By Dan McCue
Staff Writer

The satellite photos and renderings situated on one side of a large conference room in the offices of CC&T Real Estate Services tell an ongoing story in the Charleston region.

After nearly 200 years of pollution, neglect and occasional armed conflict, the “neck” area that connects Charleston and North Charleston is about to undergo a change, thanks to the efforts of commercial real estate developer and broker Robert Clement III, who is creating two new mixed-use developments—the 200-acre Magnolia project and the 120-acre Ashley River Center.

But getting the process rolling has been complicated by more than just the federal remediation efforts on parcels in the Magnolia development area designated as Superfund sites.

In order to realize his dream of building hundreds of hotel rooms, thousands of houses and hundreds of thousands of square feet of office, retail and restaurant space east of Interstate 26, Clement has had to take on the responsibility of relocating nine industrial businesses in the area, most of them currently located on Braswell and Milford streets.

To do that in a locale where developable land is at a premium and industrially zoned property is even more so, Clement and his backers, GreenHawk Partners and Cherokee Investment Partners, both of Raleigh, N.C., spent $12.6 million to buy the 144-acre site of the former Macalloy Corp. plant.

Clement is now in the home stretch of creating the infrastructure—not to mention turning verbal agreements into signed leases—that will enable these industrial business to move from Magnolia’s lots on the Ashley River side of the neck to the former steel plant’s site on the Cooper River side.

“When people hear about our projects, they talk about the number of residences, the office space we’re planning and so forth, but what they don’t seem to realize is what a complicated brokerage transaction these closely related projects have been,” Clement said.

“As the broker on the project, we have to facilitate everything that becomes necessary to complete a real estate transaction. To make these deals work, you have to be prepared to address unfolding situations.”

In this case, that meant agreeing to relocate several businesses, which meant acquiring the Macalloy site, which in turn meant revamping the federal government’s pollution remediation plan, Clement said.

“All this to just to achieve our primary goal of making the neck a viable and exciting place to live and work,” he said.

Assembling the properties

John Tecklenburg, a CC&T real estate services associate, said a property called the Beezer tract, which had been brought to Clement’s attention years ago by city planners, formed the spine of Magnolia.

Over the years, that tract had been carved up and sold to a number of different entities.

The company researched each piece of what had been the Beezer tract the old-fashioned way, Tecklenburg said.

“We poured over tax maps, determined ownership and prioritized the pieces in terms of their importance to what we had in mind,” he said. “The first few land acquisitions that formed the basis of the project were fairly straightforward. The sellers were absentee owners that were willing to sell, and we were willing to buy.”

Other aspects of putting the property back together were a bit more challenging, he said.

“When you’re the one knocking on the door, seeking a property, the table is turned a little bit,” Tecklenburg said.

Clement described how the typical development deal works.

“It all starts with a concept, the big picture. Mayors Joe Riley and Keith Summey have kindly called me a visionary in that regard, but I really think it’s a case of my not knowing any better than to get involved in these things,” he said.

“At this point, you’re doing your financial analysis, which is critical. What will it cost me to build this? What’s the state of the market? Can I sell what I’m envisioning in this market? What other projects had similar features and how have they sold in the past?

“At the same time, you’re acquiring properties,” Clement continued. “Then once you get one piece of land or three or four, you think ‘Okay, we’ve gone this far … how do we fulfill our objectives?’ You sit down, negotiate and keep talking as long as what’s being asked of you is reasonable. You give a little. They give a little. And the deal gets done.”

The first challenge, Tecklenburg said, was CC&T’s position in the negotiation. The company was approaching landowners who were essentially minding their own business and asking if they might be willing to sell a property that wasn’t currently on the market.

“That meant we had to be willing to take on some responsibilities that wouldn’t exist if we were buying properties that were already for sale,” he explained.

Even if the landowners were willing to sell, they needed viable alternatives to locating their businesses, most of which liked their current location, Tecklenburg said.

That’s why the Macalloy purchase became critical, as did the purchase of an adjoining parcel to extend the property’s frontage on Pittsburgh Avenue.

Firm acquires Superfund site

However, that purchase was a financial gamble. Clements needed only about 50 of the site’s 130 buildable acres to relocate the businesses from the Magnolia development site.

To make the deal viable, he needed a tenant for the rest of the land and that meant bankrolling significant changes to the Environmental Protection Agency’s remediation plan.

“One of the big things we had to do was relocate the storm water basin from where they had it go, adjacent to Shipyard Creek, to the north side of the development,” he said.

That change caught the attention of Carolinks, the intermodal start-up that plans to move containers from South Carolina State Ports Authority terminals to distribution sites farther inland.

Although Carolinks has yet to close on the property, Stuart Coleman, another CC&T associate working on the project, said the company’s principles are “ramping up to closing.”

In fact, he said, engineers for the company have been “studying the site to death” in anticipation of construction. “That’s pretty typical for this kind of real estate transaction,” he said.

In the meantime, CC&T has moved forward with road, sewer and water line-related construction at the Macalloy site and is designing buildings to the specifications of the industrial businesses it is moving there.

Awaiting approval

CC&T is still awaiting a final green light from the city to begin the next phase of the project—the actual development work, Coleman said.

“Construction is really governed by how quickly things move with the city,” he said.

It comes down to brokering a deal, in this case how to structure a tax increment finance district for Magnolia similar to one already worked out with the city of North Charleston for Clement’s Ashley River Center project.

TIF districts are set up by local municipalities to encourage investment and development. Typically, they freeze the amount of property tax collected from businesses in the district for a certain number of years. As property value rises, tax dollars that would have ended up in a city’s general fund are instead reinvested in the district to help developers offset the cost of roads and other infrastructure.

“We’re setting up the TIF for the area, and we’ll soon be moving the industrial users off the Magnolia project site,” Coleman said.

All three men said they’ve been satisfied with the pace of development given all the deals that had to be brokered along the way and expect to see new buildings and residences rising on the properties soon.

“When you’re involved in this kind of project, you have to take a balanced approach to everything you do and follow through to the end,” Tecklenburg said.

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.

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