million SF does not include 22.5 Million SF of specialized buildings.

• THE NATIONAL INDUSTRIAL MARKET IS CHANGING DUE TO SHIFTING SUPPLY AND DEMAND CHARACTERISTICS. • THIRD PARTY LOGISTICS PROVIDERS AND NATIONAL DISTRIBUTION COMPANIES ARE EVALUATING THEIR EXISTING PORTFOLIO AND SEEKING EFFICIENCIES AND COST SAVINGS. • THE ADOPTION OF AUTOMATION/ROBOTICS CONTINUES TO GROW. • GLOBAL MANUFACTURERS ARE PURSUING NEW SITES IN THE UNITED STATES AND MEXICO TO ONSHORE PRODUCTION. •

S.C. CONTINUES TO SEE MANUFACTURING INVESTMENTS.

• INDUSTRIAL VACANCY RATES AND RENTAL RATES ARE SETTLING IN THE NEW NORMAL FROM PRECOVID LEVELS. BRIDGE-COMMERCIAL.COM

Q3 2023 charleston industrial MARKET REPORT

Q3 SUBMARKET SUMMARY PERCENTAGE BREAKDOWN BASED ON OVERALL SQUARE FOOTAGE BY TYPE, SIZE & CLASS Other

AVERAGE ASKING RENTAL RATES BY BUILDING TYPE/CLASS

CLASS A BULK WAREHOUSE

INDUSTRY TYPE Manufacturing

100,000 - 350,000 SF $7.50 - $8.50 PSF NNN 350,000 SF + $6.75 - $8.00 PSF NNN

9%

Distribution / Warehouse

56%

35%

Distribution/Warehouse Manufacturing Other

CLASS B WAREHOUSE 50,000 SF - 200,000 SF + $6.50 - $8.50 PSF NNN

29%

200,000 SF + $5.50 - $7.50 PSF NNN

SIZE

28%

+500,000 SF 100,000 - 499,999 SF 10,000 - 99,999 SF

44% 500,000

SHALLOW BAY

200,000 - 499,999

100,000 - 199,999

16%

10,000 - 20,000 SF $12.00 - $15.00 PSF NNN 20,000 - 40,000 SF $11.00 - $14.00 PSF NNN

OVERALL CLASS

45%

39%

C ssalC

ALL NON-SPECIALIZED BUILDINGS (+10,000 SF) TOTAL VACANT SF

Class A: 172 Buildings

B ssalC

Class B: 431 Buildings Class C: 503 Buildings

A ssalC

YTD DELIVERIES SF

VACANCY RATE

UNDER CONSTRUCTION SF

505,607

2.97%

80,000

34,032

48

13,300

0.26%

0

127,000

9,761,563

108

140,500

1.44%

1,312,840

860,805

Clements Ferry

5,847,138

109

26,095

0.45%

-

-

Summerville/Jedburg

21,205,343

203

1,310,738

6.18%

3,855,463

4,404,411

Goose Creek/Moncks Corner

3,672,257

50

81,120

2.21%

-

135,200

Other*

6,446,838

89

410,253

6.36%

3,664,652

1,255,278

TOTAL MARKET**

69,086,797

1,106

2,487,613

3.60%

8,912,955

6,816,726

RBA SF

# OF BLDGS

Charleston/N. Charleston

17,029,093

499

Hanahan/North Rhett

5,114,565

Ladson/Palmetto

SUBMARKET

Bridge tracks buildings 10,000 SF and greater.

Source: Bridge Commercial 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 (22.5 Million SF).

PG. 2

BRIDGE-COMMERCIAL.COM

Q3 2023 charleston industrial MARKET REPORT

CHARLESTON MARKET CONTINUES TO SHOW RESILIENCY DESPITE NATIONAL HEADWINDS Q3 RECAP • Demand shows continued growth in the 50,000 - 200,000 SF range for requirements while big box are softening.

• Subleases from 3PL providers are starting to appear in the inventory.

• Rental rates have plateaued and should remain steady going into 2024.

• Vacancy rates have moved up from sub 1% to the low single digits. The five buildings that average approximately 950,000 SF.

CHARLESTON’S GROWTH CONTINUES • Charleston continues to be a national leader in attracting people to the area with a net in-migration of 36 people per day, which is high for a MSA of this size.

• Boeing production is up based on strong demand for the 787.

• Foreign military contractors, such as Elbit Systems, are opening operations in Charleston.

DEMAND • Distribution channels for consumer goods are flattening from a period of high demand, which is impacting the general warehousing market.

• Electric vehicle, battery recycling and solar panel manufacturing projects have increased in the region. Electrical power requirements and labor availability are driving the site location process.

• Cold storage facilities continued to show growth in the region with new facilities being delivered each quarter to serve the growing population in the southeast. U.S. cattle prices are at record highs with current domestic herd production at a 60 year low. This will push the need for import facilities for red meat.

• Industrial Outdoor Storage (IOS) demand has leveled off due to containerized cargo traffic softening. The capital markets interest in the property type has significantly upgraded the quality of trucking and storage facilities.

ACTIVE SUBMARKETS UNDER CONSTRUCTION CHARLESTON/N. CHARLESTON

80,000 SF 4 BUILDINGS

LADSON/PALMETTO

1,312,840 SF 1 BUILDING

PORT UPDATE • Long-term projects are completed and include the $1 billion, first phase of the Leatherman Terminal and the dredging project, which gave Charleston the deepest shipping channel on the East Coast at 52’.

• Overall container volume has normalized from the COVID highs to a more stable level allowing predictability in the supply chain.

• The near-dock truck and rail hub at the Leatherman Terminal is under construction and scheduled to open mid-2025.

• Full utilization of the new terminal will be realized once the longshoreman’s union contract negotiations are complete.

• The South Carolina State Ports Authority continues to benefit from cargo shifts focused on the gulf and east coast.

BRIDGE-COMMERCIAL.COM

SUMMERVILLE/JEDBURG

3,855,463 SF 14 BUILDING

RIDGEVILLE

3,664,652 SF 6 BUILDINGS

PG. 3

Q3 2023 charleston industrial MARKET REPORT

INDUSTRIAL OPPORTUNITIES

PORT 95 St. George ±1,219,772 SF Available (3 Buildings)

CHARLESTON LOGISTICS CENTER Summerville/Jedburg ±228,784 SF Available

2660 CARNER AVENUE Charleston/North Charleston ±50,000 SF Available

OMNI INDUSTRIAL CAMPUS Summerville/Jedburg ±364,700 SF Available

PORT CITY CENTRE Summerville/Jedburg ±646,230 SF Available (3 Buildings)

DORCHESTER COMMERCE CENTER Summerville/Jedburg ±534,081 SF Available (2 Buildings)

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

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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.