Charleston region’s industrial market withstands national cooling trend | business

Even as the nation’s industrial real estate market showed signs of cooling toward the end of 2022, the Charleston region remained a bright spot, according to a new report. Cushman & Wakefield found the tricounty area was among a dozen nationwide where the industrial vacancy rate stayed below 2 percent. Record cargo volumes moving through the Port of Charleston drove unprecedented warehouse growth, with nearly 16 million square feet of space either opening or breaking ground during 2022. The construction couldn’t keep up with demand, however, and competing port city Savannah was the only other Southeast market to notch a lower vacancy rate by year’s end. The Charleston region was one of just four places — Phoenix, Miami and southern California’s Inland Empire were the others — where year-over-year rental rates climbed by 40 percent or more. “Coastal and port/population-proximate markets continued to be priced at a premium over the rest of the country,” the commercial real estates firm’s report stated. As a whole, the US industrial market finished 2022 with its second-highest total for overall net absorption with businesses occupying 477.3 million square feet. That’s less than the record 561.4 million square feet recorded in 2021. As the year drew to a close, though, slowing demand and economic headwinds led to a 9.4 percent drop in net occupancy from the third quarter to the fourth quarter. New leases for industrial space during that period fell by 28.2 percent. “Still, this marked the ninth straight quarter in which absorption surpassed the 100 million-square-foot mark and indicates that demand for industrial space remains strong going into the new year,” Cushman & Wakefield said. In a separate report, San Francisco- based developer Prologis, the world’s largest builder of logistics properties, said it remains bullish on industrial warehouse demand despite the late-year slowdown. “The bottom line is that conditions remain healthy, and there is little we see across our results or proprietary metrics that point to a meaningful slowdown,” Tim Arndt, the developer’s chief financial officer, said during a Jan. 18 earnings call, according to The Wall Street Journal. A new container line service will bring cargo from Saudi Arabia to the Port of Charleston’s North Charleston Terminal. File/Staff Middle East connection A second container ship service linking the Port of Charleston with the Jeddah Islamic Port in Saudi Arabia started this month, bringing cargo from the busy Middle East seaport to the North Charleston Terminal. The Indamex 2 service, or IN2, is being operated by container lines Hapag-Lloyd and CMA CGM. It will include stops at Port Qasim in Pakistan as well as ports in India. In addition to Charleston, the vessels will make US East Coast stops in Savannah and Norfolk, Va. Saudi Arabia’s port on the Red Sea “will gain access to leading trade gateways across the Indian subcontinent and North America,” the container lines said in a joint statement. The trade link is a key part of Saudi Arabia’s “ambition in positioning Jeddah as a major east-west hub and strengthening its global maritime connectivity,” they said. The first sailing on the new service left Jeddah on Jan. 11 and is scheduled to be in Charleston on Feb. 1. The service will use smaller vessels carrying between 4,600 and 7,000 20-foot containers. The service joins the Indamex route which uses larger vessels calling on the Wando Welch Terminal in Mount Pleasant. In the last year, Saudi’s ports have added nine shipping services in a bid to boost the country’s ranking among the global maritime and logistics industries. Jeddah Islamic accounts for about three-fourths of the country’s seaborne trade and transshipment volumes. A 787 Dreamliner is shown in Turkish Airlines livery. Provided/Boeing Co. Big Boeing deal The US Export-Import Bank is considering a $100 million credit deal that will help Turkish Airlines buy 787 Dreamliner jets built at Boeing Co.’s assembly plant North Charleston. The agency, often referred to as the Bank of Boeing because it provides credit to foreign airlines looking to buy the manufacturer’s plans, said in a regulatory filing that it will make a decision on the deal after a comment period ends on Feb. 6. The carrier plans to use the jets on passenger and Freight routes between Turkey and Africa, America, Europe and Asia, the filing states. Turkish Airlines — which has nine 787-9s on order — has expressed frustration with slow deliveries of the widebody plane, the result of supply chain constraints and a 15-month pause in deliveries when minor production flaws were discovered. Boeing resumed deliveries in August, but they aren’t coming fast enough for Ahmet Bolat, chairman of the carrier, which has 16 Dash 9 Dreamliners in its fleet. “I’m planning to open new routes, but missing widebodies,” Bolat told Aviation Week. “If I can find them right now, we could easily buy 20 more next-generation widebody aircraft … ready to come in 2023.” With the Dreamliner unavailable, Turkish Airlines has turned to Airbus. The carrier last year bought six A350 widebodies built by the French planemaker. Our twice-weekly newsletter features all the business stories shaping Charleston and South Carolina. Get ahead with us – it’s free. Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_

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