by John Montgomery
It would be an understatement to say that we are experiencing unprecedented times in our lives. Businesses are closed, people are forced to work from home and there is a lot of uncertainty about what the future holds. Fortunately, in the industrial market in the Upstate of South Carolina, things are still active, and deals are still being considered and closing.
There are certainly some companies that have decided to push back their timelines on signing a lease or committing to a new facility, but very few deals have evaporated over the past two months. This is mainly due to the decision to invest in a new facility or expand an existing one being made long before the COVID-19 outbreak occurred, and the need for these longer-term investments is still there.
Before the pandemic, the underlying economy was very sound with strong fundamentals, and this should lead to a much quicker recovery than the one we experienced after the Great Recession in 2008. In 2019, the Upstate of South Carolina experienced a record amount of industrial absorption, with more than 9.6 million square feet leased or occupied. In Q1 2020 we saw positive leasing absorption of 930,000 square feet. Toward the end of March, things were beginning to slow, but it will likely take several quarters to determine how the COVID-19 pandemic will impact the industrial market long-term.
The economic development community is hopeful that this pandemic will lead to an industrial boom with companies building new facilities in the U.S. to avoid the supply chain disruptions experienced over the past two months. It is likely we will see increased demand from e-commerce companies in need of new distribution centers as online shopping trends upward in the wake of shelter-in-place orders.
The Upstate of South Carolina is well poised for a quicker recovery than many other markets across the U.S. due to the same factors that have made us successful to date: a strong labor force, good wages, a low cost of living and a very pro-business state and local community. That, along with the fact that we are located along the I-85 corridor between Raleigh and Atlanta and are an 8-hour drive from 95 million people, makes for a very attractive logistics location that is well positioned to rebound once things normalize.
John Montgomery is vice president of Colliers International in Spartanburg.