2023 Industrial Real Estate Forecast in Spartanburg, S.C.
High Interest Rates
A Looming Recession.
With swarming economic uncertainty , how is industrial real estate projected to do in Spartanburg, S.C. this year?
Here’s a quick forecast on industrial real estate for the remainder of 2023.
**It is important to note that this data covers all square footage ranges of industrial buildings.
My recent blog, An Unmet Demand for Small Industrial Buildings. How is the Spartanburg Industrial Market Impacted ? – McDaniel and Company , discussed the strong demand for smaller industrial buildings (under 50,000 sq ft), and I believe this need will persist.
Industrial Projections for 2023
No one likes an empty building! Unfortunately, vacancy rates have risen.
In 2022, the average industrial vacancy rate in Spartanburg was 3.9%.
The year to date Spartanburg industrial vacancy rate is 8.0%.
The 2023 forecasted (by year end) industrial vacancy rate is 9.7%.
Despite the rise in vacancy rates, the price per square foot lease rate is projected to increase.
In 2022, the average industrial price per square foot was $5.89.
The 2023 year to date average industrial price per square foot is $6.04.
The 2023 forecasted (by year end) industrial price per square foot is $6.38.
Annual Rent Growth
To put the rental growth rate in perspective, the 2022 Spartanburg industrial rental growth rate was 12.9%.
The 2023 year to date industrial rental growth rate is 11.9%, and the estimated 2023 year end industrial rental growth rate is 8.4%.
Although the year over year rental growth rates are projected to decline, lease rates are still rising.
Inventory is still growing in Spartanburg.
At the end of 2022, the Spartanburg industrial inventory was 103 million Sq Ft.
The current 2023 year to date inventory level is 108 million Sq Ft.
The projected 2023 year end inventory is 120 million Sq Ft.
This means the 12 month projected inventory growth rate is 16.5%.
A slow down in the economy coupled with the rise in inventory levels would explain the increase in current and projected vacancy rates.
Average Market Price Per Square Foot
Like the average price per square foot for lease, the average selling price per square foot for industrial buildings is rising.
In 2022, the average industrial price per square foot in Spartanburg was $65.
The 2023 year to date average industrial price per square foot is $67.
The 2023 projected year end average industrial price per square foot is $70.
Cap rates are projected to remain relatively steady.
In 2022, the average industrial cap rate in Spartanburg was 7.3%.
The 2023 year to date average industrial cap rate remains steady at 7.3%.
The 2023 projected year end average industrial cap rate is 7.4%.
I read some data, but what does this really mean?
On the positive side, price per square foot for sale and for lease is expected to rise.
But as inventory continues to grow, the industrial vacancy rates will continue to rise.
One key point is that the data covers all industrial real estate in Spartanburg, and the demand can vary tremendously in different square footage ranges. While developers are filling the demand for larger industrial users, the same need is not being met for users of smaller industrial space ( under 50,000 sq ft). Although this is another topic for another blog, there is a variation in demand between smaller and larger industrial inventory in Spartanburg, S.C.
Data source: Costar
If you’d like to discuss industrial properties, this blog, or commercial real estate, let’s connect!
McDaniel and Company