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.
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.
The staggering increase in inventory is great, but what are vacancy rates in these markets?
Vacancy Rates In 2013
Vacancy Rates (Current)
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
Vacancy rates are projected to increase in all markets over the next five years but will still remain relatively low.
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
Current Rent Growth (Year over Year Q4, 2022)
Projected Rent Growth By 2028
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.
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)
Projected Cap Rate in 2028
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!
McDaniel and Company
Data Source: Costar