Healthy market continues to boost absorption
- Vacancy rate lowers as 2.49 million square feet were absorbed this quarter.
- Build-to-suit and speculative buildings are being absorbed as soon as they are delivered to the market.
- Despite a fluctuation in market drivers, Greenville-Spartanburg industrial market activity soars.
Diversity of demand driver creates positive outlook
The diversity of market demand drivers in the Greenville-Spartanburg market has resulted in a stable tenant base and strong overall market velocity. These demand drivers include advanced manufacturing, warehousing and distribution, and automotive parts manufacturing and assembly. The major benefit of this wide range of demand, from a real estate perspective, is a market that is stable and less reliant on any one industry. This allows Greenville-Spartanburg to have a higher degree of stability that is less affected by macro-economic factors such as trade disputes and economic slow downs. As one demand driver is slowing or leveling off, another is expanding. This has been evident over the last five years as the annual absorption in Greenville-Spartanburg continues to exceed the historical average, despite changes to global supply chains and recent trade uncertainty. In 2015 and 2016, much of the Greenville-Spartanburg industrial absorption revolved around new and expanding automotive suppliers pursuing parts contracts for the new BMW X7 model, which began initial production in 2018. This resulted in a surge of build-to-suit and speculative building absorption and expansion of existing industries. Prior to this period the Greenville-Spartanburg market announced more than $2 billion in investments within its growing carbon fiber industry from companies like Toray Carbon Fibers of America and Tejjin. In addition, three large build-to-suit developments for new regional distribution facilities by Dollar Tree, Rite-Aid, and TTI totaled over 3.7 million square feet of new distribution space.
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