Charleston area’s real estate industrial construction boom from 2022 has hit a wall.

According to the latest market report from real estate advising firm Avison Young, “the boom in construction starts seen in 2022 has subsided, with only around 2.5 million square feet of industrial space anticipated to break ground in 2024,” the report states.

That’s a big drop from the nearly 12 million square feet of space under construction in 2022.

Charleston’s industrial construction starts are expected to recede to pre-2020 levels, according to the report.

Outlying Berkley County is experiencing the highest vacancies, having received 61% of all development activity in the market over the past two years, according to the report. Over the past four years, Berkeley and Dorchester Counties have received most of the new development activity in the market; consequently, the report states, those submarkets now have the highest percentage of available space.

The market’s leasing volume experienced a slight increase from Q4 2023 to Q1 2024, but the rise in activity wasn’t sufficient to offset the negative absorption observed this quarter, the report states.

There is a bit of good news, however: “The slowdown in new inventory should allow demand to catch up with the rapidly growing supply,” the report states.

At the start of 2024, average base rents have declined but remain 15% above the 7-year average. The average base rent is trending downward for the first time since 2020, according to the report.

The Charleston industrial market saw negative absorption (515,000 square feet) for the first time since 2020, according to the report, but a “significant increase in tenant tours) in Q1 this year could help turn the tide.

The only category that encountered positive absorption this quarter was buildings greater than 500,000 square feet, with a positive 390,000 square feet, according to the report.

In addition, the average base rent for year-to-date 2024 ($8.99) is trending down by 6.0% compared to 2023, though it is still significantly greater than the average asking rate of $7.94, the report states. The average base rent is trending downward for the first time since 2020.

It did deliver a positive outlook there, too: “Base rents should increase throughout the year as demand catches up with supply,” the report states.