Another wallflower of a warehouse is set to join the lineup in the local commercial real estate market. All it needs is someone to punch its dance card.
The Beach Co. is putting the final touches on a 250,000-square-foot speculative building in its Charleston Regional Business Center on the Cainhoy peninsula.
The project is among several so-called “spec” buildings cropping up in greater Charleston. In all, at least 950,000 square feet of warehouse space is sprouting without tenants to fill it.
• A group led by Frank Haygood Associates Inc. is developing a 300,000-square-foot shell in North Pointe Industrial Park in Hanahan, next to a nearly identical structure it built for a New York apparel company. Completion is scheduled for this month.
• Pearson Properties of Gastonia, N.C., meanwhile, recently finished a 300,000-square-foot warehouse in The Beach Co.’s industrial park.
• A Spartanburg real estate firm formed by George Johnson, chief executive of the Extended Stay America hotel chain, has put up 100,000 square feet of spec space near the former Sasib plant it owns near Goose Creek.
All of this activity is of no concern to Bill Shanaman, director of commercial brokerage for The Beach Co.
“Excess space? No,” Shanaman said.
While spec development is risky, the warehouse business requires a number of modern, empty buildings to continuously draw tenants into the market, local real estate sources agree. In the not-so-distant past, the lack of readily available space was viewed as a serious shortcoming for Charleston.
“When you get these big users, they make decisions rather quickly,” Shanaman said. “If don’t have a building, they just pass you by. There has to be a certain amount of supply available.”
Shanaman pointed to one of his company’s clients, Icon Health & Fitness. Within months of beginning its search for a new East Coast distribution center last year, the exercise-equipment maker snapped up a big spec warehouse near Cainhoy and began moving in immediately. “If we hadn’t had that building, Icon would not be here,” Shanaman said. “That’s how it works.”
Charleston developer Frank Haygood agreed that expansion-minded warehouse and distribution companies generally are unwilling to wait on a building.
“It’s very rare that tenants will go through the time of getting one built,” said Haygood.
A top-of-the-line warehouse in a prime location can command $3.50-$4 a square foot a year in Charleston, sources said.
Vacancy figures are harder to come by. Classified under industrial real estate, warehouses are lumped together with manufacturing plants, which skews occupancy rates. So ceiling heights have become a key yardstick. Haygood said demand is tightest for newly built warehouses because they tend to have the tallest ceilings, upward of 24 feet.
“They’re more versatile and not as vacant,” he said.
As for older properties with lower rooftops, “there seems to be good bit of space out there,” Haygood added.
Pearson Properties has built two spec warehouses in Berkeley County since 1999. Its 56,000-square-foot building in Mount Holly Commerce Park has been leased, said spokesman Joe Pearson. And brokers reportedly are close to filling the company’s latest project off Clements Ferry Road, which is just a short drive from the port facilities in Mount Pleasant.
“What attracted us to Charleston was all the goings on at the port, the talk of adding a terminal at Daniel Island, and the deepening of the shipping channel,” Pearson said. “We thought there might be some opportunities.”