BY Randy Kendrick | Market Trends

Charleston, South Carolina has emerged as a focal point for industrial real estate development in the U.S., bolstered in part by a strong economy and rapid population growth.

Charleston has benefitted from many of the same economic factors that have been pushing development in many cities across the Southeastern U.S. The Southeast region is attractive to businesses for a multitude of reasons, including the plentiful and continually growing supply of labor due to a population influx. Economic growth in the Southeast has been strong, and is expected by many experts to continue at least through 2019.

Charleston has many unique advantages that make it an ideal location for industrial real estate development, even within the booming Southeast region. In particular, its status as a port city (especially with its current multi-billion dollar port expansion project) and strong local manufacturing economy have made it a target for Industrial and Logistics (I&L) development. 2018 was a particularly strong year, with industrial property completions in the Charleston metro area topping the 6 million square foot mark, according to CBRE’s Charleston Industrial Market Outlook 2019.

Given Charleston’s strong fundamentals and the ongoing trends driving development in the region, Xebec believes that Charleston will continue to be an ideal market for I&L development through 2019 and beyond.

Factors Driving the Strong Charleston I&L Market

Port of Charleston

Charleston has experienced significant economic diversification ( e.g. manufacturing, retail and hospitality) over the last two decades as the city has grown. The port complex is a major factor in the region’s continued growth and prosperity, and a major selling point for both I&L developers and end users.

Along with easy access to international shipping, companies in the area benefit from the strong infrastructure and transportation network connected to the port. More than one-fifth of the U.S. population lives within a day’s drive of the Charleston metro area, and goods can reach most domestic markets from Charleston in less than 48 hours.

The ongoing Charleston port expansion project began in 2015 and included deepening the harbor to accommodate the larger New Panamax ships, adding a new container terminal that doubles the port’s total capacity, and adding a rail line to integrate the new terminal with existing transportation networks. This port expansion demonstrates Charleston’s commitment to updating and maintaining its vital domestic and international shipping infrastructure, and further underlines why Charleston is so attractive to I&L developers, end users and investors.

E-Commerce Last Mile Development

As mentioned earlier, Charleston is currently one of the fastest growing urban areas in the country.  As e-commerce continues to account for an ever-larger share of retail sales, many companies are holding more inventory nationwide in order to accommodate next-day deliveries, especially near major urban centers such as Charleston.  According to CBRE’s Charleston Industrial Market Outlook 2019, around 20% of all new leasing activity is related to e-commerce fulfillment. With the combination of Charleston’s growing population and its strong transportation infrastructure, it’s no surprise that the area is an attractive location for industrial and logistics development.

Strong Manufacturing Economy

Over the past few decades, the Southeast has emerged as a magnet for industrial and manufacturing operations. The Charleston metro area, as CBRE states in their 2019 Charleston Industrial Real Estate Outlook, has become “a prime target for industrial users looking to manufacture, store, and distribute goods across the globe.” Some of the reasons for this have already been discussed, such as population growth, plentiful labor and the Charleston port complex.  Other factors that contribute to the Southeast’s generally acknowledged “pro-business” climate include lower taxes and the right-to-work laws in many states in the region, including South Carolina.

And major corporations seem to be seeing the same strong fundamentals in the Charleston market — in 2018 alone, Volvo and Mercedes-Benz both opened manufacturing plants in the North Charleston area. The Volvo plant is projected to create 4,000 jobs, adding to the already strong economy supporting current I&L development.

As discussed more fully below, Xebec has also entered the North Charleston market with a 264,500 square foot light industrial building, Patriot, which is expected to be delivered in the fourth quarter of 2019.

Invest in Growing I&L Markets with Xebec

Xebec is seeing the demand in the Charleston industrial and logistics real estate market, being driven by the positive trends and economic indicators detailed above, and is responding by pursuing investment opportunities and developing assets in this area.

One such asset is the aforementioned Patriot, a 264,500 square foot, multi-tenant light industrial building in North Charleston. This Class-A building, located approximately 12 miles northwest of Charleston International Airport, is currently under construction and on schedule to be delivered in the fourth quarter of 2019.

Xebec will continue seeking new opportunities in strong industrial and logistics real estate markets across the US. Contact us today for more information about Xebec’s full portfolio of investment opportunities.

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