CHRISTINA LEE KNAUSS scbiznews.com
One of the hottest real estate markets in South Carolina is for buildings that don’t even have specific occupants yet.
Known as speculative buildings, they are constructed to provide ready-to-occupy space for companies looking for a place to establish new operations or expand existing ones. In the Midlands and around South Carolina in general, the need for speculative space for manufacturing as well as warehousing and distribution is booming.
The reasons for this boom are multiple, most fueled by the pandemic. COVID-19 has accelerated already growing demand for sea and air transport the next day, while supply chain disruptions have increased construction time and costs, prompting more businesses to seek pre-built buildings .
The region’s current appetite for industrial buildings, particularly speculative ones, confronts developers, design offices and construction companies with unprecedented demand. One example is SeamonWhiteside, a Mount Pleasant-based full-service land design company with offices in Summerville, Greenville, Spartanburg and Charlotte.
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“In previous years, SeamonWhiteside was developing 100,000 square feet per year in industrial projects, and now we’re projecting nearly 30 million square feet in 2022,” said William O’Neal, vice president of the company. “This is not just a change for SeamonWhiteside but a change for South Carolina as a whole. We have never seen such a volume of industrial projects in our state.
O’Neal noted that the boom in speculative industrial demand in South Carolina not only follows national trends, but can also be attributed to the rapid expansion of the Port of Charleston, the large number of people moving into the region and the increased number of suppliers. moving into the state to serve major industries such as BMW in the upstate, Boeing and Volvo in Charleston, and Mark Anthony Brewing in the Midlands.
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A recent report from Colliers South Carolina shows that overall demand for industrial space, including speculative real estate, remained unprecedented in the first quarter of 2022 despite an increase in rental rates. According to the report, 21.5 million square feet of industrial buildings are under construction in the state, with an additional 25 million square feet in proposed developments. A total of 9.8 million square feet is expected to be delivered in 2022, most of which is pre-leased.
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To help meet growing demand in the Midlands, several large speculative industrial projects are already under construction or have been announced recently.
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The grand opening of the largest expandable speculative building ever in central South Carolina took place on June 21 at the Sandy Run Industrial Park. The 497,952 square foot building, located at the intersection of Interstate 26 and U.S. Highway 21, is a project of Columbia-based Red Rock Developments, the exclusive developer of custom-built and speculative buildings in the industrial park. The structure, located in the Calhoun County section of the industrial park, is expandable to 663,836 square feet with dockside distribution capacity and 36-foot clearance.
On June 29, local developers Saxe Gotha Spec LLC announced plans for a 43,750 square foot speculative industrial building on Old Wire Road in West Columbia’s Saxe Gotha Industrial Park, which is already home to Amazon, Nephron Pharmaceuticals and other tenants.
The Class A building, slated for completion in the first quarter of 2023, will feature ceiling heights of 28 feet, 43 parking spaces, five dock-height doors and an entry door, an ESFR fire (removal early, fast response) suppression system and LED lighting throughout.
Colliers South Carolina is handling the leasing of both buildings, and company officials say they couldn’t come at a better time because the Midlands needs speculative space of all sizes.
“Free-standing industrial buildings under 50,000 square feet are the underserved product category in the Colombian market,” said Chuck Salley, general manager of industrial services at Colliers’ Columbia office.
According to Thomas Beard, Vice President, the increased availability of large and expandable speculative properties like the Sandy Run site is important because many companies looking for larger spaces have had to abandon the Midlands in recent years simply because it there were not enough sites of this size available. industrial services for Colliers South Carolina.
“Our market has been ignored by many users who want to be in the Colombian market but end up having to look elsewhere, usually the next closest market, that has bigger buildings under construction or on offer,” Beard said. “These larger sites are really the bread and butter of this market right now. There is huge demand for a product of this size right now.
However, the days of Richland County being ignored by businesses looking to relocate to South Carolina may be a thing of the past, Beard said, due to several factors. Available space in the Greenville and Charleston areas is becoming harder to come by, and Richland County’s move to become more developer-friendly through tax offset agreements and revenue credits has sparked a stir. interest of developers.
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“We are getting more interest and more calls every day from national and regional groups who realize that the Colombia market is worth looking into,” Beard said.
Other major speculative developments in Richland County include the 200,000 square foot speculative building planned by Magnus Development Partners on county-owned property in Blythewood’s Northpoint Industrial Park. And in May, St. Louis-based Summit Real Estate Group announced plans to invest $28.6 million to develop a 350,000 square foot speculative building in Richland County’s Pineview Industrial Park. , which will be located on 34 acres at the intersection of Bluff and Longwood. roads.
Charlotte-based commercial real estate company Collett has also purchased approximately 19 acres of land from the county for construction of a 210,000 square foot speculative site.
Casual observers might think this will all lead to a lot of empty buildings, but to borrow a quote from the famous baseball movie Field of Dreams, the idea behind speculative real estate is “If you build it, they will come.”
Developers say tenants start calling soon after plans are announced. At least two tenants had already expressed interest in the new Sandy Run building even before the groundbreaking ceremony, said William C. Smith, Jr., CEO of Red Rock Developments.
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Growing demand for speculative industrial real estate and industrial buildings in general has caused some companies like SeamonWhiteside to completely revamp their business model, according to O’Neal.
“It’s a full 180 in our business model because before COVID-19 we were very focused on retail, hotels, hospitality and offices, and we’re not seeing as much of it at the same rate as before 2020,” O says Neal. “Small retail was a very hot industry then, but it slowed down, while warehousing, distribution and manufacturing took off.”
SeamonWhiteside began looking to expand its industrial sector about five years ago, predicting a need for more manufacturing and warehousing space in the United States, with the demand for next day shipping and delivery becoming a norm.
He said the company’s forecasts have borne fruit with the changing needs of businesses and consumers that have come with COVID-19, as well as the growing trend of “offshoring to the right”, with more companies Americans bringing operations back here from overseas and, as a result, causing a boom in the need for industrial and warehouse space.
Beard de Colliers said the speculative industrial real estate market is not expected to slow down anytime soon.
“Speed to market is everything these days,” he said. “It’s rare for a builder to come into a market and say they have time to build a building.
“Everyone needs readily available space to meet the requirements they have, and they’re only really willing to consider buildings that are either proposed or already under construction.”
SC Biz News is a leading business publishing company with offices in Charleston, Greenville and Columbia covering all aspects of the South Carolina economy. Visit his website at scbiznews.com.