Resources

Fewer Sales. Fewer Comps. What’s Your Industrial Building Really Worth?

By Matthew Childers

If you own an industrial building in the Upstate, the honest answer this year is that it’s harder to tell than it used to be. Values haven’t collapsed. Fewer buildings have been sold, which means fewer comparables to price against.

Why pricing is harder to read

Leasing across Greenville-Spartanburg has stayed healthy. Tenants are still taking space, and new construction has slowed sharply after the building wave of 2022 through 2024.

Sales are a different story. Higher borrowing costs are widening the gap between what owners want and what buyers will pay. This means many owners holding low-rate debt have chosen to wait. Those factors lead to a thin set of recent trades. The truth is, the building that sold down the street two years ago closed in a different rate environment and may say very little about yours.

How buyers are underwriting now

• Debt sets the offer. Buyers start from what a lender will finance today, not from last cycle’s cap rates.

• Lease term carries more weight. Five or more years with a solid tenant prices very differently from a lease that expires in 18 months.

• Rents get checked against the market. A lease signed in 2020 below today’s rents is an upside story. One signed at the 2022 peak gets a harder look.

• Owner-users are competitive. Businesses buying for their own use often outbid investors on vacant small and mid-size buildings.

What earns a premium, and what gets discounted

Right now older, smaller buildings are feeling the squeeze of this market. Early this year, Class B and C vacancy in Greenville-Spartanburg sat near 5%, about half the Class A rate (9.6%). Investors aren’t focusing on building small-bay space, so existing supply is hard to replace.

Buyers are paying up for:

• Functional basics: clear height, dock doors, truck court depth, and heavy power

• Usable yard and outdoor storage

• Access to I-85, I-26, and Inland Port Greer

They are discounting for:

• Deferred roof and paving work

• Short remaining lease term with no renewal in hand

• Unresolved environmental questions

Hold, sell, or refinance

Three dates usually decide it:

1. When your loan matures. A refinance at today’s rates can change your cash flow more than any shift in value.

2. When your leases roll. A renewal signed before you go to market can add real value. A vacancy can too, if an owner-user wants the building.

3. When the building needs capital. A roof due in three years is a negotiating point today.

The right answer is different for every owner, and it starts with knowing the number.

Start with a real number

Aline Capital’s industrial team prepares broker opinions of value (BOVs) for Upstate owners at no cost and with no obligation to sell. We look at your leases, your building, and the buyers active in your size range right now, then tell you what we think it would trade for and why.