Charlie Moore, CCIM Principal NAI Batten & Moore

The local trend in Charleston, South Carolina’s industrial real estate market is a simple study of history repeating itself, according to Charlie Moore, CCIM, principal of NAI Batten & Moore in Charleston. “While the economy was robust and the demand high, developers put into service much needed new industrial parks and spec buildings. Absorption was steady with rents close to asking rates,” Moore explains.

However, since delivery of some parks and spec buildings, the economy has slowed and demand for larger industrial space (100,000 square feet and greater) has temporarily tapered off. Accordingly, landlords have become more flexible and competitive. Demand remains strong in the smaller spaces of 20,000 to 50,000 square feet. Some landlords are motivated to subdivide space in larger buildings to accommodate current demand.

Recently built, quality warehouse/ distribution space located in well-situated industrial parks are asking rents of $3.60 to $3.90 per square foot, net. Expenses are typically $0.40 to $0.60 per square foot. Deals can actually be done in the $3.25 to $3.65 range depending on quality of tenant and term as well as the financial stamina of the developers and owners. Older, less desirable space (lower clear height, all metal construction, poor location) is available in the range of $2.50 to $3 per square foot, net.

“The largest lease in the market last year was completed by our firm,” says Moore. “We leased a 560,000-square-foot new facility, developed and owned by Pearson Properties of Gastonia, North Carolina, to Wal-Mart. That building is in the Charleston Regional Business Park on the Cainhoy Peninsula in Berkeley County.”

Demand will remain high on the Cainhoy Peninsula of Berkeley County and will continue to expand up the Interstate 26 corridor west of Charleston where it links with Interstate 95, a major north-south trucking corridor. Affordable land, with good interstate access to the terminals of the South Carolina State Ports Authority, is available in those areas. These areas are also near abundant labor. Park owners are eager to accommodate developers and users.

“The Charleston market is resilient and active,” notes Moore. “I see continued interest by both developers and investors purchasing income properties. The 1031 exchange market and low interest rates are driving quite a demand for properties.”

Perhaps the newest entry in the industrial arena is Pattillo Construction of Stone Mountain, Georgia. It is a very capable, well-funded, vertically integrated company that recently built a 196,000-square-foot spec building. Pattillo apparently sees opportunity in both the Charleston market and other promising areas of South Carolina and seeks to develop those opportunities.

Other significant developments include the use of the WesternStar/ Freightliner plant by American LaFrance, the construction of a new $600 million bridge linking Charleston to Mount Pleasant, South Carolina, and an important expansion of the S.C. State Ports onto the U.S. Naval Base property.

“Charleston is well positioned to benefit from an up-tick in the economy,” Moore says. “Whether there be a trade deficit or trade surplus, goods will move through and be handled in Charleston. Historically, Charleston has been comparatively recession proof, showing strength even in difficult times.”

The future of the market is solid. Charleston is the second largest container port on the East and Gulf coasts, second only to the Port of New York and New Jersey. It’s the fourth largest in the country. There is a tremendous overall “gravity” that consists of a great place to live, a well situated port, an effective economic development community, meaningful incentives and business-minded government that attracts and retains business.

The S.C. Department of Commerce and the Charleston Regional Development Alliance have shifted some emphasis to attracting companies that pay workers higher wages than those earned by warehouse workers. This may lead to a more diversified industrial market.

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