By Lauren Ratcliffe
Published April 24, 2012
The commercial real estate market is rebounding in some sectors and experiencing a shakier recovery in others, according to first-quarter reports by Grubb & Ellis WRS.
Industrial space vacancies declined to the lowest levels since the fourth quarter of 2007. Currently, industrial vacancies are down to 9.5%. During the first quarter, more than 1.37 million square feet was absorbed and more than 1 million square feet of new space is currently under construction.
Office and retail space saw vacancies increase over the first quarter. Office vacancies increased slightly to 15.5% indicating a slow and shaky recovery. The downtown business district maintains the lowest vacancy rates of the market and boasts lease rates of $30 per square foot or more.
Mount Pleasant office space vacancies are the lowest among the suburban submarkets at 12.3%.
North Charleston and West Ashley still are facing higher vacancies and are waiting for greater demand to help encourage the absorption and redevelopment of aging properties available on the market.
North Charleston’s office space vacancy rose to 20.1%, but that submarket also tends to be a preferred location for larger users who have not returned after the downturn.
Retail vacancies across the Charleston area increased to 9%, reversing a downward trend from the previous two quarters. Driving the increase was the closing of three Food Lion grocery stores in Mount Pleasant and Moncks Corner.
Downtown retail space boasts the lowest vacancy with a rate of 5.1%. Lower vacancy in this area is bolstered by buzz surrounding the King Street Shopping District.
The reports state that while East Cooper’s vacancy is the third highest in the region at 9.6%, the widening of Highway 17 will help the market remain an attractive opportunity for commercial investors and businesses looking to lease space.
Industrial space shines in the first quarter with vacancies dipping. The port, defense industries and manufacturing industries continue to increase jobs and lead companies to expand into existing inventory.
The reports also state that land acquisitions have resumed with an 80 % increase in land sales over the previous 12 months. “Pad-ready” industrial parcels have begun to go under contract again largely for build-to-suits, primarily in the main industrial corridors.