Upstate’s Infrastructure, Workforce Set Table for Future Industrial Expansion
In 2019, the Greenville-Spartanburg industrial market added an unprecedented 33 buildings encompassing 10 million square feet of inventory, bringing the total market size to approximately 211 million square feet. Despite record-breaking new deliveries, absorption has kept pace at 9.6 million square feet the same year. This market is preparing for future growth with delivery of available buildings and land sites, as well as investment in infrastructure and the overall workforce.
With the increased supply of Class A speculative space, the market has seen numerous company expansions and relocations away from its Class B product type. New, modern space provides the efficiencies and amenities companies desire (i.e. above 32-foot clear heights).
In order to service customers’ consumption preferences, companies are making capital investments into automated processes that allow them to stay competitive in a rapidly changing supply chain.
One of the earliest signs of momentum in 2020 was the announcement of South Greenville Enterprise Park and its first user investment, Vermeer. South Greenville Enterprise Park is the first industrial park to deliver to the Greenville market in 10 years.
Primary investment has been focused on the S.C. Highway 101 and S.C. Highway 290 corridors due to demand drivers such as BMW Manufacturing and Inland Port Greer. While that focus has continued, we have seen recent announcements on the book-ends of the Upstate market. Techtronic Industries has invested in Anderson and Cherokee counties with ongoing expansions in both, bringing its total market-based footprint to approximately 3 million square feet.
Confirming this trend, numerous developers have recently announced speculative developments in Anderson, Laurens and Cherokee counties. These neighboring counties are beginning to see their share of speculative development as the market continues to mature and expand from its core. Users are taking advantage of the availability of land with utilities in these counties, as well as competitive incentive and labor dynamics.
While preleasing has slowed due to uncertainties in the latter part of 2019, we have seen activity pick back up thus far in 2020 due to increased confidence in the market related to the resolution of international trade deals. China recently cut tariffs on $75 billion worth of U.S. goods and the United States-Mexico-Canada (USMCA) free trade agreement was also signed in late 2019. International trade uncertainty weakens decision making and forces companies to adjust their supply chains accordingly.
BMW, Inland Port, Michelin
BMW has continued its expansion in Spartanburg and will soon add an additional 1,000 jobs, bringing total employment to 12,000. Last year was a record one for the auto giant as the Spartanburg plant produced 411,620 SUVs (X Models) in 2019 alone. This tops the plant’s 2016 record by nearly 450 units. OEMs (original equipment manufacturers) like BMW are continuously expanding their offerings and inventory in the market, which in turn has led to an expanded and diverse supplier network.
Inland Port Greer also had a record year in 2019 with 143,000 rail lifts. This equates to a 5 percent increase year-over-year from 2018 to 2019. In 2019, the South Carolina Ports Authority produced $63.4 billion in annual economic impact and set a record for total export sales for the 10th year in a row. Exporters sold $41.5 billion of products over the course of 2019.
Automotive, rubber, plastics and machinery topped the list of export commodities. South Carolina holds 18 percent of the market share for exported passenger vehicles in the United States and 35 percent of the market share for tires.
Regionally headquartered in Greenville, Michelin has also seen continuous growth, helping South Carolina become not only the nation’s leader in tire exports but also production. Approximately 110,000 tires are produced in South Carolina each day, accounting for more than one-third of all U.S. tire export sales.
South Carolina’s tire industry also includes Continental, Bridgestone, Trelleborg and Giti. Michelin recently expanded its retread division into Simpsonville, leasing 204,952 square feet of industrial space at 101 Harrison Bridge Road.
Local municipalities have continued to invest in infrastructure in order to attract further investment, resulting in the delivery of additional shovel-ready sites including those able to accommodate over 1 million square feet.
Lowe’s Home Improvement recently leased 1.3 million square feet at The Cubes at Inland 85, leading to one of the largest single-tenant property sales in the state at $98.4 million to Lexington Realty Trust. CRG, the developer of The Cubes at Inland 85, is now working on Phase II at the park, a 504,060-square-foot spec building expandable to 1.3 million square feet.
Labor availability across the United States continues to affect site selection decisions for industrial development. In Upstate South Carolina, local leadership initiatives are helping the area maintain a competitive workforce and positioning the underemployed to take advantage of newly created job opportunities. Local leaders consider affordable/workforce housing as key infrastructure on par with roads and utilities and consistently work to ensure both viability and capacity.
With a pro-business mindset and focus on sustainable growth, the outlook is positive for Greenville-Spartanburg. This region is one to which employers and investors will continue to migrate as population and market growth persists in the coming years.
— By Dillon Swayngim, Brokerage Associate at Colliers International. This article originally appeared in the March 2020 issue of Southeast Real Estate Business.