Amid changing economic tides across the nation, Greenville's warehouse/distribution market continued to demonstrate signs of strength in the final months of 2022, according to Cushman & Wakefield. The commercial real estate services firm recently released its latest fourth quarter industrial research findings and found that rental rates continue to increase modestly, vacancy remains near its historic low, and strong occupancy gains were witnessed.
Asking rents pushed upward for the fifth consecutive quarter, reaching $4.86 per square foot (psf) and surpassing the previous historical high recorded in Q3 2022 by 0.8%; however, rent growth decelerated with the recent pullback in demand. Landlords have maintained negotiation strength throughout 2022 with the average deal signing at 2.6% above the asking rent along with annual rent escalations climbing from the former 3.0% standard to a new status quo of 3.75% to 4.0%, largely driven by inflationary pressures. Regardless, Greenville-Spartanburg remains an attractive option for tenants
Though readily-available supply remains limited in the market, vacant space increased slightly during Q4 with the overall vacancy rate climbing 30 bps since Q3 to 2.5%, but still remaining near its historical low. Despite the 4.1 million square feet (msf) of newly constructed product delivered in Q4, only 488,000 sf delivered vacant as 87.3% of this space was either pre-leased or built-to-suit. In total, Q4 deliveries accounted for 44.9% of the 9.1 msf of construction completions throughout 2022, driving the market to a new annual high-water mark. A healthy increase in vacancy rate is expected in the coming year with 17.3 msfof speculative product set to deliver in 2023, 25.5% of which is already pre-leased. The Hwy 290 Corridor was the most popular submarket for speculative development, recording 54.0% pre-leasing at the close of 2022.
Demand for industrial space receded in Q4 with 623,000 sf of new deals signed, well below the average of the three previous quarters. Changes in the economic landscape paired with a limited supply of existing availabilities have reshaped the market after an extraordinary first half of 2022. However, occupancy gains of 3.2 msf in the fourth quarter propelled the annual net absorption figure to 10.6 msf, marking a record year for the Greenville-Spartanburg market.
While the Greenville industrial market will likely continue to be impacted by the economic landscape and inflationary pressures in 2023, the area is still generating significant interest and investment. In fact, a noteworthy announcement was made by BMW in October to expand the company’s manufacturing footprint in the Upstate for electric vehicle production. The plan includes an expansion of the existing Spartanburg facility along with anew high-voltage battery assembly facility in Woodruff, a $1.7 billion total investment creating 300 jobs.
Download Cushman & Wakefield's full Q4 Greenville Industrial Report here: https://cw-gbl-gws-prod.azureedge.net/-/media/cw/marketbeat-pdfs/2022/q4/us-reports/industrial/greenville-industrial-marketbeat-q4-2022.pdf?rev=75af2099706c4a38be303ca1f62295e0
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and approximately 60 countries. In 2021, the firm had revenue of $9.4 billion across core services of property, facilities and project management, leasing, capital markets, and valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
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