 Oconee County completed this 50,000-square-foot spec building in June, funded with public money and utility tax credit funds. Oconee County filled one spec building during the recession and hopes to fill this one in 2012. (Photo/Provided) |
by Liz Segrist
lsegrist@scbiznews.com
Published Jan. 18, 2012
Seeking space for industrial recruitment, Upstate counties are taking creative steps to finance and develop speculative buildings.
Oconee County put up its own money, for example, and Laurens County created virtual space.
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Oconee, Abbeville and Greenville counties have one spec building each. Greenville County has an 85,000-square-foot spec building available at The Matrix and a 70,000-square-foot flex space building with 63,000 square feet available, said developer Charlie Whitmire of The Whitmire Co. LLC.
“There’s a huge market for spec buildings, but no one is willing to financially step out and build them,” said Marvin Moss, executive director of Laurens County Development Corp., or LCDC.
While there are opportunities for commercial construction, banks largely are not lending on speculative projects where the loan repayment is dependent on the sale of the new construction, said Dixon Woodward, a regional market president in South Carolina for TD Bank. Lenders will look to some other recurring source of borrowers’ income as repayment on construction loans, he said.
“It’s going to continue to be challenging for those who want to put up spec buildings and industrial space as banks try to manage their risk,” Woodward said.
Economic developers say spec buildings are extremely instrumental in their efforts to continue attracting industry. The Upstate has many older industrial buildings available, but many were designed under older manufacturing guidelines; manufacturers’ needs in a facility have changed.
“We are pretty much exhausted in all our spec buildings that we have,” said Spartanburg County Council Chairman Jeffrey Horton, noting that 50,000- to 100,000-square-foot buildings are lacking and most needed for industry recruitment.
Existing, quality speculative buildings attract companies looking to an area since they can be upfitted for their needs and move-in time is shortened. Sites that are permitted and pad ready have a major advantage.
“Financial markets have made it a little more challenging to have product built speculatively without a company committed,” said Carter Smith, executive vice president of the Economic Futures Group in Spartanburg County. “In this economy, a company often waits longer to pull the trigger and when they do, they need to move quickly.”
Oconee County is one exception to the rule.
Oconee County completed one 40,000-square-foot spec building in 2006 and sold it in the midst of the recession in 2008. The county’s most recent spec building was completed in June and is expected to fill in 2012.
It is 50,000 square feet, expandable to 200,000, and has 32-feet-high ceilings and 50-by-50 column spacing.
It was funded by utility tax credit funds and economic development funds from the county. Economic developers lobbied the Oconee County Council to get the funding.
“If we don’t build it here, no one is coming to visit. We don’t have an area that generates so much traffic that private developers want to build on it,” said Russell Johnson, the county’s project and marketing manager. “We have to take it on ourselves to create the product and build it ourselves.”
The S.C. Department of Commerce recommends square footage for spec buildings ranging from 50,000 to 200,000; ceiling height clearance of 25 to 30 feet or above; wide column spacing; numerous dock doors; and other needs for manufacturing or distribution businesses.
Counties are exploring creative ways to develop a speculative building inventory. LCDC found an alternative to deal with Laurens County’s lack of spec buildings by creating a virtual spec building online here.
The Laurens Commission of Public Works and LCDC funded an 118,000-square-foot pre-compacted pad and Moss Associates in Greenville designed a 50,000-square-foot building to eventually be built on the pad in Hunter Industrial Park.
“To build a 50,000-square-foot spec building, it will cost about $1 million,” Moss said. “No one wants to spend that on a spec building right now.”
It has been on the market for a few years. The pre-built pad and pre-designed building can save two to three months when a company confirms, shortening move in time to 120 days.
Available buildings in the Upstate
*One of the buildings in Greenville County is partially used. |
The Upstate has 135 available buildings in every county that were previously used for a variety of industries, according to the S.C. Department of Commerce’s interactive website of building and site availability. The buildings are all different ages, conditions, ceiling heights and floor layouts.
Some of these buildings might require some substantial upfitting. Others might be a good fit for incoming industry.
“Over 75% of projects looking to relocate begin their search for a suitable building in hopes of finding a building that will meet most of their needs resulting in a quicker start-up and faster return on the company’s investment,” said Amy Love, the S.C. Department of Commerce’s communications director.
Moss Associates built a spec building for Abbeville County a few years ago, which remains empty. Don Warren of Moss Associates, who has been in the construction industry for more than 30 years in the Upstate, said banks and private developers aren’t willing to finance in this economy and company owners are looking to move in while incurring as little cost as possible.
“Most economic developers would love to have a spec building to sell because owners want to see what they’re getting,” Warren said. “Hopefully, the economy continues to get better and new construction becomes a first choice instead of the last choice.”
Attracting industry
The flipside to lacking in speculative buildings means industry has moved in to take them off the market. The Upstate continues to attract industry despite the dwindling inventory.
The S.C. Department of Commerce and local economic development agencies recruited $3.3 billion in investment and 14,855 jobs in 2011. The Greenville Area Development Corp. recruited 3,100 jobs and more than $275 million in capital investment through 19 announcements in 2011.
ZF Transmissions LLC nears completion of its 947,000-square-foot facility in Laurens County. Bosch Rexroth Corp. makes its biggest investment in its hydraulics manufacturing operations in Fountain Inn with a 260,000-square-foot expansion of production space.
Pickens County saw a record year in 2011, recruiting five companies to locate operations and expand within five months through refurbishing facilities.
Amazon plans to invest around $50 million and construct a 1-million-square-foot distribution facility in an industrial park in Spartanburg County.
Love said counties with low spec building inventories need to evaluate existing assets to find potential opportunities in abandoned buildings or buildings with refurbishing potential.
“It’s a concept of making your community attractive, which is not just about downtown revitalization,” Love said, noting site preparation, spec buildings, industrial parks and infrastructure as crucial components. “All of those things are going to support the county in making that area attractive, particularly to a manufacturer looking to locate.”
Editor Scott Miller contributed to this story.
Correction: Greenville County has an 85,000-square-foot spec building available. It was not included on the S.C. Department of Commerce’s website at the time of publication.
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