SOUTHEAST SNAPSHOT, JULY 2009

Columbia Industrial Market

The Columbia industrial market was booming 2 years ago. Developers were building responsibly and tenants were gobbling up space as it came on the market. The market’s year-end vacancy rate for 2007 stood at 2.5 percent, says  Chuck Salley of Colliers Keenan’s Columbia office.

“That’s almost nothing,” Salley says of the measly vacancy rate. “If somebody needed 50,000 square feet, we were taking them to Charlotte.”

By the end of 2008, the story was quite different. The vacancy rate had climbed to just less than 7 percent, and that was just the beginning. During the first quarter of 2009, Columbia warehouses benefited from 35,000 square feet of positive absorption; the recessionary reality finally sunk in during the second quarter of this year when the market posted a negative absorption of 200,000 square feet. Suddenly, users looking for 100,000 to 200,000 square feet in a Class A warehouse had places to shop. The largest space currently on the market is a 350,0000-square-foot building, and a few new properties have just delivered.

The current situation, however, may be a small blemish on what is an otherwise strong market because things are starting to pick up. “There was very slow tenant velocity in the first and second quarter,” Salley says, “but the end of the second quarter and the very beginning of the third quarter’s been pretty fast paced.”

The majority of the space currently available has been left by companies that have recently downsized. Once this starts turning around, it shouldn’t take Columbia long to get back to pre-downturn numbers. Besides, the Columbia industrial market has always benefited from a small amount of speculative development, which should certainly help in the long run. In fact, Salley is convinced that the Columbia industrial market is heading into a fairly decent year, no matter what the market is currently doing.

“In the majority of instances, you’re seeing consolidation and realignment. We’re seeing some increased expansions here, which are being affected by closings elsewhere. We’re also seeing some buildings go vacant here because they’re consolidating into other buildings in other states,” Salley says. “It’s a mixed-bag market. I wouldn’t say we’re hurting; everybody’s doing the best they can to keep up with it.”

— Jon Ross

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