Figures

Greenville-Spartanburg Industrial Figures Q4 2023

Availability Equals Opportunity

January 30, 2024 10 Minute Read

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Development Activity

The industrial market saw a substantial increase in speculative deliveries in 2023, with 17.6 million square feet added throughout the year, resulting in a jump in the market vacancy rate from 3.5% to 8.2%. This contrasts with 2022, where 7.2 million square feet of speculative deliveries were added with a pre-leased rate of nearly 80%; therefore, the deliveries added to the size of the market but did not adversely affect the vacancy rate. Industrial development in Greenville-Spartanburg has significantly evolved over the past three years to meet user needs, with a notable increase in the total square footage and average size of speculative deliveries.

 

Absorption & Leasing Activity

In 2023, Greenville-Spartanburg's real estate market experienced a total net absorption of 4 million sq. ft., despite the addition of 17.6 million sq. ft. of speculative deliveries. The final quarter of this year contributed to 1.9 million sq. ft. of this absorption. Class A net absorption in Q4 2023 totaled 2.5-million sq. ft and 4.6-million sq. ft. during 2023, both of which are better than the overall net market absorption during the same time period. With an improving market economic outlook, we anticipate leasing velocity and absorption to normalize over the next six quarters.

 

Outlook

The economy and interest rate hikes remained relatively unchanged and steady during the fourth quarter, but there are positive expectations for the second half of 2024 including the possibility of three rate cuts. The banking industry is expected to positively adjust to the predicted changes in interest rates, creating opportunities in the real estate sector. Furthermore, the Federal Reserve's predicted end to its tightening cycle could lead to an increase in transactions in the upcoming year; positivity was evident with the U.S. GDP growth of 3.3% during Q4 2023. However, there are challenges on the horizon due to global trade facing significant challenges due to crises at two crucial intersections. The Panama Canal is experiencing problems due to receding water levels, causing delays and congestion. Simultaneously, the ongoing Gaza crisis is having regional implications with rebels in Yemen taking aggressive actions towards Red Sea cargo ships which could force port-dependent companies to plan for delays or warehouse supply to avoid delays. In addition, the upcoming presidential election may also lead to temporary decision-making hesitancy in 2024.