Construction completions are expected to be quickly absorbed...construction deliveries, most of the...

Construction completions are expected to be quickly absorbedCrystal Baker Research Coordinator | South Carolina

Research & Forecast Report

GREENVILLE-SPARTANBURG, SC | INDUSTRIAL

Q2 2020

Summary Statistics Q2 2020 Greenville Industrial Market

Greenville-Spartanburg Market

Vacancy Rate 7.11%

Change From Q2 2019 (basis points) +218

Absorption (Square Feet) +117.10

New Construction* (Million Square Feet) 2.08

Under Construction (Million Square Feet) 1.76

*New construction is buildings delivered

Asking Rents NNN Per Square Foot Per Year

Market $3.61Flex $7.68Warehouse $3.50Manufacturing $4.67

Key Takeaways > Increased interest in the Greenville-Spartanburg market has fueled industrial activity throughout the pandemic thus far, the market absorbed 117,104 square feet.

> Speculative construction deliveries pushed the vacancy rate up to 7.11% during the second quarter of 2020.

> The next phase of construction will not be delivered until the middle of next year, so the available industrial space is expected be absorbed within the next few quarters.

Greenville is the place to locateAccording to the U.S. Census Bureau, Greenville’s population has increased 19.2% from 2010 to 2019. Also, according to the Post and Courier, South Carolina’s growth percentage is ranked ninth in the U.S. The pandemic has forced people to evaluate where they live, and those cities with less dense populations in tertiary markets such as Greenville-Spartanburg are becoming popular places for large city residents to locate. Due to the influx of people throughout the state, housing demand has increased exponentially. In addition, the arrival of new residents will add to the labor pool and create opportunities for employers to choose employees from a larger group of applicants.

Increased interest in the Greenville-Spartanburg market has fueled industrial activity throughout the pandemic thus far. Speculative construction completed during the second quarter of 2020, and the market posted positive absorption throughout the market. Despite the vacancy rate increasing due to speculative construction deliveries, most of the construction pipeline is now built and the next phase of construction is not expected until next year. Industrial demand is high enough throughout

Market IndicatorsRelative to prior period

Q2 2020 Q3 2020*

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE**

Note: Construction is the change in Under Construction. *Projected **Rent forecast is for metro-wide rents.

In the midst of the COVID-19 outbreak, information and data is emerging at a quick and uneven rate. The information contained herein has been obtained from sources deemed reliable at the time the report was written. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

2 South Carolina Research & Forecast Report | Q2 2020 | Greenville-Spartanburg Industrial | Colliers International

the market that the construction delivered during this quarter is expected to be absorbed by year-end.

Market OverviewGreenville-Spartanburg Market

Comprised of approximately 213.86 million square feet, there are currently 1.76 million square feet among 9 buildings under construction and approximately 1.97 million square feet proposed to begin construction throughout the Greenville-Spartanburg market. During the second quarter of 2020, the market absorbed 117,104 square feet; however, there were 2.08 million square feet delivered to the market. Subsequently, the quarterly vacancy rate rose from 6.20% last quarter to 7.11% during the second quarter of this year. The overall weighted rental rate during the second quarter of 2020 decreased slightly from last quarter and averaged $3.61 per square foot.

Flex/R&D

The flex sector of the Greenville-Spartanburg market is comprised of approximately 5.44 million square feet. There are currently no buildings under construction, but there are approximately 114,500 square feet proposed to begin construction in the Highway 585 Corridor. One 12,000-square-foot flex/R&D building was delivered to downtown Greenville at 10 Webb Road. This sector absorbed 16,214 square feet this quarter and the quarterly vacancy rate decreased to 8.60%. The average weighted rental rate decreased slightly to $7.68 per square foot.

Significant TransactionsWithin the Greenville-Spartanburg market, CoStar reported 33 signed leases, five were over 100,000 square feet. There were also 28 sale transactions during the second quarter of 2020, including 2 portfolio sales.

Sales > For $4.25 million, Alexander Summer, LLC purchased a 154,000-square-foot manufacturing facility in Roebuck.

> For $6.92 million, SCP of Dexter Augusta, LLC purchased a 149,550-square-foot warehouse at 6801 Augusta Road in Greenville.

> For $4.23 million, Eaton Corp. purchased a 111,600-square-foot manufacturing facility at 5502 Highway 25 North in Hodges.

Leases > Custom Goods LLC leased 647,785 square feet at 120 Orion Street in Greenville.

> Leigh Fibers Inc. leased 552,147 square feet at 1101 Syphrit Way in Wellford.

> JIDA Industrial Solutions Inc. leased 150,000 square feet at 154 Metro Court in Greer.

> Lockheed Martin leased 149,550 square feet at 6801 Augusta Road in Greenville.

Capital Investment & EmploymentFrom June of 2019 through May of 2020, there were approximately $304.91 million in capital investments from new companies, accounting for 1,111 jobs. Existing company expansions accounted for $579.13 million in new capital, creating 2,601 additional jobs within the Greenville-Spartanburg region. The types of investments include advanced and engineered materials manufacturing, automotive manufacturing and software, communications, solar farming and logistics. According to the Bureau of Labor Statistics data there are 400 more industrial jobs than there were in May of 2019, despite COVID-19 closings. While total employment has decreased by 51,600 jobs, down to 546,500, total employment is expected to normalize as Coronavirus restrictions are relaxed or lifted.

Market ForecastAccording to the Site Selectors’ Guild, mid-size cities are most likely for relocation to the market or expansions within the market; therefore, the Greenville-Spartanburg market demand is predicted to increase. In addition, Greenville is listed as one of the top mid-size cities for new projects; therefore, an influx of out-of-state residents, employers and employees are predicted to fuel increased activity throughout next year. The market is viable for new projects to begin. The next phase of construction will not be delivered until the middle of next year, so the available industrial space is expected be absorbed within the next few quarters. While this seems positive for the industrial sector, the true effects of the pandemic will not be evident for several quarters.

Industrial Employment | Greenville-Spartanburg MSA

52

54

56

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62

64

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500

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2,500

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Industrial Jobs Added Industrial Employment

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ent (Thousands)

Source: Bureau of Labor Statistics, St. Louis Federal Reserve, Colliers International


Speculative Pipeline ReportGreenville-Spartanburg +100,000 SF

Source: Colliers International, CoStar

Victor Hill Commerce Center1345 Victor Hill Road Duncan, SC 29334Bldg A:545,127 SF | Cross-DockBldg B: 285,240 SF | Front LoadExisting

Inland 85 Logistic Center Robinson RoadDuncan, SC 29334504,060-1.32 mil SF | Cross-DockExisting

Apple Valley Phase IV 405 Apple Valley RoadDuncan, SC 29334327,670 SF | Rear Load195,327 SF | Rear LoadExisting

Garlington North315 Tanner Price WayGreenville, SC 29615Bldg 1 136,500 | Rear LoadExisting

GGAARRLLIINNGGTTOONN NNOORRTTHH

85 LogisticsBerry Shoals RoadDuncan, SC 29334201,634 SF | Rear LoadExisting

Clarius ParkLister RoadGreer, SC 29651551,670 - 1.1 million SF | Cross-DockExisting

Woods Chapel Crossing 1121 Woods Chapel RoadDuncan, SC 29334243,380 SF | Cross-DockExisting

Carolina Commerce Center Harvey RoadGreer, SC 29651327,139 SF | Rear Load131,615 SF | Rear LoadUnder Construction

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CarolinaCommerceCenter

EXIT #58

EXIT #60

EXIT #56

NOW LEASINGRear-Load Distribution Facility Nearby access to I-85 via Highway 80, Highway 14 and Highway 101

Carolina Commerce Center is a 42.76-acre park located in the center of the dynamic Greenville/Spartanburg industrial submarket. The park contains two Class A rear-load industrial buildings totaling 458,754 square feet. Building One is 327,139 square feet with ample car and trailer parking. Building One can accommodate a single user, or be subdivided. An additional 4 acres are available in the park that can accommodate additional car or trailer parking.

Carolina Commerce Center Building One – 327,139 SFGreer, South Carolina

Brian Young, CCIM, [email protected]

Elliott [email protected]

Kacie [email protected]

For leasing information contact:

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GreenvilleSpartanburg

SOUTHCAROLINA

CarolinaCommerceCenter

Augusta Grove1700 Old Grove RoadPiedmont, SC 29673 300,645 SF | Rear LoadExisting (158,240 SF avail.)

Spartan Ridge2010/2000 Nazareth Church RoadSpartanburg, SC 29301Bldg 1: 95,940 SF avail. (Existing)Bldg 2: 286,000 SF | Rear Load(Under Construction)

Smith Farms Industrial Park7870/7820 Reidville RoadWoodruff, SC 29388Bldg 11A: 396,073 | Cross-DockBldg 11B: 151,340 SF | Rear LoadExisting

Wingo Park2725 New Cut RoadSpartanburg, SC 29303171,727 SF | Rear LoadExisting (55,963 SF avail)

Spartan Exchange 1021 Tyger Lake RoadSpartanburg, SC 29301 213,200 SF | Rear LoadExisting

Ft. Prince Commerce CenterFort Prince RoadWellford, SC 29385439,360 SF | Cross-DockExisting

74 Brookfield Oaks74 Brookfield Oaks DriveMauldin, SC 29662148,643 SF | Rear LoadExisting

Global Commerce Park 678 Brockman McClimon RoadGreer, SC 29651165,062 SF | Rear LoadExisting

Southchase Industrial Park218 Wilson Bridge RoadFountain Inn, SC 29644219,054 SF | Rear LoadExisting (121,160 SF avail.)

The Exchange1800 Highway 86 Piedmont, SC 29673289,173 SF | Rear LoadUnder Construction


Q2 2020 Industrial Market Summary Statistics | Greenville-Spartanburg, SCMARKET BUILDINGS INVENTORY

(SF)DIRECT VACANT

(SF)SUBLEASE VACANT

(SF)TOTAL VACANT

(SF)TOTAL VACANCY

RATE (%)NET ABSORPTION

(SF) RENTAL RATE (NNN)

ANDERSON COUNTYFlex/R&D 2 49,840 - - - 0.00% - -

Manufacturing 14 3,892,489 41,920 - 41,920 1.08% -3,000 $5.55

Warehouse/Distribution 185 12,067,635 468,500 - 468,500 3.88% 63,750 $4.31

Anderson County Total 201 16,009,964 510,420 - 510,420 3.19% 60,750 $4.34AUGUSTA ROAD DONALDSONFlex/R&D 4 74,687 - - - 0.00% - -

Manufacturing 21 788,404 44,839 - 44,839 5.69% 22,163 $5.08

Warehouse/Distribution 167 10,334,961 916,154 362,197 1,278,351 12.37% -7,418 $3.88

Augusta Road Donaldson Total

192 11,198,052 960,993 362,197 1,323,190 11.82% 14,745 $3.94

COWPENSManufacturing 5 163,456 - - - 0.00% - -

Warehouse/Distribution 20 2,909,708 216,738 - 261,738 7.45% - -

Cowpens Total 25 3,073,164 216,738 - 216,738 7.05% - -GAFFNEYFlex/R&D 1 12,800 12,800 - 12,800 100.00% - -

Manufacturing 5 176,889 2,000 - 2,000 1.13% -2,000 $3.00

Warehouse/Distribution 54 4,898,774 - - - 0.00% 30,720 -

Gaffney Total 60 5,088,463 14,800 - 14,800 0.29% 28,720 $3.00GREENWOOD COUNTYFlex/R&D 2 34,528 3,000 - 3,000 8.69% - -

Manufacturing 20 2,942,323 - - - 0.00% 300 -

Warehouse/Distribution 36 1,284,584 16,000 - 16,000 1.25% - -

Greenwood County Total 58 4,261,135 19,000 - 19,000 0.45% 300 -HWY 101 CORRIDORFlex/R&D 26 766,044 5,750 - 5,750 0.75% 4,000 $7.50

Manufacturing 9 2,213,840 772,650 - 772,650 34.90% - -

Warehouse/Distribution 173 15,442,894 2,560,170 28,988 2,589,158 16.77% 36,701 $4.69

Hwy 101 Corridor Total 208 18,422,778 3,338,570 28,988 3,367,558 18.28% 40,701 $4.71HWY 221 CORRIDORFlex/R&D 1 73,404 - - - 0.00% - -

Manufacturing 17 510,663 30,200 - 30,200 5.91% - $3.30

Warehouse/Distribution 49 3,814,156 - - - 0.00% - -

Hwy 221 Corridor Total 67 4,398,223 30,200 - 30,200 0.69% - $3.30HWY 29/129 CORRIDORFlex/R&D 4 782,894 1,500 - 1,500 0.19% - -

Manufacturing 11 351,454 - - - 0.00% - -

Warehouse/Distribution 160 13,369,855 1,179,781 88,720 1,268,501 9.49% -24,835 $2.59

Hwy 29/129 Corridor Total

175 14,504,203 1,181,281 88,720 1,270,001 8.76% -24,835 $2.59

HWY 290 CORRIDORFlex/R&D 2 62,690 6,386 - 6,386 10.19% -3,193 $7.00

Manufacturing 16 2,104,279 - - - 0.00% - -

Warehouse/Distribution 82 8,868,631 416,371 177,700 594,071 6.70% -89,535 $3.59

Hwy 290 Corridor Total 100 11,035,600 422,757 177,700 600,457 5.44% -92,728 $3.66HWY 585 CORRIDORFlex/R&D 13 524,045 84,050 - 84,050 16.04% -7,185 $7.03

Manufacturing 28 751,403 - - - 0.00% - -


Hwy 585 Corridor Total 141 10,453,954 332,050 - 332,050 3.18% 139,251 $3.64


Source: CoStar, Colliers International

In January 2017, Colliers International benchmarked its industrial data set statewide. The new standard for collection is all industrial buildings 10,000 square feet or larger that can be readily adapted to an alternative industrial use. All properties were placed into a revised set of markets and submarkets and divided into three categories. Warehouse/Distribution, a facility primarily used for the storage or distribution or both of materials, goods and merchandise. Manufacturing, a facility used for the conversion, fabrication or assembly of raw or partly wrought materials into products or goods. Flex/R&D, a building designed to be used in a variety of ways with at least 30% of the rentable building area used as office. It is usually located in an industrial park setting. Specialized flex buildings can include service centers, showrooms, offices, warehouses and more. Due to the adjustments of the building inventory, comparison of data included in previously published market reports should be avoided.

Q2 2020 Industrial Market Summary Statistics | Greenville-Spartanburg SCMARKET INVENTORY

(SF)DIRECT

VACANT (SF)SUBLEASE

VACANT(SF)

TOTAL VACANT(SF)

TOTAL VACANCY RATE (%)

NET ABSORPTION (SF)

RENTAL RATE (NNN)

PELHAM ROADFlex/R&D 19 449,094 24,637 8,600 33,237 7.40% 15,525 $9.75

Manufacturing 7 193,806 36,800 - 36,800 18.99% -10,800 $10.00

Warehouse/Distribution 99 4,889,118 563,620 2,500 566,120 11.58% 76,212 $3.46

Pelham Road Total 125 5,532,018 625,057 11,100 636,157 11.50% 80,937 $3.92PIEDMONTFlex/R&D 6 122,850 21,500 - 21,500 17.50% - -

Manufacturing 8 179,557 - - - 0.00% - -

Warehouse/Distribution 89 4,139,597 12,000 - 12,000 0.29% - $5.50

Piedmont Total 103 4,442,004 33,500 - 33,500 0.75% - $5.50SIMPSONVILLE FOUNTAIN INNFlex/R&D 4 77,776 13,946 - 13,946 17.93% - $8.23

Manufacturing 8 228,728 - - - 0.00% - -


Simpsonville Fountain Inn Total

149 13,666,370 534,520 - 534,520 3.91% 205,700 $3.48

WHITE HORSEFlex/R&D 1 18,502 - - - 0.00% - -

Manufacturing 1 23,665 - - - 0.00% - -

Warehouse/Distribution 72 5,137,691 227,000 24,500 251,500 4.90% 271,094 $3.25

White Horse Total 74 5,179,858 227,000 24,000 251,500 4.86% 271,094 $3.25WINGOFlex/R&D 1 30,605 - - - 0.00% - -

Manufacturing 16 485,147 - - - 0.00% - -


Wingo Total 78 9,413,057 654,968 - 654,968 6.96% 36,560 $3.14OTHER SUBMARKETS

Flex/R&D 61 2,055,133 259,120 - 259,120 12.61% 4,747 $7.23

Manufacturing 133 7,432,338 1,131,712 - 1,131,712 15.23% -29,500 $3.96

Warehouse/Distribution 935 53,390,311 3,067,768 175,050 3,242,818 6.07% -401,379 $3.21

Other Submarket Total 1,129 62,877,782 4,458,600 175,050 4,633,650 7.37% -426,132 $3.39MARKET TOTALFlex/R&D 162 5,441,573 458,553 9,280 467,833 8.60% 16,214 $7.68

Manufacturing 337 23,164,568 2,260,121 - 2,260,121 9.76% -22,837 $4.67

Warehouse/Distribution 2,578 185,250,775 11,535,939 939,655 12,475,594 6.73% 177,727 $3.50

Market Total 3,077 213,856,916 14,254,613 948,935 15,203,548 7.11% 171,104 $3.61

HWY 81 CORRIDOR

Flex/R&D 1 13,304 2,116 - 2,116 15.90% - -

Manufacturing 4 141,700 - - - 0.00% - -

Warehouse/Distribution 29 4,276,038 - - - 0.00% - -

Hwy 81 Corridor Total 34 4,431,042 2,116 - 2,116 0.05% - -MAULDINFlex/R&D 14 293,377 23,748 680 24,428 8.33% 2,320 -

Manufacturing 14 584,427 200,000 - 200,000 34.22% - -

Warehouse/Distribution 130 8,991,145 468,295 80,000 548,295 6.10% -166,279 $3.60

Mauldin Total 158 9,868,949 692,043 80,680 772,723 7.83% -163,959 $3.60

FOR MORE INFORMATION:David Feild, CCIM

Market President | Greenville+1 864 527 [email protected]

Liz H. McCaryVice President, Marketing | South Carolina+1 803 401 [email protected]

Crystal Baker, CPRC

Research Coordinator | South Carolina+1 803 401 [email protected]

Ashley FenlonMarketing Coordinator | Spartanburg+1 864 527 [email protected]

Garrett Scott, SIOR

Vice President Logistics & Transportation Solutions Group+1 864 527 [email protected]

John Montgomery Vice President+1 864 527 [email protected]

Brockton Hall, MRED Senior Brokerage Associate+1 864 527 [email protected]

Richard Barrett, MCR Senior Brokerage Associate+1 864 527 [email protected]

Brannan Hudson Brokerage Associate+1 864 527 [email protected]

Dillon SwayngimBrokerage Associate+1 864 527 [email protected]

GREENVILLE-SPARTANBURG INDUSTRIAL PROFESSIONALS:

Colliers International | Greenville55 E. Camperdown Way, Suite 200Greenville, South Carolina | USA+1 864 297 4950

Copyright © 2020 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

400 offices in 68 countries on 6 continents

$3.3billion in annual revenue

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Colliers International | Spartanburg145 West Main Street, Suite 300Spartanburg, South Carolina | USA+1 864 297 4950

About Colliers InternationalColliers International (NASDAQ, TSX: CIGI) is a leading real estate professional services and investment management company. With operations in 68 countries, our more than 15,000 enterprising professionals work collaboratively to provide expert advice to maximize the value of property for real estate occupiers, owners and investors. For more than 25 years, our experienced leadership, owning approximately 40% of our equity, has delivered compound annual investment returns of almost 20% for shareholders. In 2019, corporate revenues were more than $3.0 billion ($3.5 billion including affiliates), with $33 billion of assets under management in our investment management segment. Learn more about how we accelerate success at corporate.colliers.com, Twitter @Colliers or LinkedIn.

Learn more about how we accelerate success at corporate.colliers.com, Twitter@Colliers or LinkedIn.

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