Research & Forecast Report GREENVILLE-SPARTANBURG-ANDERSON, SC INDUSTRIAL Q2 2017 Industrial Development Continues in Second Quarter Ron Anderson Vice President, Administration South Carolina Key Takeaways > > Large waves of construction are underway. > > The flex market continues to be under-supplied. Market Conditions The Greenville-Spartanburg-Anderson market had a relatively slow second quarter but the overall health looked strong. Vacancy increased slightly to 6.73%, with 301,825 square feet of net negative absorption. More than 5.26 million square feet of space were added to the market over the last 12 months. Rents remained steady and the pipeline of future construction was very strong, with 5.6 million square feet of additional space under construction. Warehouse/Distribution The warehouse/distribution sector constitutes the largest portion of the Greenville-Spartanburg-Anderson industrial market, with slightly more than 171 million square feet. At the end of the second quarter of 2017 vacancy had risen to 6.73%. Rents were stable, with many properties in the development pipeline and 2.1 million square feet absorbed in the previous quarter. The average rent for Class A warehouse space was $4.25 per square foot per year triple net. Manufacturing The Upstate is a manufacturing powerhouse. It is home to BMW, General Electric and Lockheed Martin. At the end of the second quarter, there were 15 million square feet of manufacturing buildings. During the quarter, 34,400 square feet were absorbed and vacancy fell to 5.27%. Rents in the manufacturing sector were $3.10 per square foot per year triple net. Flex Vacancy in the flex market rose slightly to 9.59% in the second quarter of 2017. There were 1,173 square feet of net negative absorption, with a 45,000-square-foot building added. The average rental rate was stable this quarter at $8.75 per square foot per year triple net. Market Indicators Relative to prior period VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE** Q2 2017 Q3 2017* Note: Construction is the change in Under Construction. *Projected **Rental rates for current quarter are for CBD. Rent forecast is for metro-wide rents. Summary Statistics Q2 2017 Greenville Industrial Market Industrial Vacancy Rate 6.73% Change From Q4 2016 (basis points) Absorption New Construction* Under Construction *New construction is buildings delivered Asking Rents NNN Per Square Foot Per Year 28 -.3.26 5.6 Market $4.00 Flex $8.75 Warehouse $4.25 Manufacturing $3.10
Capital Investments In 2017, $244 million in capital investments and at least 1,436 new jobs were announced in the Greenville-Spartanburg-Anderson market. Additionally, many announcements made in the past 2 years are nearing opening. For instance, Michelin s distribution center in Spartanburg County and Valeant s expansion will begin operating soon, driving additional investment in the surrounding areas. Significant Transactions The statewide expansion of logistics, automotive and aeronautical production is driving the expansion of manufacturing in the Greenville-Spartanburg-Anderson market. With access to national markets via Interstates 85 and 26 and international markets through the Port of Charleston, tenants and investors are scouring the region for locations and investments. Leasing and sales have been brisk as a result. Sales were consummated throughout the region while leasing activity was concentrated in the Highway 101 and Highway 290 submarkets this quarter. Most tenants securing space were leasing between 75,000 and 200,000 square feet. Leases > > Rudolph Logistics leased 171,600 square feet at Caliber North (2988 Green) from Liberty Properties. > > Lear Corporation leased 157,000 square feet at 1201 Woods Chapel Road from Beacon Partners. > > At 2781 New Cut Road, a 125,000-square-foot lease was completed by Grupo Antolin. > > Lockheed Martin completed a 104,500-square-foot lease at 1508 Antioch Church Road. > > The 75,000-square-foot Clinton Speculative building was leased by General Electric. Sales > > 780 Flatwood Industrial Road, a 901,000-square-foot distribution center was purchased by the Eaton Vance Investment Group from Johnson Development for $65 million, or a 6.25% cap rate. > > 1201 Woods Chapel Road and 545 Brookshire were part of a $72.5 million sale in June from Beacon Partners to Grammercy Property Trust. They were 350,000 and 240,101 square feet, respectively. 100 Technology Way > > Plastek Industries acquired 200 Masters Boulevard in Anderson from Coveris Flexibles for $3.5 million. > > 15 Pelham Ridge, a 60,000-square-foot warehouse was acquired by Circuit Board Medics LLC for $3.5 million. Construction Pipeline Construction activity remains near its historic high in the Greenville-Spartanburg-Anderson market, with 5.6 million square feet under construction. 291,600 square feet were delivered this quarter. Delivered > > Caliber North Building 2, a 171,600-square-foot building in the Highway 101 corridor was completed. > > A 45,000-square-foot flex building was delivered at the Hayward Ridge Business Park. > > The 75,000-square-foot Clinton Speculative Building was delivered. Under Construction > > The 2.1 million-square-foot Michelin distribution center is well underway, with delivery of the first phase expected in early 2018. > > Valeant Pharmaceuticals continues to construct a 432,000-square-foot manufacturing facility in the Highway 101 corridor in Spartanburg County. > > Plastics Omnium is building a 632,000-square-foot plant in Moore near the BMW facility in Greer. > > There is a 331,800-square-foot building under construction at the Augusta Grove Industrial Park south of Greenville. > > Protrans and Magna each have 230,000-square-foot buildings under construction near the Inland Port. Market Forecast Leasing activity will continue to be brisk over the next several quarters. Developers are continuing to secure sites for build-to-suit and speculative construction, especially in Spartanburg County. With the completion of several new manufacturers and distribution centers eminent, production at the Volvo and Sprinter Van facilities in Charleston set to begin in 2018 and continued national economic expansion, the immediate future looks strong for industrial leasing and sales in the market. Hillside Source: Red Bullet Development Source: Scannell Properties 2 South Carolina Research & Forecast Report Q2 2017 Greenville-Spartanburg-Anderson Industrial Colliers International
Q2 2017 Industrial Market Summary Statistics Greenville-Spartanburg-Anderson, SC MARKET ANDERSON COUNTY BUILDINGS INVENTORY DIRECT VACANT SUBLEASE VACANT TOTAL VACANT TOTAL VACANCY RATE (%) NET ABSORPTION Flex/R&D 1 38,000 0 0 0 0.00% 0 Manufacturing 12 2,678,489 33,520 0 33,520 1.25% 0 Warehouse/Distribution 178 11,976,675 1,035,771 0 1,035,771 8.65% 12,250 Anderson County Total 191 14,693,164 1,069,291 0 1,069,291 7.28% 12,250 AUGUSTA ROAD DONALDSON Flex/R&D 4 74,687 10,800 0 10,800 14.46% 0 Manufacturing 21 788,404 20,093 0 20,093 2.55% 31,500 Warehouse/Distribution 163 9,613,353 279,250 641,900 921,150 9.58% -641,300 Augusta Road Donaldson Total 188 10,476,444 310,143 641,900 952,043 9.09% -609,800 COWPENS Manufacturing 5 163,456 0 0 0 0.00% 0 Warehouse/Distribution 20 2,909,708 18,000 0 18,000 0.62% 0 Cowpens Total 25 3,073,164 18,000 0 18,000 0.59% 0 GAFFNEY Manufacturing 2 43,904 5,000 0 5,000 11.39% 0 Warehouse/Distribution 51 4,463,606 1,053,253 0 1,053,253 23.60% -13,578 Gaffney Total 53 4,507,510 1,058,253 0 1,058,253 23.48% -13,578 GREENWOOD COUNTY Flex/R&D 2 34,528 3,000 0 3,000 8.69% 0 Manufacturing 21 2,975,514 116,000 0 116,000 3.90% 0 Warehouse/Distribution 31 1,030,783 92,970 0 92,970 9.02% -16,000 Greenwood County Total 54 4,040,825 211,970 0 211,970 5.25% -16,000 HWY 101 CORRIDOR Flex/R&D 25 691,396 8,200 0 8,200 1.19% 0 Manufacturing 2 78,470 0 0 0 0.00% 0 Warehouse/Distribution 151 7,267,894 143,140 0 143,140 1.97% 320,441 Hwy 101 Corridor Total 178 8,037,760 151,340 0 151,340 1.88% 320,441 HWY 221 CORRIDOR Flex/R&D 1 73,404 0 0 0 0.00% 0 Manufacturing 17 510,663 38,700 0 38,700 7.58% 0 Warehouse/Distribution 50 3,827,156 316,994 0 316,994 8.28% 17,000 Hwy 221 Corridor Total 68 4,411,223 355,994 0 355,994 8.06% 17,000 HWY 29/129 CORRIDOR Flex/R&D 1 29,880 2,235 0 2,235 7.48% 0 Manufacturing 12 383,739 0 0 0 0.00% 0 Warehouse/Distribution 154 12,245,784 571,693 0 571,693 4.67% -23,600 Hwy 29/129 Corridor Total 167 12,659,403 573,928 0 573,928 4.53% -23,600 HWY 290 CORRIDOR Flex/R&D 2 62,690 4,500 0 4,500 7.18% 5,700 Manufacturing 10 318,473 0 0 0 0.00% 0 Warehouse/Distribution 80 8,411,031 555,418 0 555,418 6.60% 0 Hwy 290 Corridor Total 92 8,792,194 559,918 0 559,918 6.37% 5,700 HWY 585 CORRIDOR Flex/R&D 13 524,045 41,135 0 41,135 7.85% 0 Manufacturing 28 748,803 30,000 0 30,000 4.01% 0 Warehouse/Distribution 100 9,191,231 1,069,044 0 1,069,044 11.63% 29,088 Hwy 585 Corridor Total 141 10,464,079 1140,179 0 1,140,179 10.90% 29,088 3 South Carolina Research & Forecast Report Q2 2017 Greenville-Spartanburg-Anderson Industrial Colliers International
HWY 81 CORRIDOR Flex/R&D 1 14,082 0 0 0 0.00% 2,623 Manufacturing 4 141,700 0 0 0 0.00% 0 Warehouse/Distribution 28 4,226,038 3,800 0 3,800 0.09% 0 Hwy 81 Corridor Total 33 4,381,820 10,148 0 10,148 0.23% -6,348 MAULDIN Flex/R&D 14 293,369 15,478 0 15,478 5.28% 0 Manufacturing 14 584,427 224,666 0 224,666 38.44% 3,100 Warehouse/Distribution 126 9,236,933 588,700 0 588,700 6.37% 11,400 Mauldin Total 154 10,114,729 828,844 0 828,844 8.19% 14,500 PELHAM ROAD Flex/R&D 18 437,568 62,000 0 62,000 14.17% 3,000 Manufacturing 7 193,806 26,000 0 26,000 13.42% 0 Warehouse/Distribution 98 4,713,738 42,500 0 42,500 0.90% -12,500 Pelham Road Total 123 5,345,112 130,500 0 130,500 2.44% -9,500 PIEDMONT Flex/R&D 5 94,374 32,050 0 32,050 33.96% 0 Manufacturing 8 179,557 7,200 0 7,200 4.01% 5,000 Warehouse/Distribution 80 3,795,755 85,450 0 85,450 2.25% -12,400 Piedmont Total 93 4,069,686 124,700 0 124,700 3.06% -7,400 SIMPSONVILLE FOUNTAIN INN Flex/R&D 4 77,776 5,225 0 5,225 6.72% -1,525 Manufacturing 8 228,728 0 0 0 0.00% 0 Warehouse/Distribution 130 12,834,421 123,500 0 123,500 0.96% 16,250 Simpsonville Fountain Inn Total 142 13,140,925 128,725 0 128,725 0.98% 14,725 WHITE HORSE Flex/R&D 1 18,502 18,502 0 18,502 100.00% 0 Manufacturing 1 23,665 23,665 0 23,665 100.00% 0 Warehouse/Distribution 72 4,998,781 1,207,361 0 1,207,361 24.15% -3,453 White Horse Total 74 5,040,948 1,249,528 0 1,249,528 24.79% -3,453 WINGO Flex/R&D 1 30,605 0 0 0 0.00% 0 Manufacturing 16 485,147 0 0 0 0.00% 0 Warehouse/Distribution 56 8,154,069 802,764 51,028 853,792 10.47% 139,464 Wingo Total 73 8,669,821 802,764 51,028 853,792 9.85% 139,464 OTHER SUBMARKETS Flex/R&D 47 1,632,639 186,344 0 186,344 11,41% -2,000 Manufacturing 118 4,780,273 281,831 0 281,831 5.79% -1,895 Warehouse/Distribution 912 52,169,302 2,771,896 80,462 2,852,358 5.90% -5,200 Other Submarket Total 1,078 58,657,214 3,312,525 97,902 3,410,427 5.81% -165,314 MARKET TOTAL Flex/R&D 140 4,127,545 395,817 0 395,817 9.59% -1,173 Manufacturing 306 15,307,218 806,675 0 806,675 5.27% 34,400 Warehouse/Distribution 2,481 171,141,258 10,833,958 790,830 11,624,788 6.79% -335,052 Market Total 2,927 190,576,021 12,036,450 790,830 12,827,280 6.73% -301,825 Source: CoStar, Colliers International In January 2017, Colliers International benchmarked its industrial data set statewide. The new standard for collection is all industrial buildings 10,000 square feet or larger that can be readily adapted to an alternative industrial use. All properties were placed into a revised set of markets and submarkets and divided into three categories. Warehouse/Distribution, a facility primarily used for the storage or distribution or both of materials, goods and merchandise. Manufacturing, a facility used for the conversion, fabrication or assembly of raw or partly wrought materials into products or goods. Flex/R&D, a building designed to be used in a variety of ways with at least 30% of the rentable building area used as office. It is usually located in an industrial park setting. Specialized flex buildings can include service centers, showrooms, offices, warehouses and more. Due to the adjustments of the building inventory, comparison of data included in previously published market reports should be avoided. 4 South Carolina Research & Forecast Report Q2 2017 Greenville-Spartanburg-Anderson Industrial Colliers International
396 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 79 EMEA: 111 FOR MORE INFORMATION: David Feild, CCIM Market President Greenville +1 864 527 5428 David.Feild@colliers.com Liz H. McCary Vice President, Marketing South Carolina +1 803 401 4269 Liz.McCary@colliers.com Ron Anderson Vice President, Administration South Carolina +1 803 401 4234 Ron.Anderson@colliers.com GREENVILLE INDUSTRIAL PROFESSIONALS: $2.6 billion in annual revenue 2 billion square feet under management 15,000 professionals and staff Givens Stewart SIOR Principal +1 864 527 5430 Givens.Stewart@colliers.com Garrett Scott Senior +1 864 527 5453 Garrett.Scott@colliers.com Brockton Hall, MRED +1 864 527 5441 Brockton.Hall@colliers.com Colliers International Greenville 55 E. Camperdown Way, Suite 200 Greenville, South Carolina USA +1 864 297 4950 Richard Jackson +1 864 527 5442 Richard.Jackson@colliers.com Richard Barrett MCR +1 864 527 5448 RO.Barrett@colliers.com Brannan Hudson +1 864 527 5443 Brannan.Hudson@colliers.com About Colliers International Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 15,000 professionals operating from 396 offices in 68 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 10 consecutive years, more than any other real estate services firm. For the latest news from Colliers International, visit Colliers.com or follow us on Twitter (@ColliersIntl) and LinkedIn. colliers.com Copyright 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.