Yesterday, Today, Tomorrow: Spartanburg’s Industrial Real Estate Vs Other Nearby Markets

A few weeks ago, I compared Spartanburg’s to Greenville’s industrial real estate market (Read Here).

This blog will expand the comparison of Spartanburg’s industrial real estate market to other nearby markets (Charleston, Atlanta, Charlotte, and Savannah) and address these questions:

Inventory: What did the industrial inventories look like 10 years ago, what do they look like now, and what is projected for the future?

Vacancy: With the current inventory levels, what are current vacancy rates?

Price: What is the historical, current, and projected prices per square foot in each market.

Rental Rates and Rental Growth: What is the current rental price per square foot, what is the current annual rent growth compared to 10 years ago, and what is the projected rental growth?

Cap Rates: What are the past, current, and, future industrial cap rates? Read on my blog on cap rates here.

 

Inventory

Let’s discuss inventory under construction, total inventory in the market, and compare these numbers to the inventory levels ten years ago in 2013.

Total Inventory in 2013

Spartanburg       75.7 million square feet

Charleston          71.5 million square feet

Atlanta                673  million square feet

Charlotte            131 million square feet

Savannah          56.4 million square feet

 

Total Inventory (Current)

Spartanburg       105 million square feet

Charleston         98.3 million square feet

Atlanta               803 million square feet

Charlotte           355 million square feet

Savannah          105 million square feet

 

Square Feet Under Construction (Current)

Spartanburg     15 million square feet

Charleston        12.1 million square feet

Atlanta              35.1 million square feet

Charlotte          23.2 million square feet

Savannah       30.6 million square feet

 

Total Projected Inventory in 2028

Spartanburg     141 million square feet

Charleston        131  million square feet

Atlanta              912 million square feet

Charlotte          417  million square feet

Savannah        188 million square feet

 

Spartanburg and Savannah both currently have 105 million square feet of inventory, but Savannah has more than double the square feet under construction.

Relative to total inventory, Atlanta’s inventory under construction is low.

Since 2013, Savannah has nearly doubled its inventory ,and Charlotte is approaching nearly triple its 2013 inventory.

Inventory growth will remain strong in all areas over the next five years. Surprisingly, a little less than 50% of Spartanburg’s new inventory in the next five years is currently under construction.

Vacancy

The staggering increase in inventory is great, but what are vacancy rates in these markets?

Vacancy Rates In 2013

Spartanburg     8.5%

Charleston      8.7%

Atlanta            11.1%

Charlotte        10.4%

Savannah       10.4%

 

Vacancy Rates (Current)

Spartanburg     3.7%

Charleston      2.6%

Atlanta           3.8%

Charlotte        5.3%

Savannah       2.5%

While all areas have relatively low vacancy rates, Savannah and Charleston in particular are struggling to keep up with industrial demand at 2.5% and 2.6% vacancy.

Projected Vacancy Rates In 2028

Spartanburg     4.5%

Charleston      3.6%

Atlanta            6.3%

Charlotte        8.6%

Savannah       4.7%

Vacancy rates are projected to increase in all markets over the next five years but will  still remain relatively low.

Price

Below are the historical, current, and projected average industrial prices per square foot.

Price Per Square Foot in 2013  

Spartanburg     $32/ Square Foot

Charleston        $49/ Square Foot

Atlanta              $41/ Square Foot

Charlotte        $39/ Square Foot

Savannah      $46 / Square Foot

 

Average Purchase Price Per Square Foot (Current)

Spartanburg   $66/ Square Foot

Charleston      $101/ Square Foot

Atlanta            $108/ Square Foot

Charlotte        $101/ Square Foot

Savannah       $123/ Square Foot

Projected Price Per Square Foot by 2028

Spartanburg     $76/ Square Foot

Charleston       $115/ Square Foot

Atlanta             $ 121/ Square Foot

Charlotte         $116/ Square Foot

Savannah        $139/ Square Foot

 

Although industrial prices have grown a staggering amount in the past ten years, industrial price growth will be a little softer moving forward.

Rent and Rent Growth

One hallmark of the Spartanburg industrial real estate market is that Spartanburg’s rents are significantly less than other nearby markets.   See the average price per sq ft below

Average For Lease Price Per Square Foot (Current)

Spartanburg    $5.85/  Square Foot

Charleston       $9.41/ Square Foot

Atlanta            $8.36 / Square Foot

Charlotte        $8.27 / Square Foot

Savannah       $7.62/ Square Foot

 

Annual Rent Growth in 2013

Spartanburg     2.6%

Charleston        2.1%

Atlanta             2.7%

Charlotte      2%

Savannah     2.4%

 

Current Rent Growth (Year over Year Q4, 2022)

Spartanburg    13.1%

Charleston      12.1%

Atlanta          12.4%

Charlotte       14%

Savannah       13.7%

 

Projected Rent Growth By 2028

Spartanburg    .8%

Charleston      .9%

Atlanta           .9%

Charlotte      .8%

Savannah     .7%

 

The comparison between historical, current, and future rent growth is perhaps the most interesting set of data. 2013 year over year rent growth is significantly less than the current rent growth for all markets. Over the next few years, rent growth is going to decline and significantly stabilize.

Cap Rates

Any person or entity interested in industrial real estate for investment purposes will be particularly interested in where cap rates are heading in the future. Despite projected rent growth stabilizing significantly, cap rates will remain stable and are projected to increase slightly for all markets discussed.

Notice that Spartanburg is currently leading (and is projected to continue to lead) in industrial cap rates.

Current Average Cap Rate (Q4, 2022)

Spartanburg     7.31%

Charleston        6.63%

Atlanta              5.7%

Charlotte         6.2%

Savannah       5.8%

 

Projected Cap Rate in 2028

Spartanburg     7.5%

Charleston      6.9%

Atlanta            5.9%

Charlotte       6.4%

Savannah       6%

 

Conclusion

Spartanburg Vs Charleston, Atlanta, Charlotte, and Savannah:

Spartanburg industrial prices (both for lease and sale) will remain well below its neighboring industrial market’s prices.

Spartanburg is the leading market for projected average industrial cap rates in 2028 (at 7.5%). This should attract investors to the Spartanburg market.

While the markets discussed have gained significant headway in price and inventory levels over the past 10 years, it’s important to study where these markets are headed as investors and business owners make decisions.

 

If you’d like to discuss this blog or anything related to commercial real estate, let’s connect!

Emma McDaniel

McDaniel and Company

864-576-4660 (Office)

emma@mcdanielandco.com

 

Data Source: Costar

 

 

Emma McDaniel

Hello! My name is Emma H. McDaniel and welcome to my real estate blog. As a Business Economics major at Wofford College, a third generation in my family to be a real estate agent, and a woman who has a great love for our community, I am looking forward to sharing with you what I discover as I engage with people, explore places, and learn about different sectors of our market.

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