Industrial Insights V2 2023 FINAL - Flipbook - Page 12
MARKET CHALLENGE #3
SUBLEASE SPACE IS ALSO UP
Since the pandemic, we’ve seen an uptick in industrial construction that was quickly leased
by e-commerce, homegood suppliers and 3PLs. During that time, tenants we’re aggressively
competing for space in order to 昀椀ll consumer demand. As consumer spending and port volumes
have decreased (relative to the pandemic), tenants no longer have the need or supply to keep
excess inventory in the warehouses they were so aggressively pursuing.
And as we look at historical data from the past 5 years, an intriguing correlation emerges between
Charleston’s sublease availability and the trajectory of the Federal Interest Rate. As the Federal
Reserve embarked on its aggressive push to elevate rates, we’ve seen a simultaneous spike in
sublease listings. This isn’t mere coincidence. Higher interest rates increase borrowing costs for
businesses, making capital-intensive operations, like warehousing, less sustainable for some. As
companies 昀椀nd it harder to service debts or access affordable 昀椀nancing, their strategies shift,
leading to situations where subleasing becomes a more viable option.
1,000,000
6.0%
900,000
5.0%
800,000
700,000
4.0%
600,000
500,000
3.0%
400,000
2.0%
300,000
200,000
1.0%
100,000
0.0%
2019
12
2020
2021
2022
2023