The Industrial Market in Spartanburg S.C.
If you live in or have visited the Upstate of South Carolina, you may have noticed the industrial market is doing quite well.
And if you don’t know the Upstate area of South Carolina, you may have seen the area pop up on the national charts as a prime location for industrial real estate.
Let’s break down some key facts on what is special about the Upstate (and specifically Spartanburg), in the industrial real estate market.
The Upstate of South Carolina is home to over 234 million square feet of industrial real estate with over 18 million square feet currently under construction.
In the past year (Oct 2021- Oct 2022) over $575 million in industrial transaction volume has occurred in Spartanburg alone.
The Upstate is home to 539 foreign companies, so the area has become an ideal location for both national and global companies.
There are many factors contributing to the high demand and volume of industrial real estate in the area.
Spartanburg has access to both I-26 and I-85 and is in close proximity to the Port of Greer and is 212 miles from the port of Charleston.
Besides Charleston’s proximity, Spartanburg is driving distance to cities such as Raleigh, Charlotte, and Atlanta.
Spartanburg is Pro-Growth!
Spartanburg county is a land use county. Unzoned land lessens the barriers for growth that exists in other counties.
Because of Spartanburg’s less restrictive zoning and affordability, Spartanburg has been a strong alternative for companies who were originally attracted to the Upstate area because of Greenville.
Existing big facilities like BMW and Michelin have certainly driven demand for industrial real estate in the area. Many other companies have recently expanded in the Spartanburg area including TTI, Custom Goods, and Oshkosh Defense.
We have the workforce demographics to support the industry!
14% of the Upstate workforce is in the manufacturing sector, and the projected population growth in Spartanburg is above the national average. We expect to see a workforce to support the industry growth in the area.
These facts are great, but let’s discuss the current and projected industrial data in Spartanburg.
Show Me the Data!
Despite Spartanburg being in driving distance to larger nearby cities, its rent is relatively inexpensive.
Industrial rents in Spartanburg are 40% less rent that Charlotte, Charleston, and Atlanta.
The current average industrial price per square foot in Spartanburg is $5.65
It is projected that the market rents per square foot will remain well below the national average for many years to come.
The projected 2025 average industrial rent per square foot in Spartanburg will be just over $6 per square foot compared to the average projected 2025 industrial price per square foot of $13.
Despite this discrepancy, the annual rent growth for the area is strong.
In the past 12 months, the industrial annual rent growth has been 13.4% (before adjusting for inflation) and the industrial logistics rent growth was 14.3%.
You may be thinking….
You may be thinking, why would I invest in a property where rent is cheaper compared to other markets?
-Cheaper Real Estate!
Spartanburg’s industrial buildings are significantly less expensive than other local markets and especially less expensive compared to current and projected national averages.
The past 12 month price per square foot average in Spartanburg was $67 while the current national average is around $150 per square foot.
In 2025, the projected average price per square foot in Spartanburg is around $70 while the projected national average will be over $180 per square foot.
-Higher Cap Rates!
Despite current and projected rents and prices per square foot being lower than the national average, the current and projected cap rates for Spartanburg are well above the national averages. The current average cap rate for industrial buildings in Spartanburg is 7.1%.
In 2025, the projected market cap rate for Spartanburg is over 7.5% while the projected industrial cap rate average in the United States is just over 6.0%.
Occupied Real Estate = A Happy Landlord
The occupancy levels for industrial real estate are strong! The current industrial vacancy rate is 2.7% in Spartanburg.
There are multiple factors contributing to the current condition of the industrial real estate market in Spartanburg, and the future for this sector is looking strong.
If you’d like to discuss this blog, market data, or industrial real estate, let’s chat!
Emma Harmon McDaniel