It would be great, in this time of pandemic uncertainty, to have a crystal ball that could predict the future. Instead, our best alternative is to find a trusted guide to help weigh the pros and cons to make the best decision for the days ahead. When it comes to commercial real estate in South Carolina, this maxim couldn't be truer.
CRE firm Wilson Kibler tracks data for South Carolina markets and their most recent report shows us the trends the Palmetto state is seeing. The details reflect the huge contrast between the demand for industrial space and office/retail property. As a result of the massive shift to e-commerce and on-line shopping caused by Covid-19, there has been a significant increase in the demand for warehouse space. At the same time, as office and retail users are determining what the “new normal” looks like we are seeing landlords get creative to keep the tenants they have and to fill vacant space.
In the industrial market, investors are sinking billions in warehouses to address the growing demand for next-day shipping. “It's the Amazon effect,” notes George McCutchen, CCIM, SIOR, Wilson Kibler principal. Retail distributors want to invest where the consumers are—in markets where infrastructure allows easy access to those consumers. “Because of the interstate system, (Columbia is less than a 4-hour drive to the Port of Charleston, Inland Port Greer, Charlotte and Atlanta) we're seeing a lot of people coming here for that reason,” McCutcheon said. “They want that east coast presence.”
The vacancy rate in Columbia sits at a low 3.9 percent, leaving little available space to address current demand. Two Class A industrial buildings totaling 1.1 million square feet are currently under construction.
In the Upstate, “industrial is on fire,” says managing partner Givens Stewart, SIOR. “This is an area that checks all the boxes: a strong manufacturing workforce, convenient logistics and infrastructure and ample land for development.” At present, 13 industrial/flex buildings are in the process of being built. About 1.8 million square feet in five buildings will be delivered this quarter.
In contrast, the office markets continue to be uncertain, although the vaccine rollout continues to provide reasons for cautious optimism. The vacancy rate in office space in Columbia is up, but landlords have been flexible with tenants who want to downsize and average asking rents are holding steady. The same holds true for office space Upstate. Though vacancy rates are up, they remain steady with just a 8.3 percent increase from year-end 2020 and first-quarter 2021.
Retail is also in a state of flux. “The spaces with drive-through and carry-out capability are obviously much more sought after right now,” notes senior associate John Mills. “We've seen some of the bigger box spaces reduce their footprint.” For those looking to downsize, landlords are being flexible.
What does Wilson Kibler offer in such a dynamic moment? Deep knowledge of the local market and a history of relationships throughout the state from years invested in the region. International firms have been drawn to the area, but the difference is “you're not just a number when you're dealing with our firm,” says Stewart.
“You get a different quality of service at a more boutique firm,” says Edward Wilson, CCIM. “There's an opportunity for more transparency versus some of our corporate competitors. Especially in these times, that knowledge and those relationships make a huge difference.”
Wilson Kibler is an independent, full-service commercial real estate firm, founded in 1987, with offices in Columbia, Greenville and Charleston. For more information, go to: https://www.wilsonkibler.com/