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Investment in industrial sites fuels residential growth
By Dan McCue
Staff Writer
In Dorchester County, a growing industrial base is seen as the key to fostering and supporting the region’s booming residential development, according to the head of the county’s economic development fund.
Among the strategies being employed to satisfy both ends is using economic development dollars to develop industrial properties on spec, wagering that the tax dollars paid by the eventual buyer over time will foot the bill for schools, fire engines and a host of other county needs.
“When it comes to managing growth, you have to strive for a balance,” Dorchester County Economic Development Director Jim Friar said.
“Those communities that don’t have industrial as well as other commercial activity going on probably aren’t prospering in terms of residential growth because the tax support for it is not there.”
In late 2004, with the residential real estate market in the tri-county region heating up, the Dorchester economic development department started its speculative building project with cooperation from the Eastport Industrial Park in Summerville, the St. George Industrial Park in St. George and the Trident Construction Co.
Since then, it has sold seven buildings, for prices ranging from $600,000 to $864,000, and two undeveloped properties to companies relocating to the area.
The economic development department never takes ownership of the site but does take on the risk of enhancing the site’s value “because after all, the value of a piece of real estate is the value of the land plus any improvements that are made to it.”
The industrial park itself sets the price and negotiates the final sale.
“What we get out of it are new jobs, new investment and a source of additional tax revenue that doesn’t take it right back through its demand in services,” Friar said.
Every project starts with the economic development department selecting a site in collaboration with the industrial park and then doing all the permitting, soil testing and other due diligence work that a developer would have to do.
“Then we build a shell of the building—just outer walls and a roof—and market it through organizations like the Charleston Regional Development Alliance,” Friar said. “A large part of the appeal to prospective owner/tenants is that by doing what might be called the grunt work, we’ve dramatically reduced the time it will take for them to get up and productive on the site.”
The time gained by a company buying a spec industrial site is 9 1/2 months to two years, depending upon how far the project has proceeded before the purchase takes place, he estimated.
In at least two cases, companies bought the sites after the environmental assessment was done but before a single beam was raised for the new building. The most recent case involved Metalworx, a privately owned metal fabrication business that has since relocated from North Charleston.
“Since our company was founded
10 years ago, we’ve seen a steady growth rate of about 25% a year,” said Michael Sawer, president of the company that provides metal fabrication and assembly services to companies throughout the Southeast.
It was during a drive through the Eastport Industrial Park that Sawer saw the economic development department’s
for sale sign posted on about 8 1/2 acres of land. He also happened to see Friar, who was on-site while the grass was being cut on the then still vacant lot.
After a short conversation, Sawer told Friar he would buy it. Metalworx moved into its new home at 340 Deming Way three months ago.
Besides simply needing more space, Dorchester County appealed to him because of the county government’s “industry-friendly attitude” and because many of the kind of people it’s looking to employ live in the area, Sawer said.
“We do blue collar work, and this is where the pool of potential blue collar workers lives,” Sawer said. “That’s a real plus for us.”
The point of the program, Friar said, isn’t to lure businesses from neighboring communities but to ensure that those who might relocate farther afield stay within the tri-county region.
He estimated that through this project and others, Dorchester County’s economy grows by about 300 jobs a year and by about $1.5 million in new taxes.
“Because industry consumes a smaller portion of the tax dollar than residential developments do, we see that tax revenue as a real multiplier,” Friar said. “With what doesn’t go directly back to the manufacturer in services, every two to three years we can pay for another whole school building and buy a lot more police cruisers and EMS vehicles. It’s one of the most cost effective supports to residential development I can think of.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charelstonbusiness.com.
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