Military contracts drive Charleston market

Most industrial land with proximity to the Port of Charleston has been absorbed, and defense contracts are continuing to drive the industrial market, according to Colliers Keenan’s midyear report.

Still, occupancy rates of industrial buildings were down, rental rates were up and land prices relatively flat, the commercial real estate company reported.

At the end of June, the market had 25.67 million square feet of industrial space, of which 1.89 million square feet was unoccupied, leaving a vacancy rate of 9.17%. The lease rate was $4.33 per square foot.

Industry consolidations, a byproduct of the weak economy, are dragging down the port’s container traffic volume. Even with the 2% projected uptick in port traffic for 2009, net volume will remain well below 2007 numbers, the report says.

The outlook is still positive, Colliers Keenan said, noting that Southeastern ports expect to increase container throughput by 4% yearly for the next two decades — perhaps by more as fuel and trucking costs push more vessel traffic through East Coast water routes.

Among the highlights of the report:

• Military contract growth boosted industrial warehouse occupancy throughout the Charleston market during the first half of the year.

• Force Protection continues to compete successfully for armored vehicle contracts for U.S. and foreign militaries, and the company’s Cheetah series is positioned to be an interim replacement for the Humvee.

• A slew of local SPAWAR contracts for installation of electronics and weapons components were awarded, further driving growth in the military segment.

• Jedburg experienced a jolt when Continental Terminals, a third-party logistics provider, received its first shipment of Starbucks coffee beans earlier this year. Continental leases the 250,000-square-foot building from Johnson Development Associates Inc.

• Hillwood Properties, Rockefeller Group Development Corp., and Trammel Crow Co. plan new industrial facilities in the Jedburg area, but construction has not begun.

• Although Class “A” bulk space is limited, Indiana-based Lauth Construction broke ground earlier this month on the first of two new bulk distribution buildings it has planned for the North Pointe Industrial Park in Hanahan.

• Jafza International’s plans to develop a 1,300-acre logistics, distribution and manufacturing center east of Interstate 95 near U.S. Highway 301 in Orangeburg County also continue to progress, though construction has not begun.