The Charleston area speculative building boom has no end in sight, with more room to grow according to local experts. “Charleston is a new market to many developers, and the returns are strong,” said Bob Barrineau, of commercial real estate firm CBRE Charleston office to the Post & Courier. “It’s a rapidly growing port market with a diversifying base. Hard not to love the industrial opportunity in the market.”
New Jersey-based Silverman Group is closing on a land deal in the near future with plans to build a 562,544 square foot warehouse. The speculative warehouse, which means it is being built without known tenants, will be built along Interstate 26 near Jedburg. This is the second big announcement in the last month of speculative building development in the Charleston area. The Spartanburg-based group Johnson Development Associates plans to build an 829,000 square foot warehouse across Interstate 26 from the Silverman Group project on 91 acres of land.
These two announcements of a combined 1.4 million square feet of speculative buildings, is in addition to 2 million square feet of speculative space already under construction in the Charleston metropolitan area. Mark Vitner, an economist with Wells Fargo in Charlotte, said “Charleston is seeing an incredible amount of industrial development right now and is poised to grow rapidly as major projects like Volvo and Mercedes come fully online.” He thinks that Charleston has plenty of room for growth adding, “it is a great time to be building spec” in the Charleston region. Both the Volvo and Mercedes-Benz Vans new manufacturing campuses are currently under construction.
A CBRE report on speculative building development in the Charleston area says that any glut of speculative space that could result in higher vacancies and stagnant rental prices will be short term. “Over time we expect Charleston to be viewed even more attractively as an investment market as investors see higher returns in secondary and tertiary markets,” the report states. According to commercial real estate firm Avison Young, there has been an uptick in industrial vacancy rates with the rise of more speculative building, with an average vacancy rate of 9.7 percent in the fourth quarter of 2017 from 7.4 percent a year ago. The Avison Young analysis adds that the new corporate tax laws will help spur investment as “demand continues to be strong for our area.”
The big boom in speculative building development is also being spurred on by the revitalized Port of Charleston, which has set new records for containers and cargo moving through the port.
SOURCE: Post & Courier, “Charleston area’s ‘spec’ building boom accelerates, with no end in sight,” by David Wren, March 30, 2018
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