Considering Leasing Industrial Property in Spartanburg, S.C.?
Here’s What You Need to Know
The recent rise in demand for industrial buildings coupled with the current economic uncertainty raises several questions regarding the industrial leasing market in Spartanburg, S.C.
You may be a developer determining what size industrial building to build, an owner interested in leasing an existing asset, or a tenant interested in leasing an industrial building.
This blog will give you an overview of the industrial leasing market in Spartanburg, S.C. and compare Spartanburg to a few other nearby markets.
The current industrial inventory in Spartanburg S.C. is 108 million square feet.
The current vacancy rate is 7.9%
Market Rent Per Square Foot
The current market rent per square foot is $6.07.
Even with the slow down in industrial sales and leasing activity, 12 months ago the market rent per square foot was $5.41. Therefore, market rents have increased over 12% in the past year.
The market rent per square foot is projected to continue to rise.
The projected industrial rent per square foot is projected to be $6.38 by the end of 2023, $6.64/ sq ft by the end 2024, and $7/ sq ft by 2027.
Median Months to Lease
How long does it typically take an industrial building to lease?
Although size, location, and several other factors need to be considered, here are the median months to lease across all industrial buildings in Spartanburg:
The 2023 quarter to date median months to lease is 3.6 months. This is in line with the average US median months to lease of 3.7 months.
Probability of Leasing
If you have an industrial asset you plan to lease, how many months will it take to secure a tenant?
There is a 50% probability of leasing in 5.4 Months
Within 9 Months, the probability of leasing is over 70%.
There is currently 14.3 million square feet of industrial inventory under construction in Spartanburg.
This 13.3% expansion of current inventory is the second largest industrial expansion in the Southeast.
The number one market for new construction (relative to existing industrial inventory) is Savannah, GA.
How Does Spartanburg’s Industrial Leasing Compare to Other Nearby Markets?
A few months ago, I wrote a blog that took a deep dive into data comparing Spartanburg’s industrial market to other nearby markets.
You can read the blog here.
Because data is always changing, here’s an update on the Spartanburg Industrial leasing market relative to some alternative markets: Charlotte, Atlanta, Savannah, and Raleigh-Durham.
Average Industrial Price Per Square Foot for Lease: $8.48/ sq ft
Industrial Vacancy Rate: 4.9%
Price Per Square Foot: $105
Average Industrial Price Per Square Foot for Lease: $8.60/ sq ft
Industrial Vacancy Rate: 4.1%
Price Per Square Foot: $112
Average Industrial Price Per Square Foot for Lease: $7.84/ sq ft
Industrial Vacancy Rate: 2.5%
Price Per Square Foot: $119/ sq ft
Average Industrial Price Per Square Foot for Lease: $11.14/ sq ft
Industrial Vacancy Rate: 4.4 %
Price Per Square Foot: $140/ sq ft
At a price per square foot for lease of $6.07, Spartanburg’s industrial rents are significantly cheaper than other nearby alternative markets.
From a tenant’s perspective, the price per square foot is a positive factor when considering locating to the Spartanburg market.
From an owner’s perspective, although the Spartanburg’s industrial prices for lease are lower, the price per square foot to purchase is also significantly less than alternative markets.
Spartanburg’s average industrial price per square foot for sale is $67. This is far less than the national average of $165/ sq ft and the prices discussed above for other nearby markets.
Therefore, an owner can purchase an industrial building cheaper in Spartanburg than many other alternative markets which justifies the lower asking rental prices.
If you’d like to discuss this blog, industrial real estate, or anything relating to commercial real estate, let’s connect!
Dat Source: Costar
VP of McDaniel and Company