By Chuck Crumbo
Published Oct. 9, 2013
COLUMBIA, S.C. — With economic development announcements popping out of the S.C. Commerce Department like popcorn these days, the state must find places for new businesses and expansions to take root, said the state’s top commerce official.
|S.C. Commerce Secretary Bobby Hitt|
“We are quickly exhausting the inventory we have of available sites and available buildings,” S.C. Commerce Secretary Bobby Hitt said. “That’s good news and bad news. We need to do something about it.”
What’s putting pressure on industrial buildings and sites across the state, Hitt said, is that companies want to make their move sooner than later.
“Seventy-five percent of the companies that come to us want buildings. They don’t want greenfield sites,” Hitt said. “They want to move into available buildings in South Carolina as quickly as possible.”
Minneapolis-based Element Electronics’ recent announcement of plans to open its first U.S. television set manufacturing facility in Winnsboro could illustrate Hitt’s point.
In March, the company decided to open a U.S. plant and by July it was negotiating with the Fairfield County Council for use of an abandoned 315,000-square-foot manufacturing plant on the U.S. Highway 321 bypass in Winnsboro.
What attracted Element to Fairfield County was that there was a building already standing to meet the company’s needs, said Tiffany Harrison, the county’s economic development director.
“It was the largest building available,” Harrison said of the former home to the Manhattan Shirt Co. and Perry Ellis Distribution Center. “They are able to move into it within their timeframe.”
Element, which expects to ramp up production in December, said it plans to invest $7.5 million and create 500 jobs over five years, Harrison said. Those jobs, the company said, are being moved to South Carolina from China, where the firm’s TV sets are currently assembled and then shipped to the U.S.
Companies are making their moves quicker, and it helps a community to be able show a client a building they can use, said Mike Briggs, president and CEO of Central SC Alliance, an economic development organization representing 10 Midlands counties.
“That’s just the nature of the business,” Briggs said. “We move at light speed in many ways.”
Although space is getting tight, Briggs said that the region is in pretty good shape.
“But when they’re gone they’re gone, and by the way, we’re trying to selling every one of them,” Briggs said.
Inventory of industrial space is shrinking because the state has been successful, Hitt said.
Since January 2011, South Carolina has recruited more than $9 billion in capital investment and more than 26,000 jobs in the manufacturing sector.
Hitt added that local and state leaders need to do future planning to meet the needs of manufacturers and others that need industrial buildings.
“We need to bring together some planning to make sure we’re doing the right mix,” Hitt said. “We have to have a concerted effort. If not people will turn around and go the other way.”
One of the challenges in the state’s economic development business is planning future industrial sites near major arterials so companies can have ready access to interstate highways, railroads and ports.
“We’ve got plenty of land, but there’s no connectivity,” Hitt said.
Also, the regulatory fallout from the Great Recession is causing developers to retrench speculative projects such as buildings and industrial sites.
Tighter lending rules require a developer to have a customer signed up before making a pitch to a bank for a construction loan.
Chuck Salley, a vice president and principal at Colliers International in Columbia, said that although vacancy rates are low, most new projects will be built for a specific customer.
“We don’t anticipate speculative construction unless at least 50% of the building is preleased,” Salley said. “We do anticipate a more active build-to-suit market on shovel-ready sites.”
If a speculative building is built, it most likely will have to be backed by a local government, Salley said. Governments can use property taxes and federal matching grants to fund projects, he said.
“We’re no different than a retail business,” Hitt said. “We have to continue to build our product.”
Companies today are not going to wait, he said.
“Our competitive states are sitting there with shovel-ready sites,” Hitt said. “We need to be more aggressive, that’s all.”
Reach Chuck Crumbo at 803-726-7542.