Dear El Cardinal,
I haven’t heard much about the Carolinas Industrial market lately. Are we immune to the pressures resulting from the Trump tariffs? Should we be worried?
– Tariff-ied Ted,
In May, Trump more than doubled levies on $200 billion in Chinese goods. This raises costs for many American manufacturers. Luckily for us, the Carolinas economy remains healthy and supportive for all industrial market fundamentals. Any weaknesses in manufacturing have been offset by strong consumer demand that continues to drive speculation in distribution and warehouse properties.
The consumer will continue to create strong market fundamentals for the industrial sector. However, as trade discussions continue, the impacts will weigh more heavily on export-dependent automotive manufacturing. The impact will be felt especially in South Carolina as BMW and Boeing are among the largest automotive exporters in the U.S.
Greenville, S.C. continues to be on fire, according to CoStar. CoStar recently reported that 395,000 SF have been delivered in Greenville in the past 12 months. Only 131,000 SF was absorbed, but the vacancy rate is at an all-time low at 3.9 percent, and rents continue to grow at about the same pace as in Charlotte, which is 4.8 percent.
Developers and brokers alike point to BMW’s growth as being the primary demand driver in the Greenville/Spartanburg markets. I predict that a drop in BMW exports will impact the demand for new warehouses. But for now, e-commerce is making up for much of this slow down.