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Trends in Spartanburg County, South Carolina
Industrial Real Estate in Spartanburg: A Stable Outlook for 2025
The industrial real estate market in Spartanburg continues to offer significant opportunities, especially for users looking for cost-effective alternatives. Compared to many other regional markets, Spartanburg’s industrial properties remain notably more affordable. For example, the cost per square foot is considerably lower than in other Southern U.S. cities.
Current Market Conditions
The current vacancy rate for industrial real estate in Spartanburg is 15%.
While demand for smaller spaces, particularly those under 100,000 square feet remains strong, filling large, big box industrial buildings is more challenging. This is reflected in the fact that fewer than 300,000 square feet of new industrial projects began in 2024. The outlook for 2025 points toward a focus on absorbing the existing inventory of larger industrial properties, with minimal new construction planned.
What to Know About the 2025 Market
Vacancy Rate Will Decrease
- By the end of 2025, the vacancy rate is expected to drop to 12%, a 3% decrease from the current level. This reduction in vacancy is a sign that the market is beginning to stabilize, especially as the demand for smaller spaces continues to outperform larger ones.
Rent Growth Will Continue, but at a Slower Pace
- Rents are projected to rise by 3.8% this year, reaching an average of $6.94 per square foot. While rent growth will continue, it will be at a slower rate compared to previous years. For context, 12-month rent growth peaked in 2022 at an impressive 10.9%. This deceleration in rent growth signals a more balanced market moving forward.
Price Per Square Foot to Increase Slightly
- The price per square foot for industrial properties is expected to increase modestly by $2, bringing the average price to $69 per square foot in 2025. This slight increase reflects the stable demand for industrial space while also indicating that significant price surges are unlikely.
Cap Rates Remain Stable
- Cap rates are anticipated to remain relatively stable, with a slight increase of 0.01%, reaching an average of 8.8% by the end of 2025. This stability in capitalization rates indicates a steady return on industrial real estate investments.
Looking Ahead: A Year of Stabilization
As we move into 2025, Spartanburg’s industrial market will likely experience a year of relative stability. With a significant decrease in new construction, the focus will be on absorbing existing inventory, particularly larger industrial buildings. The market is expected to see the slowest year-over-year rent growth since 2016, indicating a more balanced and mature phase for the industrial sector in the region.
The outlook for 2025 points to steady growth and a gradual decrease in vacancy rates.
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