SOUTHEAST SNAPSHOT, FEBRUARY 2008

Columbia Industrial Market

Columbia’s industrial market is in an expansion phase. Overall vacancy is hovering around 6.4 percent and vacancy in some property types and submarkets have reached critical lows.

Rental rates have increased dramatically as older, less expensive properties have been absorbed and new speculative space was delivered to the market causing this increase. Overall, the average rental rates rose 23 percent to $4.33 per square foot. Large blocks of warehouse and distribution space average $3.61 per square foot, while smaller blocks of industrial space have seen rates increase 31 percent in the last year to an average of $5.02. R&D and flex space average rental rates increased 24 percent to $7.64.

Growth is expected from a variety of new entrants to the market. Developers had been apprehensive about over building speculative space and most new projects have been less than 50,000 total square feet, with spaces ranging from 3,000 to 15,000 square feet. However, the lack of new larger spaces has created demand from tenants for more than 20,000 square feet and new available space. Because of this demand, developers will begin larger projects for tenants of this size while still retaining the capability of subdividing the space if necessary. Increased interest has been shown from manufacturers and logistics companies, many of which will be new to the market.

Columbia’s transportation system and its location as a regional hub between Charlotte, Charleston and Atlanta make it attractive to tenants. Demand has increased for smaller space near the intersection of Interstate 20 and Highway 6 in Lexington County. This increase is due to the need to service new developments in southeast Lexington County as well as the Aiken and Augusta markets. Preliminary work is set to begin on the new Saxe Gotha Industrial Park this year. The park will be 497 total acres located at Interstate 26 and Old Wire Road. The State Farmers Market has a public-private partnership to relocate the market to a 160-acre site at Interstate 26 and Highway 321. The project will require $32 million in private investment as well as $12 million from the South Carolina Department of Agriculture. The first facility is expected to open in early 2010. Calhoun County has attracted new development along I-26 as Starbucks has announced plans to build a $70 million coffee roasting plant and warehouse.

In the Northeast submarket, Kirco has purchased the remaining 126 acres from Sony off of Interstate 77 in Blythewood. They have announced plans to build up to 850,000 square feet of speculative industrial space. The first building, 184,000 square feet, will be completed in the summer. Additionally, while specific plans have not yet been announced, Google has purchased 466 acres along I-77. Smaller projects will also come online along Clemson Road near Interstate 20.

Because of its location near I-77 and easy access to downtown Columbia, new projects are expected in Southeast Columbia as well. Most of this activity will be in existing industrial parks as land for industrial development in the Southeast is growing scarce.

— Alan Moyd, CCIM, SIOR is an industrial real estate specialist with Columbia, South Carolina-based Grubb & Ellis | Wilson Kibler.

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