In the 1970s and ‘80s, South Carolina clung to its southern roots as the rest of the South was busily wooed by and won huge investments from companies finding the “New South” a great place to do business. Understanding that the old “bars and stars” was not going to be removed from the capital building anytime soon, the state’s economic development powers turned to unconventional alternatives. They discovered that Germany and China could overlook what U.S. firms couldn’t.
Twenty-five years later, the strategy is paying off, and it is no more obvious than in Charleston.
The Chinese-owned Volvo Car Corp. has broken ground on a 2.5 million-square-foot, $500-million plant that pumps out 100,000 cars a year and employs 4,000 people. This is the third OEM in South Carolina and both BMW and Mercedes are rapidly expanding.
With access to six major interstates, two national rail carriers, five primary airports and the Port of Charleston, the surrounding region offers the resources to meet growing industrial real estate and supply chain needs. Another reason for Charleston’s growing status as a magnet for major manufacturers and distributors is its port’s ability to handle Post-Panamax Vessels, which are the largest transport ships on earth.
Consequently, major retail and automotive brands and others are investing in the market. The city of Charleston saw over $1 billion worth of industrial real estate sales last year, its highest-ever sales figure in a single year.
The future looks equally promising. According to leading real estate firm Avison Young, the Charleston industrial real estate sector continues to grow with almost 55 million square feet of space.
The vacancy rate for all three major segments — industrial, office and retail — is below 10 percent. Without more supply, rental rates could accelerate, especially as blue-chip employers like Boeing, Daimler and Volvo bring new jobs and more residents to the region.
Many investors are surprised to see rental rates between 10 to 15% higher here than in Charlotte. Bids for investment properties are also exceeding those in Charlotte.
The rednecks of South Carolina were once the state’s Achilles’ heel, causing South Carolina to be mocked by the progressives of the day and forcing economic developers to go far, far away to find jobs. In a similar vein, perhaps HB2 will be a boon for the Tar Heel State. As we’ve seen, the controversial law has caused many U.S. companies to abandon North Carolina. Perhaps we will instead see investment from distant emerging countries during the next 25 years. We better get (soon to be former) Gov. Pat over to Serbia quick! Perhaps North Carolina can get that next Yugo project!