Published April 29, 2013
The Columbia-area industrial real estate market tightened in the first quarter as total vacancy rate fell to 8.08%, Colliers International reported.
And it appears there’ll be further tightening during the remainder of the year, the commercial real estate firm said in its first-quarter market study.
“Both lease and purchase transactions are on the rise and are expected to continue through 2013 with decreased vacancy rates, positive absorption and stabilizing rents,” the report said.
Colliers expects more investment in industrial buildings in the upcoming months as buyers take advantage of low interest rates.
“Prospects for industrial buildings may find that occupancy costs are lower by purchasing rather than leasing,” the firm added. “Owners will continue to encourage tenants to commit to longer lease terms by increasing rates on short leases while maintaining incentives in the form of free rental periods for longer term leases.”
During the first quarter, the market vacancy rate dropped by 70 basis points from the year-end figure of 8.78%, Colliers said.
Vacancy rates in almost all submarkets declined. The greatest improvement came in northeast Columbia where the rate dropped to 23.99%, down 139 basis points from the end of the fourth quarter. During the quarter, northeast Columbia absorbed more than 70,000 square feet of space.
Still, the northeast submarket has the greatest amount of available space with more than 1.2 million square feet ready to be occupied. Much of the space is in chunks of 50,000- to 350,000-square-foot buildings.
The large, empty buildings, though, may be a plus for the Columbia market, Colliers said. That’s because there’s a shortage of large, contiguous blocks of space throughout South Carolina and the region while demand continues to grow.
Colliers expects “significant absorption” for the northeast submarket through the remainder of the year.
Around the area, space is tightest in the Irmo-Chapin area and Lexington County. According to Colliers, all of the 811,560 square feet of industrial buildings in the Irmo-Chapin area is filled, while just 600 square feet of more than 4.2 million square feet in Lexington is unoccupied.
Of 625 industrial buildings totaling 37.9 million square feet, approximately 3 million square feet is unoccupied, the report said.