Charleston Industrial Market Gets Boost with 1.1MSF BTS Deal
Oct 13, 2009
By: Barbra Murray, Contributing Editor
Given that the U.S. recession has left the retail market in shambles and the global financial meltdown has hindered trade activity, demand for distribution and warehouse facilities has taken a major hit, so the big news out of Charleston's industrial market is something that is heard of quite infrequently these days. Rockefeller Group Development Corp. and MeadWestvaco Corp., developers of the 400-acre Rockefeller Group Foreign Trade Zone/Charleston industrial park in Berkeley County, S.C., have just landed a 1.1 million square-foot build-to-suit deal with automotive replacement tires marketer TBC Corp.
Located at the I-26/Jedburg Road interchange near the Port of Charleston--one of the top 10 ports in the country--FTZ/Charleston will ultimately feature multiple buildings totaling 2.7 million square feet. TBC's commitment is the property's first, and the company will utilize the behemoth facility to bring part of its distribution network under one big state-of-the-art umbrella. Real estate services firm Colliers Keenan represented the Rockefeller/MWV development team in the build-to-suit agreement, while Jones Lang LaSalle stood in for TBC.
Local and state officials competed with other states to bring the Rockefeller/MWV project to the port area, where demand for space is expected to grow, partially due to the fact that plans have recently been put in place to increase the Port of Charleston's capacity by 50 percent. The hope is that the TBC facility and the port expansion will attract other businesses to this distribution cluster.
Charleston, however, does not have to wait for the late 2010 completion of the new TBC distribution center to spur recovery of the industrial market; recovery is actually already getting underway. The average vacancy rate in the Charleston area decreased 1.4 percent in the second quarter, while the average vacancy rate for the U.S. increased 1.2 percent," according to reports by real estate services firm Grubb & Ellis. The 120 basis points jump in the national industrial market marked the largest single-quarter increase in the 22-year history of the Grubb & Ellis report.
"Fundamentally, the Charleston market is not unhealthy," Peter Fennelly, vice president with Colliers Keenan, told CPE. "It's not large, roughly 30 million square feet. It has been affected by the changing economy over the last 24 months but we didn't overbuild so there isn't a lot of vacancy in the market; there are very few blocks of large space available." The recent hiring of a new CEO for the South Carolina Ports Authority, he added, is also providing confidence in the market. Other positive signs pointing to the commencement of a turnaround include increased absorption due to dropping lease rates, and the rebounding of the local housing market.
Construction of TBC's new distribution center is on track to begin in the fourth quarter of this year.