"Greenville-Spartanburg continues to offer users and developers an opportunity to leverage South Carolina’s strong transportation network, available labor and proximity to Southeast U.S. population centers in a pro-business environment. These fundamentals will offer companies competitive advantages, as they reevaluate their plans and work through current economic challenges."
Greenville-Spartanburg (GSP) is centrally located between Atlanta and Charlotte—two of the fastest-growing metropolitan areas in the Southeast. The state, county and municipalities continue to be business friendly in terms of permitting, economic incentives and working with users and investors entering and expanding within the market. A wide range of manufacturers—especially automotive, advanced materials and aerospace—provide a diverse economy and drive demand for distribution space.
Nearly one-quarter of the 33 million people who live within a 250-mile radius of GSP are in the 18- to 34-year-old Gen Z and millennial demographic. These population cohorts are among the biggest consumers and do the most online shopping.
Figure 1: Greenville-Spartanburg Population Analysis
Distance from Downtown Greenville
Source: CBRE Labor Analytics.
The influx of distribution occupiers has increased the number of warehouse workers in the region. According to CBRE Labor Analytics, 18,910 people work in the local distribution industry and this workforce is forecast to increase by 18.7% over the next 10 years—well above the 14.8% average growth rate nationally. The average salary for non-supervisory warehouse workers is $12.12 per hour, 8.6% lower than the national average.
Figure 2: Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics.
The inland ports within the GSP market are a primary driver of distribution center demand due to cost savings, supply chain mitigation and efficiency. The Port of Charleston essentially provides overnight service to Inland Port Greer, allowing manufacturers to move products quickly and to deliver consumer goods to regional distribution centers in a short time. Inland Port Dillon provides another logistics advantage in the region.
Using Norfolk Southern rail to and from Inland Port Greer gives cargo owners the ability to control costs with maximum flexibility and minimal inland truck miles. This is especially attractive in the region as it provides a low-cost platform from which empty containers can be sourced and returned loaded for export in the fastest possible turn time. To handle the growing number of ground containers going in and out of the region, the South Carolina Department of Transportation is heavily investing in upgrading and widening the I-85 Corridor and adding new ramps.
SUPPLY AND DEMAND
Despite the market posting negative net absorption in Q2, year-to-date absorption is a positive 1.7 million sq. ft. and should improve in the second half of 2020 as there are many prospects in the market. More than 15 million sq. ft. of tenant requirements are currently in the market, some of them from large users in multiple markets along the I-85 Corridor.
Figure 3: Greenville-Spartanburg Historical Data
Developers remain bullish on the market, completing 5.9 million sq. ft. in the first half of 2020, only 200,000 sq. ft. less than the all-time annual record. With under-construction product robust, 2020 will be the strongest year for development on record. The massive amount of development has increased the overall vacancy rate to 8.6%, 90 basis points higher than year-end 2019. Despite an uptick in available product, asking rents rose to a record $3.68 per sq. ft.
Source: CBRE Research, Q2 2020.
Figure 4: GSP Size Range Comparison
Source: CoStar, Q2 2020.
(Includes all properties including Owner Occupied)