Publication: Southeast Real Estate Business, November 2024

OPTIMISM REIGNS IN I-85 INDUSTRIAL CORRIDOR

Industrial real estate professionals in the region say the softness from past two years should be a temporary bump in the road.

By John Nelson

In some ways, the I-85 Industrial Corridor has seen better days. Most of the top industrial markets along the esteemed interstate are contending with vacancy levels they haven’t experienced in a few economic cycles.

For instance, the Greenville-Spartanburg industrial market’s vacancy rate is above 11 percent in the third quarter after seeing the rate surpass 12 percent earlier this year, according to research from Colliers. As recently as second-quarter 2022, the vacancy rate was sub-4 percent.

On the other hand, the Upstate South Carolina region is on the back end of a construction wave that saw north of 30 million square feet delivered over the course of 24 months.

 

…there is rising demand for more tailor-made solutions on the user side. This often takes the shape of smaller leases and build-to-suits deals with tenants paying close mind to factors including dedicated truck courts, security, ingress and egress and even landscaping.

“As tenants’ needs shift toward customized solutions for evolving logistics and operational requirements, we have seen increased demand for build-to-suit projects,” says Connor Tomlinson, director of strategic relationships at Poettker Construction, an Illinois-based general contractor with a regional office in Charlotte. “This trend is occurring even as the Sun Belt’s industrial supply currently exceeds absorption.”

 

…While the I-85 markets are working their way through the tail end of this trough, sources are pointing to some inherent advantages like infrastructure and population growth that the region offers that should help lead the markets out of this recovery period.

“The Sun Belt remains highly attractive due to its great ports, highway systems, rail and supportive infrastructure, top ranked labor force, quick access to international airports, lower taxes and incentives,” says Keith Poettker, chairman and CEO of Poettker Construction. “We are optimistic about both our internal growth and the broader commercial real estate market heading into 2025 and beyond.”

 

…On the development side, Poettker says that his construction firm is busy on various projects in the region, including the 702,000 square-foot Gaston Commerce Center park in Gastonia and the 473,000-square-foot Phase II of Innovation Logistics Center in Salisbury, both by Crow Holdings Development.

“These developments not only address the rising demand for logistics infrastructure but also contribute to the ongoing industrial growth in one of the nation’s busiest corridors,” says Poettker.