Issuu

Summer 2019

Building for the boom Multifamily construction continues unabated to meet demand, but for how long?

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County Spotlight: Beaufort | Trending: Construction in S.C. | S.C. Delivers

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Dear Reader,

EDITOR

We all see it nearly every day we venture out our front doors — the new framing that rises out of the ground, seemingly overnight, in freshly cleared fields, on a patch of land surrounded by downtown skyscrapers or along highways from Pickens to Port Royal. The construction boom isn’t new in South Carolina — we’ve been adding homes, office and apartment buildings and manufacturing facilities to our landscape at a feverish pace since the Great Recession finally released its grip on us around 2013 or so. This sustained period of population and construction growth has been a major driver in the Palmetto State’s economic health. That growth has added thousands of jobs, millions of dollars in tax revenue and boosts to bottom lines across the state. It has also strained infrastructure, forced communities to make hard choices about how much is too much, and caused many sleepless nights for construction managers dogged by a persistent shortSteve McDaniel age of skilled carpenters, masons and roofers. Editor, This issue of SCBIZ takes a look at the construction boom in our SCBIZ Magazine state, the impact on cities and towns, along with trends and what the future looks like in a volatile industry. Developers and builders have been busy the past few years with multifamily projects to meet the housing demands of a growing population. Most projects of this nature have long lead times and are vulnerable to economic cycles and changes in migration patterns. We asked home builders, developers and others in the industry what they see in terms of current and future demand for the thousands of units either built, under construction or planned across the state. Rising construction costs have a significant impact on what is built and who can afford it. New technology is helping companies in that regard, both on the drawing board and in the field. Drones, 3-D software and wearable devices are just some of the emerging technologies that companies use to reduce costs and streamline projects. On a different front, Columbia welcomed tens of thousands of college basketball fans to Colonial Life Arena in March as the NCAA men’s tournament returned to our state capital for the first time since 1970. Fans from Virginia, North Carolina and elsewhere came to town, bringing their dollars with them. As always, thank you for being a reader of our magazine and for your efforts in helping our state’s economy continue to grow and evolve as a national and global leader.

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Table of

CONTENTS TRENDING: CONSTRUCTION IN S.C. 24 Multifamily construction boom: Experts see surge in apartment projects, but expect market to cool 28 Under Construction: Upstate, Lowcountry office markets active with new projects on horizon; Midlands office market remains sluggish 32 Bull Street building momentum Cover: Finishing touches are starting to become visible at 10 WestEdge, part of a new mixed-use district in downtown Charleston. (Photo/Ryan Wilcox) Left: Falls Tower in Greenville, part of the downtown Camperdown development. (Rendering/Provided)

FEATURE STORY

SMART MOVE S.C.

Hoopla surrounds return of NCAA tournament to S.C.

Celebrating economic development success in South Carolina

DEPARTMENTS 6 Upfront www.scbizmag.com

10 Research SC

14 County Spotlight: Beaufort 40 S.C. Delivers 48 1,000 Words

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VIEWPOINT Improving South Carolina isn’t about making everything equal

his issue of SCBIZ takes a look at construction. And if, like me, you live in one of our major metro regions, you see construction every day — whether you want to or not. Those of us who live in the regions enjoying the construction boom have a very different set of worries from our fellow citizens who live in the economically depressed regions of the state. I’d bet there are plenty of South Carolinians who would love a share of the traffic inconvenience that comes from increased prosperity. So what would you rather have — a commute that takes you more than an hour to go 15 miles or a household income half of the national average? If you answered “neither,” you’re on the right track. I had an “Aha” moment recently while

EQUALITY

attending a panel discussion at the Charleston Regional Development Alliance’s quarterly investor briefing. State Sen. Sean Bennett made an interesting observation on the difficulty of passing meaningful legislation on the so-called big items of tax reform, infrastructure and education. His insight was the acrimony and dysfunction between the political parties we observe in national politics barely exists in our Legislature. The usual conflict is between legislators from rural or urban districts. That seemingly irreconcilable set of priorities is what is keeping us from making any progress on the big issues we all agree need to be resolved — tax reform, infrastructure and education. Aha. This is a small state. I live in Mount Pleasant, which is about as prosperous an area as

EQUITY

True equity in public education requires the unequal distribution of resources to a far greater degree. Graphic/ Tri-County Cradle to Career Collaborative

Grady Johnson President and Group Publisher, SC Biz News

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Treating each student the same – deploying nearly identical resources, dollars, talent and support – does not ensure all children receive the high-quality education they deserve (depicted above as equality). Children, through no fault of their own, are born into vastly different circumstances and have access to varying opportunities. Some, for instance, have access to wealth and social networks that ensure they thrive (depicted above as children on higher ground), while others battle the chronic stress of poverty, illness or disability (depicted above as children on lower ground).

you can find. But I can be in Williamsburg County in less than 90 minutes. It ain’t that far. Managing these complex issues isn’t a zero-sum game of winners or losers. It does come down to funding. We won’t be able to tackle education or infrastructure without comprehensive tax reform, and the business community needs to increase pressure on the Legislature to meaningfully change the way we fund this relatively small state. Next year is an election year, and there are going to be very few politicians willing to stick their necks out. So let’s be realistic and shoot for the year after next, agitate for reform and support those candidates who are going to be bold and creative enough to get this done. In the meantime, I’m going to refer our readers to the graphic by publishing it whenever and wherever I get the chance. The graphic, which was done for the Tri-County Cradle to Career Collaborative by our creative director Ryan Wilcox, succinctly illustrates the difference between equity and equality. It’s not an either/or solution. It’s a both/and value proposition. For all children to thrive, they need equal opportunities, and some need an extra step up to be able to reach those opportunities. It’s not equal. It’s equitable. It’s the same with tax reform and rural versus urban counties. It can’t just be about equality. It also has to be equitable. This means focusing on sustainable funding mechanisms that put revenues into prosperous regions to accommodate growth and funding the kinds of things rural regions need to provide opportunity. Let’s think constructively.

UPFRONT regional news | data

Veteran unemployment rate drops in South Carolina

outh Carolina’s unemployment rate for military veterans dropped to 3.3% in 2018, down from 3.9% percent in 2017, according to the S.C. Department of Employment and Workforce. The rate stood at 5% in 2016, the department said. Nationally, the unemployment rate for veterans, defined as men and women who served in the U.S. Armed Forces who were not on active duty at the time of the U.S. Department of Labor’s annual survey, was 3.5% in 2018. G. Daniel Ellzey, confirmed as DEW executive director last week according to a news release from the agency, said initiatives such as the department’s Disabled Veteran Outreach Program and local veteran employment representatives help veterans find jobs. “Their focus to find the right fit for veterans and their relationship with

South Carolina National Guard servicemembers, families and retirees from McEntire Joint National Guard Base gathered at the base in April along with local businesses and base departments, which provided food and event activities to show appreciation for servicemembers who work at McEntire. (Photo/ Senior Master Sgt. Edward Snyder, U.S. Air National Guard)

businesses to determine their workforce needs and inform them about specific advantages of hiring veterans is making a difference,” Ellzey said in a news release. “South Carolina is seeing the benefits of this effort.” DEW’s veteran employment repre-

sentatives work throughout the state to promote veterans as potential hires. The agency also partners with the S.C. National Guard on Operation Palmetto Employment, a project designed to streamline the transition from active duty to civilian life.

FAST FACTS | Construction in S.C. New private housing units authorized by building permits

– Recession

4,400 3,600 3,200

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Page 24 Housing construction is still nowhere near the spike experienced in the runup to the recession in 2008.

4,000

Section begins on

2,800 2,400 2,000 1,600 1,200 800

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Source: Federal Reserve Bank of St. Louis

UPFRONT

Boyer awarded $500M VA contract

Photo/File

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Columbia airport to offer nonstop flight to Miami

Boyer Commercial Construction Inc. has been awarded a contract to provide services at eight major Veterans Affairs Medical Centers and related facilities. The Columbia-headquartered construction company was awarded a five-year, $500 million multiple award task order contract for services supporting the VA, including construction, maintenance, alterations and repairs at the medical centers and off-site facilities within the Veterans Integrated Service Network 7. “This contract supports our vision and commitment to bring the quality of project delivery Boyer Construction provides its private clients to the public sector,” Justin Schaeffer, Boyer’s director of federal contracts, said in a news release. The contract covers a fast-growing region of 244 counties in South Carolina, Alabama and Georgia, according to the release. The medical centers are located in Columbia, Charleston, Atlanta and Augusta, as well as in Dublin, Birmingham and central Alabama. The service network also serves 57 outpatient clinics throughout the region.

Columbia Metropolitan Airport passengers can fly nonstop to Miami on American Airlines beginning Dec. 18. The daily flight will depart Columbia at 7:30 a.m. and arrive in Miami at 9:11 a.m., the airport said. The return flight will depart Miami at 9:50 p.m. and land in Columbia at 11:25 p.m. Initial service will be on a regional jet with a 50-passenger capacity.

“This is huge for the Midlands region,” CAE executive director Mike Gula said. “Miami is a destination that has been a part of our airline and air service conversations for some time, so we are very excited to see this come to fruition. Our passengers can now easily access destinations in the Caribbean, South America, Central America and various European markets with ease.”

Carolina Alliance Bank opens in Anderson

Kiawah Island Club to host Four-Ball Championship

Carolina Alliance Bank has opened a new location at 304 N. Main St. in Anderson. The location is approximately three times the size of the former office, at 2,500 square feet, and includes onsite parking and drivethrough lanes. “Anderson is an important market for Carolina Alliance Bank and this new investment in Anderson will help us to better meet the needs of our growing customer base in this area,” John Kimberly, Carolina Alliance Bank president and CEO, said in the release. “Downtown Anderson is growing and we’re excited to be a part of its revitalization process.” Carolina Alliance Bank is a division of the Park National Bank and has seven locations in Upstate South Carolina and western North Carolina.

The Kiawah Island Club will host the U.S. Golf Association’s ninth annual U.S. Amateur Four-Ball Championship, scheduled to take place May 20-24, 2023. This will be the second USGA event hosted by the club, which hosted the U.S. Mid-Amateur in 2009. Kiawah Island Club’s Cassique Course hosted the 2001 UBS Cup, and the River Course was the site of the 2000 S.C. Amateur. “U.S. Amateur Four-Ball continues to

be one of our most popular championships and provides for a spirited and dynamic team competition,” said John Bodenhamer, USGA senior managing director of championships, in a news release. “We look forward to identifying an Amateur FourBall champion in the state of South Carolina for the first time in 2023.” The Amateur Four-Ball Championship consists of 128 two-player teams, each playing their own ball throughout the round. A team’s score is determined by the lower score of the partners for each hole. After 36 holes of stroke play, the field is reduced to the lowest-scoring 32 teams for the championships match-play bracket. The Cassique Course will host stroke play and match play, and the River Course will serve as the stroke play co-host.

Here are the latest economic development announcements from the Department of Commerce since February 7, 2019: County

JUUL Labs, Inc.

Lexington

$125M

500

Lucideon M+P

Greenville

$7.5 M

Southern Current

Hampton

$14 M

N/A

IPSUM Technologies

Pickens

$19.2M

The Muffin Mam Inc

Laurens

$18.8M

114

Perdue Farms

Dillon

$25M

100

World Energy

Hampton

$5.4M

Horton Holding Inc.

Oconee

N/A

125

Multi-Pack

Greenville

Greenwood Fabricating and Plating

Greenwood

$17.1M

DHL Supply Chain

Dorchester

$100M

450

Charleston Distilling

Charleston

$4.2M

The QM Group

Orangeburg

$9.5M

Maxwood Furniture Inc.

Marion

$1.8M

Ortec

Anderson

$20M 18

valantic SCE (USA) Inc.

Greenville

UPFRONT

Company

Investment Jobs

$16.3M 72

N/A

Source: S.C. Department of Commerce

Participants test their skills in the Dominion Energy putting challen ge during the 2019 Midlands Gives event at Segra Park. (Photo/Provided )

Midlands Gives donations surpass $2 million

Donations to the fifth Midlands Gives charitable challenge surpassed $2 million, breaking last yearâ€™s record. Preliminary figures from the Central Carolina Community Foundation, host of the 18-hour, online giving challenge, show that 14,272 donations to 410 registered charities totaled $2,028,966. The day of giving began in 2014 and is part of a nationwide focus on philanthropy. In its first four years, Midlands Gives raised more than $7.25 million for area charities, including a then-record $1.75 million via 14,665 donations last year.

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Research S.C. Embracing new technology in construction By Jim Tatum, Associate Editor

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ust what does the future hold for the construction industry? In this age of ever-changing technologies, it’s easy to question how anyone can actually expect to improve their long game, technologically speaking, given the breakneck pace of change and the seemingly endless array of “game changers” that appear and disappear just as quickly. And, no matter what comes along, no matter how nifty the latest, greatest gadget seems to be, you still need knowledgeable, qualified, experienced people on the job site. Nevertheless, while technology will probably never replace humanity, especially in an industry that requires so much hands on/eyes on experience, there are innovations that do augment the process and contribute — significantly — to the bottom line. The trick, notes Oscar Chica of Choate Construction, is in the vetting process. In fact, there are so many interesting and innovative tools and technologies available — and being developed — that the challenge is in making sure certain technologies are truly beneficial for a given project. “I don’t think it’s a trend, or that certain technologies become popular and fall off the radar, it’s more of trying to find the right time to use the right tool,” Chica said. “Technology moves quickly, and we try very hard to stay ahead of it.” Choate does make use of many innovative technologies, including 3D modeling, virtual reality, drones, 360-degree photography and laser imaging, to name a few, he said. These tools save time and money. And, while assigning metrics to these tools is difficult, there’s no question that such innovations are greatly contributing to the

Mashburn Construction is building the five-story Grand Strand Medical Office Building in Myrtle Beach. This is the first tilt-up building in South Carolina. (Photo/Mashburn Construction.)

bottom line, he said. Brock Koonce, of THS Constructors, says technology is a very important component, across the entire spectrum, of the company’s business. “We are on the cusp of taking this company from a medium-sized to a pretty large company,” Koonce said. “We have some pretty aggressive goals, and so we’re always looking at how technology can fit and help with the scope of the projects we’re doing —

as we grow, our technology grows.” One company that has combined technology and talent effectively is Mashburn Construction, a design/build construction firm based in Columbia, with offices in Greenville, Charleston and Myrtle Beach. Mashburn has augmented its services throughout the entire construction process, which saves time, increases quality and efficiency and ultimately saves money, according to CEO Paul Mashburn.

and invite subcontractors and vendors to bid on a project. “In the past, one of our estimators would be on the phone with literally hundreds of subcontractors, asking them to bid, sending them all drawings and information, all for one project,” he said. “This makes the process much more efficient and allows the estimator to work on multiple projects.” From the client’s perspective, this speeds up the bid process as well as improves overall quality — which translates into cost savings, Mashburn added. “Whenever the general contractor can better qualify sub-contractors, it always translates to better quality for the customers,” he said. “It avoids change orders, which can add significant costs, because all the subcontractors are getting real-time information efficiently and effectively.” Another tool being utilized these days is Building Information Modeling (BIM) technology, which, simply stated, is a 3-Dimensional computer modeling technology that allows the contractor to digitally create a 3D model of a given project, such as a building. With these, one can get a sense of

what a building will look like as it is being constructed, Mashburn said. While the advantages of such a tool may seem obvious, there are certain functions that are especially worth noting, such as clash detection. In a BIM model, one can see — without necessarily having to go onsite — potential issues that could otherwise result in a change order, which can be costly. For example, 3D representation can reveal a sprinkler line that is intersecting with a duct, a situation that may not have been indicated or seen on a construction drawing. Therefore, instead of running into the problem in real time, during the actual build, which would necessitate a potentially expensive change order relocating placed infrastructure, the contractor can relocate those elements in the model. Another important function and advantage of BIM technology is clearer communication, especially between contractor and client. “A lot of people just can’t look at drawings and understand what they’re seeing,” he noted. “With this, you can — you can basically walk a client through the building,

RESEARCH S.C.

“We’ve had a major technology boom,” Mashburn said. “This has come a long way, especially in the past five to 10 years.” Mashburn Construction handles a wide variety of large commercial projects, therefore, efficiency, especially at the front end, is key. One important tool the company uses is a web-based project management platform called ProCorp. Within this system, a project team can coordinate information such as subcontracts, purchase orders and committals, to name a few. It provides a central location and platform for all paperwork as well. “It allows the entire team — designers, owners, subcontractors, etc. to all collaborate, because they can access all this information in real time,” Mashburn said. “It’s been a real game-changer for us.” Another important IT tool is Building Connected, a database of subcontractors and vendors. With Building Connected, a project estimator can access information on subcontractors and vendors, including safety records, bonding capacities, insurance coverages and other pertinent data. This allows the estimator to quickly qualify, vet

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RESEARCH S.C.

in 3D, and see where everything is and what it looks like.”

Material innovations One building method Mashburn is using more than in the past is tilt-up construction. This is simply building concrete structural panels on site and “tilting” them into position rather than ordering prefabricated panels from an offsite vendor, which not only requires more time but added transport expense. In fact, Mashburn is currently building the new, five-story Grand Strand Medical Office Building in Myrtle Beach as a tilt-up project, currently the first of its kind in the state. “Again, it’s about efficiency,” he said. “If you have to wait for pre-ordered materials, then they come in and they are flawed or wrong, then that’s more time, and ultimately, money, lost,” he said.

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Flying high

Another technology that has taken off — quite literally — is drone technology. “Drone technology has been huge for us,” Koonce said. “One big thing it does is give us a completely new perspective of a building. It really helps the project managers see what’s going on and it gives us a different standpoint, not only of how people can view a project, but see the size of the entire site.” The technology is not that new, many people have been flying drones for nearly a decade, but as drone and accompanying equipment technology has improved, use in areas such as construction has increased. “The technology has really caught up in the last couple of years,” Brady Reisch, owner of Las Vegas-based company Prone To Drone, said. “It has exploded in much the same way cell phone technology did just a few years ago.” Reisch said dramatic improvements in both drone and equipment technology has led to recent commercial opportunities for drone operators. In fact, the technology is so new that there are no truly recognized “experts” in the field yet, However, thanks to partnering with Sundance Media Group for training, and Westwind Unmanned for equipment, Reisch’s growth was rapid, he said. “It’s a good time to get into it, because it

A prototype Smart Helmet, complete wth camera, flashlight, GPS and communications features, weighs about 8 ounces more than a standard OSHA-approved construction helmet. (Photo/Jim Tatum)

is not terribly expensive to get started,” he said. “But, if you’re not flying every week, you’re falling behind.” Likewise, with the sheer versatility of drones, Reisch said he believes that construction businesses that are not using drone technology are already behind the curve. “We work with contractors on various projects,” Reisch said. “Mostly, they’re looking for progression — we send photos and video to the architect, to the builder, even to the investors, so they can review it in real time and see what has changed. It helps keep people accountable — we can help ensure things are in the right place.” Scott Young, vice president of product management for SYNNEX, leads that company’s strategic procurement group, which works to prepare emerging manufacturers, such as young drone companies, to successfully launch and grow within the IT industry. Young noted that SYNNEX’s interest in new manufacturers and cuttingedge businesses is another example of the company’s ability to identify and follow up on emerging industry trends. In fact, it was largely due to his attending a SYNNEX conference in 2017 that Reisch partnered with Sundance Media Group and Westwind Unmanned. “There’s growing opportunity for drone applications in the commercial sector today — especially within construction, agriculture, utilities and government,” Young said. “By developing a drone strategy, businesses are able to implement new ways to monitor projects, thereby saving money and increasing efficiencies, both in the short-term and over time.”

In fact, SYNNEX recently worked on a high-end, custom home build in Las Vegas. Partnering with reseller Westwind Computer, SYNNEX helped monitor this project, allowing their team to overlay the plans to the footage of what was being built. “This kind of proactive monitoring prevents issues versus having to go back and fix things later,” Young said. “In turn, it ensures projects move along and are completed on time. It also ensures contractors and subcontractors are doing what they are supposed to do. Plus, the general contractor has a record of everything.”

Putting a hard hat on the future What if you knew where your entire labor force was at any given moment? What if they could provide deep-dive, detailed, real-time information, instantly, whenever you needed it? If all goes as planned on an invention Greenville area software developer/entrepreneur Chase Michaels is developing, that could very well be the next revolutionary development in the construction industry. Michaels calls his new idea the “Smart Helmet.” This is essentially a standard construction safety helmet — with several important bells and whistles added. First, it is a remotely operated integrated control platform. It can send such information as photos and videos from the construction site, in real time, to a remote location. It tracks the individual user’s location. It is equipped with two-way communication, two mics and two speakers, so that the user can clearly hear and be heard. It has a headlamp, like that found on a miner’s helmet, so that the wearer can see in poor visibility — and transmit clearer images and video in poor visibility. Most of these tools are operated remotely by project management staff. Not only can each worker transmit important information from wherever they are, but the helmets can easily be used to track and organize large groups of workers onsite. For example, a project as large and as complex as building a hangar at the North Charleston Boeing plant may easily require staging hundreds, if not thousands, of workers over many acres. Some will

able to warn them away, having the ability to locate someone who may have had an accident and is in a remote or difficult-toaccess area, is extremely beneficial at all levels. One company very interested in the Smart Helmet’s potential is BE&K Building Group. If the helmet does come into production, BE&K is very interested in seeing just how it might work. In fact, it may be more useful, at least in the beginning, to issue Smart Helmets to management/supervisory staff so that they are able to monitor a project and relay information to project managers. One major problem in the construction industry — indeed, many industries — is the amount of productivity lost due to unauthorized cell phone use, BE&K’s Health, Safety and Environmental Program Director Mark Manos said. “People that are between 25 and 38 years old spend an average of 5 hours a day on the cell phone — and a lot of that time is during work.” Manos said. “With the helmet, there would be no need for anyone to have a cellphone on the jobsite.” The current argument seems to be that employees need their cell phones on the job

site so that they can deal with such issues as family emergencies. However, because of the communications capability of the Smart Helmet, there is no need for a cell phone; if a situation arises that requires an employee’s attention while he or she is on the job, management can contact the employee via the helmet to let them know they have a situation they need to take care of and they can temporarily leave the work site to make a call, if necessary. “I’d like to see it in action — I think there are a lot of positive aspects,” Manos said. “I am especially interested in the safety aspects. I love that it has an emergency button on it. When safety issues and concerns occur on job sites, you might not know exactly where they are. This is capable of pinpointing exactly where someone is.” Both Michaels and Manos said they have not seen, nor even heard of any similar product available right now. “I’ve never seen anything like this helmet in this country,” Manos said. “I think it has a lot of potential — I certainly want to be the first to give it a trial run.” Michaels said a prototype should be ready to roll out shortly.

RESEARCH S.C.

be experienced, many will not; there will always be some confusion as to where people are supposed to be. But with the helmet, a management team can see where each individual is. Currently, the helmet, with all the extra equipment, weighs about eight ounces more than a standard OSHA required construction helmet, Michaels said. “The whole idea came about as the result of a conversation with a friend of mine, who is in the construction industry,” Michaels said. “He told me they estimate that about 17 percent of their overall project costs are due to lost time, often because of issues as basic as not knowing who is onsite and where they are supposed to be.” If project managers could instantly identify and locate individuals on a massive site, then they could easily cut those losses. “Seventeen percent may not sound like much in the abstract, but when you’re talking about hundreds of millions of dollars, that adds up quickly,” Michaels said. Just as important is the potential for significantly improving safety, Michaels said. Being able to see immediately whether someone is potentially in danger and being

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county spotlight

BEAUFORT

An aerial view of the city of Beaufort’s downtown area. Southern Living magazine named Beaufort the South’s Best Small Town in 2017.

NATURAL BEAUTY AND NATIONAL DEFENSE Beaufort County seeks to build on solid foundation of coastal quality of life, large military presence By Jim Tatum, Associate Editor | Photos provided by Beaufort County Economic Development Corp.

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eaufort County continues to grow. With its storied, fascinating history, haunting beauty, friendly, welcoming people and virtually unmatched quality of life, it’s pretty much a given that so many continue to find Beaufort County such a desirable place to visit and call home. But there’s more to it than great beach weather and virtually limitless recreational opportunities. To be sure, such things are important selling points. But it takes a well-coordinated balancing act to achieve, maintain and increase the prosperity Beaufort County continues to enjoy.

Special Advertising Section

Beaufort Coun by the numbersty

Population............

................ 186,844

Average Per Capita Income.................. ....

........... $34,966

Median Age.............. Source: U.S. Cens

................... 43.6

us Bureau

COUNTY SPOTLIGHT: BEAUFORT

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COUNTY SPOTLIGHT: BEAUFORT Beaufort County is home to Hilton Head Island, which was named the No. 1 Island in the U.S. by Travel & Leisure magazine in 2018.

Beaufort County, and the municipalities within the county, continue the work of recruiting business and industry in order to bring greater diversity to an economic base that for many years was largely underpinned by the hospitality and retirement industries and a large military presence. Those efforts have focused on augmentation rather than replacement. “Our base has, for some time, been

something of a three-legged stool,” Beaufort County Council Chair Stu Rodman noted. “We never had too much beyond that, so recently, we have started to gear up for traditional economic development efforts.” One important step was the creation in 2017 of the Beaufort County Economic Development Corporation (BCEDC), Rodman said. The BCEDC is charged with diversifying the county’s economy and ultimately im-

proving the lives of the citizens by attracting good-paying jobs and encouraging growth that is respectful of the environment. The county also joined the Southern Carolina Regional Development Alliance, which promotes economic development in Allendale, Bamberg, Barnwell, Beaufort, Colleton, Hampton and Jasper counties. Located between the ports of Charleston and Savannah, Ga., Beaufort County is

Leading local employers Rank Company: Number of Employees 1.

Department of Defense: 19,200+

2. Hospitality Industry: 17,200+ 3. CareCore National LLC: 400+

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4. Lockheed Martin: 200+

5. BFG Marketing LLC: 100+ 6. Geismar North America: 45+ Geismar-Modern Track Machinery manufactures and distributes railway maintenance equipment. Geismar offers a comprehensive range of tools for track works, including hand-held machinery and heavy equipment. Geismar moved to Beaufort County in 2017.

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COUNTY SPOTLIGHT: BEAUFORT

well-situated for many who seek that proximity to major ports, Rodman said. He also notes the county is very attractive to those who simply do not wish to deal with the high taxes and costs of doing business in other parts of the country, such as New York or California. “The county is aggressive in incentivizing companies through cash grants tied to capital investment/job creation and reduced land costs,” Beaufort County Economic Development Director John O’Toole said. Indeed, Beaufort County has seen success in recruiting smaller and mid-sized companies in varying sectors. New announcements for 2018-19 included: • Blue Sky Processing, $3.1 million investment, 16 jobs • Dust Solutions, $1.75 million investment, 12 jobs • Burnt Church Distilleries, $7.7 million investment, 35 jobs • Watterson Brands Headquarters, $1.5 million investment, 19 jobs • Alpha Genesis Inc., $3.35 million investment, 32 jobs

Above, employees on the job at Harris Pillow Supply, a pillow manufacturer located in northern Beaufort County. Harris Pillow Supply has been in Beaufort County since 1980 and announced a $2.1 million expansion in 2016.

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COUNTY SPOTLIGHT: BEAUFORT Marines stand in formation during VMFA-115’s change of command ceremony at Marine Corps Air Station Beaufort, Jan. 11, 2019. During the ceremony Lt. Col. Jonathan Curtis relinquished command of the squadron to Lt. Col. Edmund Hipp. (Photo/Cpl. Terry Haynes III, Marine Corps Air Station)

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But the cost of doing business entails more than taxes and utilities. Work force availability is important. Fortunately, Beaufort County seems to be uniquely situated when it comes to that, O’Toole said. With three important military installations, Marine Corps Air Station — Beaufort, Marine Recruit Depot – Parris Island and Beaufort Naval Hospital, a significant sector of the industrial base is defense-related. More than 19,000 work under the auspices of the U.S. Department of Defense. Lockheed-Martin is currently the largest private employer

in that sector, with some 200 employees. And with more than 1,000 highly trained and experienced personnel exiting the military each year in that area, the area has a strong skilled labor force. In fact, Lockheed-Martin completed some 75 new hires this past year. In one setting, they interviewed 30 individuals and hired 28 of them. “That’s just a microcosm of the work force available here,” O’Toole said. Also taking lead roles in workforce development are the University of South Carolina-Beaufort and the Technical College of

Hilton Head Island Distillery is a spirits manufacturer that uses a combination of age-old distillation techniques and modern technology to make rum and vodka. About 15,000 visitors tour the facility annually.

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the Lowcountry. With a student population of more than 2,000 and an annual graduating class of more than 300, USC-Beaufort offers four-year degrees in a variety of fields. With an enrollment of more than 2,200 students, TCL offers programs in areas such as Avionics, Agri-science, Basic Industrial Systems Technology and more. TCL graduates more than 350 yearly. Besides a robust military presence, Beaufort County also has long maintained a thriving hospitality industry, with more than 17,000 employed in this sector and opportunities growing. Other leading employers include CareCore National LLC, Lockheed Martin, BFG Marketing LLC and Geismar North America. Beaufort County is also constantly working with available infrastructure, from utilities to commercial space. It is home to several business/industrial parks, including Beaufort Commerce Park, a 209-acre industrial park located within the city of Beaufort; Buckwalter Place Commerce Park, a 4.72-acre business park owned by the city of Bluffton; the Port of Port Royal, which consists of more than 275 acres located on the deepest natural channel on the eastern seaboard; and Myrtle Business Park, a 7.7-acre county-owned business park. Samet Corp. is constructing a 50,000-square-foot

COUNTY SPOTLIGHT: BEAUFORT

The University of South Carolina – Beaufort has campuses in Beaufort, Bluffton and Hilton Head Island. The university has an enrollment of over 2,100 students and offers programs to train future workers to meet regional workforce demands.

spec building in Beaufort Commerce Park. And yet, underpinning it all is that nearly unbeatable quality of life, say officials and business owners alike. “Beaufort County and South Carolina have a plethora of resources for emerging businesses,” noted Jennifer Pfuhl, CEO/ owner of Maptech Packaging and Blue-Sky Processing. “However, far more important to us are the quality of life issues. My team and my family love the Lowcountry. The wildlife here is spectacular. The opportunities for boating, fishing, bird watching, camping and beach combing are unparalleled. The weather is unbeatable. We love the people we have met here. The more

we engage in what Beaufort County has to offer, the more ‘hooked’ we become. This is truly our home — and we are thrilled to stay close to it.” Geismar North America, which manufactures rail maintenance equipment, is a recent arrival to Beaufort County. According to Geismar president Al Reynolds, the move has been a very positive one for his company. “In 2017 we made the decision to locate our North American operations to Beaufort County — and we couldn’t be happier,” he said. “The welcoming climate, workforce availability, quality of life — Beaufort County has it all.”

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The Henry C. Chambers Waterfront Park promenade provides a nice view of the Beaufort River and the Woods Memorial Bridge, one of a handful of swing bridges still in operation in South Carolina.

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FEATURE STORY

HOOPLA

SURROUNDS RETURN OF NCAA TOURNAMENT TO S.C. By Melinda Waldrop, Editor, Columbia Regional Business Report

Longtime University of South Carolina sport and entertainment management professor Tom Regan has studied countless sporting events, but he’s never analyzed the economic impact of one quite like this. Columbia was a regional host for the NCAA men’s basketball tournament in March for the first time since 1970, and while Regan expected full hotels and a bustling social scene surrounding the games at Colonial Life Arena, more specific

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predictions were a bit hard to make.

Columbia’s Colonial Life Arena was the site of first- and second-round games of the NCAA men’s basketball tournament March 22-24. The event was the first of its kind held in Columbia since 1970. The NCAA didn’t allow predetermined championship events to be held in South Carolina while the Confederate flag flew above the Statehouse. (Photos/Melinda Waldrop)

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Colonial Life Arena in Columbia fills up prior to a game in the NCAA men’s basketball tournament in March. Fans were treated to several close games, two No. 1 seeds in Duke and Virginia, and the appearance of Blue Devils superstar Zion Williamson. (Photos/Melinda Waldrop)

“We haven’t had that conversation for 49 years,” Regan said. Columbia, like all S.C. cities, was ineligible for such a discussion for nearly 15 years. Beginning in 2001, the NCAA refused to allow predetermined championship events to be held in the state while the Confederate flag flew above the Statehouse. With the passage of legislation in July 2015 that led to the flag’s removal, the boycott ended, and two years later, Columbia was awarded a 2019 men’s basketball regional. Greenville played host to regional competition in 2017, the same year that the Gamecock women’s basketball team served as a regional host on its way to a national championship. From March 22-24, hoops fans in the Midlands and beyond watched a pair of No. 1 seeds take the court in the first and second rounds of the annual sporting frenzy known as March Madness. Eventual national champion Virginia beat Gardner-Webb and

Oklahoma on its way to the title, while top national seed Duke and freshman sensation Zion Williamson provided plenty of excitement in winning two games, including a nail-biter against UCF, coached by former Duke star Johnny Dawkins. After the Blue Devils’ 77-76 escape, Duke coach Mike Krzyzewski thanked Columbia for his team’s regional experience, saying, “What a beautiful city, everything about it.” Regan was on site at the Columbia regional, distributing surveys to fans as they tailgated or enjoyed a halftime hotdog. He hoped to survey at least 1,000 people about where they stayed, what they ate, what they bought and what they thought of Columbia. Regan was still imputing the data he collected in early May, but he said plenty of out-of-town folks flocked to Columbia. “The hotels were full, and the spending was a lot,” he said. Early estimates projected 25,000 fans and an economic impact of up to $9 million.

“I think the spending is going to be like an SEC football weekend,” Regan said. “The hotels during football games are full. When you think about it, football’s going to bring in 80,000 people, but let’s just say 20,000 are visitors. That’s about the same size as you’re going to get here. … You’re also going to have a lot of people that come to town to be around the event that will be in the bars and other areas to view the game, but they won’t have tickets to the game.” Chris Stone, president of VisitGreenvilleSC, told The Greenville News that the 2017 men’s regional generated an estimated $3.6 million impact for that Upstate city, with more than 14,000 visitors with tickets flocking to town. Much of the excitement in Columbia centered around Williamson, widely projected as the top pick in June’s NBA Draft after a head-turning freshman year at Duke. Thousands of fans turned out to see Williamson, the nation’s most-buzzed about

FEATURE STORY

About 5,000 fans turned out for Duke practice sessions at Colonial Life Arena to catch a glimpse of the Blue Devils’ highly touted freshman Zion Williamson (under basket in top photo and dunking at right).

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recruit last year out of Spartanburg Day School, during an open practice on March 21 and cheered his every move, including an impressive one-handed dunk. “He’s one of the best players in college basketball, and being from Spartanburg, I think there’s going to be significant interest in how he’s doing,” Regan said before the regional began. “That tie right there alone is going to be very beneficial, because I think basketball fans who understand the game are definitely going to come and watch him play.” Tickets to the first day of games went for $20-$30 on StubHub, while seeing Williamson in prime time cost at least $90. While attendance at events such as the NCAA tournament is generally driven by support for specific teams, “in this case — probably a rare case in college basketball — it’s individual player-specific with Zion Williamson,” said Stephen Shapiro, a USC sport and entertainment professor who has researched ticket sales and the secondary market, which includes services such as StubHub and SeatGeek. “Duke and Zion Williamson being here has really inflated the prices. “I would think it’s a combination of Duke being here, which I think the prices would be high wherever it is, and the fact that we haven’t hosted a tournament here in so long. I think there’s a lot of appetite for going, versus if it’s in Charlotte and it’s there every other year.” Regan hopes the economic impact generated will bolster Columbia’s chances of playing host to another NCAA regional, which it can do in 2023. And he said the city’s turn in the spotlight could have longer-term ramifications. “Many (visiting fans) are season ticket holders, and these season ticket holders are the businesspeople, usually, in those communities,” Regan said. “Within the region, I would say from Virginia and North Carolina, when they see Columbia and if they have a great perception, and they see that this is a city that’s doing a lot of things right, that they might have business-to-business relationships where they might bring their companies into Columbia in order to do some business.”

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MULTIFAMILY CONSTRUCTION BOOM Experts say surge in apartment projects a result of demand, but will likely slow

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By Patrick Hoff, Staff Writer

WestEdge is a multibuilding, mixeduse project being built near the Ashley River in downtown Charleston. It will eventually include space for retail, office and medical use, as well as apartments. (Photo/Ryan Wilcox)

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The Residences at Camperdown is a major project in development in downtown Greenville. Demand for multifamily living has surged in Greenville, as well as other areas of South Carolina, as a result of population growth and demographic change. The Residences at Camperdown is an 11-story, 305,120-squarefoot tower with one-, two- and three-bedroom apartment homes. (Rendering/Provided)

“We’re seeing a lot of attraction for a lot of the … warmer states,” she said. “So, for example, Las Vegas is actually not building enough for their demand, we’re finding, but people are very attracted to places in Florida and South Carolina, Texas. And so while it looks like the supply might be exceeding demand, that may not actually be the case.”

kets have a little bit of that going on right now. That’s a sign that the market is having trouble absorbing the new supply.” The vacancy rate is highest in Charleston, at 10.6%, followed by 8.2% in Columbia and 6.1% in the Greenville-Spartanburg metro area. A healthy vacancy rate would be between 5% and 8%, according to Andrea Pevey, market analyst for Real Data.

Meeting a need According to We Are Apartments, an initiative by the National Apartment Association and the National Multifamily Housing Council, South Carolina needs almost 63,500 new apartments by 2030, which amounts to about 4,500 per year. The state currently has about 384,500 apartment residents living in 223,300 units. South Carolina’s total housing stock is just over 2 million. Schwarz said the multifamily market is mostly balanced, with new units absorbed quickly when they come online, though it’s not perfect. “There’s some short-term indigestion right now as these new units are being delivered … and so when there’s indigestion on new supply, our residents get, at times, free rent, for two weeks to six weeks,” Schwarz said. “And certainly all these mar-

Leveling off Schwarz said the multifamily market’s continued prosperity is dependent on the economy. “If the economy continues to grow like it has, I think, it’s good. The apartment market is going to be in balance,” he said. “Neither a renters’ market or an owners’ market, it’s just going to be in balance and, you know, grow along the lines of inflation. But if the economy were to slow down, it would quickly become a renters’ market.” Schwarz added, though, that he expects to see a slowdown in multifamily construction in the next few years. “I think the economics of apartments are going to make it very difficult over the next several years to continue building at the pace we’ve been building,” he said. “You’re going to see a slowdown in the amount of

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t’s hard to drive through South Carolina’s metro areas without seeing a new apartment building under construction, but experts say the state may not be building enough despite outward appearances that suggest otherwise. Mike Schwarz, a partner at Charleston and Greenville multifamily development company Woodfield Development, said business has been good since the end of the Great Recession. “We’re in downtown Greenville … and all over Charleston, and they’re both very dynamic Southern cities that are attracting new residents every day,” he said. In Charleston, 5,343 units are currently under construction with 4,544 units proposed, according to multifamily research firm Real Data; in Columbia, 783 units are under construction with 2,218 proposed; and in the Greenville-Spartanburg metro area, 2,158 units are under construction and 3,718 are proposed. Developers are building so much, Schwarz said, because the demand for apartments is there. “The two biggest cohorts of age … are millennials and baby boomers,” he said. “And retiring baby boomers and millennials both — baby boomers are downsizing, renting apartments, and millennials, you know, are getting their first jobs and moving … and rentals are where they want to live because of the amenities we’re building for them and the convenience of living in an apartment versus buying a home.” Millennials, those born between 19811996, are changing what was the normal evolution of homeownership, said Caitlin Walter, vice president of research for the National Multifamily Housing Council. “Traditionally, you graduated from college, you moved out, you know, you rented for a couple years, you got married, you bought a house, you had kids,” she said. “And that kind of seems to have been changing. People are getting married later in life, people are choosing to stay in apartment living longer because they like the flexibility that renting gives them.’ Walter said demand is also high because the millennial generation is the largest since the baby boomer generation and because of the Palmetto State’s climate.

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Pricing concerns

A rendering shows the completed Cotton Mill Apartments in Simpsonville, a Greenville suburb, scheduled to open soon. New complexes include many amenities, such as saltwater pools, recreation areas and even dog-washing facilities, to attract new residents. (Rendering/Provided)

new apartments being built.” The main reason for the slowdown, Schwarz said, is going to be rising construction costs. “Construction costs have grown faster over the last five years than rents have grown,” he said. “And when that happens, it turns unprofitable to build new apartments.” Multifamily construction permits issued in 2018 for the Columbia metropolitan area were at their lowest since 2013 at 464. That’s down from 557 in 2017, 711 in 2016 and in 964 in 2015, according to data from the U.S. Census Bureau. “The pattern here is much like the national multifamily production level,” Robert Dietz, senior vice president and chief econo-

mist for the National Association of Home Builders, said via email. “Production is leveling off as demand moves from renting to owning, with much of that change due to millennials moving from their 20s into their 30s. I would expect apartment construction to level off near current production levels.” About 300 fewer multifamily building permits were issued in the Charleston metro area in 2018 than in 2017, though 2,336 permits issued last year is still the secondhighest total in the last five years. The Greenville metro area is also an outlier, issuing 1,468 multifamily building permits in 2018. That’s about 500 more than in 2017 and the second-highest number of permits issued in five years.

MULTIFAMILY BUILDING PERMITS BY MSA – Charleston

– Columbia

– Greenville

2,500 2,000

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1,500

1,000 500 0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: U.S. Census Bureau

Walter said one issue she sees across the country is a lack of diversity in pricing for apartments. “It’s extremely expensive to build right now,” she said. “So it’s hard to build for the lower and middle income price points. So it’s highly likely that a lot of what’s being built currently is at the higher end, just because that’s all you can afford to build.” Average rent in Charleston is $1,246 according to the most recent analysis by Real Data, a 38% increase over the last five years. Average rent in Columbia is $1,021, a 23% increase, and average rent in the Greenville-Spartanburg metro area is $991, a 32% increase. Wages in South Carolina have gone up by 12% over the last five years, according to the Bureau of Labor Statistics. “We need housing stock, housing inventory in a diverse range,” said Ian Scott, senior vice president of government relations for the Charleston Metro Chamber of Commerce. “We need supply in that range adequate to meet a growing demand.” Scott said the Charleston metro area, and the state, also need to think about where multifamily homes are being built. “We’ve got to make sure that we’re creating the most conducive environment where there’s a housing option that minimizes significantly the amount of time that people have to stay on the road,” Scott said. He added, “Over the next decade, we’ve got to have both better aligned housing that meets the needs for all of our residents and better mobility, more capacity to move people quickly, safely and efficiently.” Ultimately, though, Scott said the state’s job centers need more housing to accommodate the population influx. “What’s happening right now is the price escalation is signaling to the investors that there’s a market for multifamily, and that’s why you’re getting multifamily online,” he said. “We’d love to see the market, the regulatory environment induce more diversity in housing stocks so we can get some more of those attainable housing options coming online.” Columbia Regional Business Report editor Melinda Waldrop contributed to this story.

APARTMENT CONSTRUCTION BY METRO AREA

783

2,218

9,877 total

4,544

3,001 total

2,158

Greenville

– Proposed

Lowcountry aims high

5,876 total

3,718

With more than three times the apartment units under construction and proposed than Columbia, and almost twice that of Greenville, the Charleston market will continue to experience the largest surge in apartment growth in South Carolina.

AVERAGE RENT BY METRO AREA – Charleston

– Columbia

– Greenville

$1,300 $1,200

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5,343

Charleston Columbia

– Under Construction

$1,100 $1,000 $900 $800 $700

Early ’14

Late ’14

Early ’15

Late ’15

Early ’16

Late ’16

Early ’17

Late ’17

Early ’18

Late ’18

Source: AptIndex.com

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The Charleston Technology Center on the Charleston peninsula will eventually include space for startups and larger, established tech firms. (Rendering/Provided)

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UNDER CONSTRUCTION Upstate, Lowcountry see active office markets and new projects on horizon; Midlands office market remains sluggish By Liz Segrist, Staff Writer

ew office construction is on the rise in the Upstate and Lowcountry and more is expected this year, while the Columbia office market remains sluggish, according to several commercial real estate professionals. Population growth and strong business climates in Greenville, Columbia and Charleston continually bring more employees into these regions, driving demand for new office space, but most new product coming online this year is in the Upstate and the Lowcountry. New office buildings are popular in both urban and suburban markets in these metros, and as new projects open to tenants, rental rates rise and vacancy rates increase.

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Crews work on the foundation of the planned 17-floor Falls Tower at the Camperdown site in downtown Greenville. Falls Tower is the future home of Elliott Davis headquarters, Bank of America and Spaces, a company that offers shared work spaces. (Photo/Ross Norton)

The Lowcountry has significant office construction ongoing and more projects in the pipeline over the next two years. “The Charleston metropolitan area’s population growing; therefore, there will be more employees to fill jobs and a budding demand for additional office space,” said Crystal Baker, research coordinator for Colliers International, in a report. “Rental rates continue to rise each quarter as new office space is delivered to the market.” The Upstate market has seen a population increase and an influx of out-of-state businesses moving into the region. This growth is spurring developers to build new office buildings, particularly in downtown Greenville. “The Greenville-Spartanburg-Anderson office market is in high demand,” Baker said. “Out-of-town users are beginning to tour the office buildings and, due to the livability rating, low cost of living and overall positive economy and business climate of the region, these prospects are likely to land deals in the next few quarters.” Columbia does not have much new office product in the pipeline for 2019. Baker said that while the Columbia region’s low cost of living and strong business environment make it attractive for investment, rising construction costs and lagging rental rates “means it is not economically viable for new office development,” Baker said.

She added that the city remains “a viable city for office prospects looking to relocate.” “Even though Columbia is experiencing a lull in market activity, it is likely in the next few quarters that new prospects will show interest in the market and absorb a portion of the high quality office space currently available,” Baker said. Rising construction costs continue to be a challenge to new construction around the state as both labor and materials become more expensive. Companies that can afford it are opting to invest in new office spaces anyway in an effort to attract talent. Kendall Chorey, a researcher with CBRE, said the state’s tight labor market tends to boost the success of new office developments. “Looking for any edge possible, tenants are now leveraging the quality of their spaces to help attract and retain talent,” Chorey said in a report.

Upstate office market Rental rates are on the rise in the Upstate office market as high quality office spaces become available. Two new buildings totaling 40,567 square feet were delivered to the market in the first quarter — a 26,000-square-foot, Class A office building on Congaree Road in Greenville and a 14,000-square-foot, Class B office building on Industrial Court in

Spartanburg, Colliers said. Commercial real estate firms anticipate rental rates and vacancy rates will continue rising this year as more new office developments open to tenants. Four buildings, totaling more than 298,000 square feet, are under construction in the Greenville region. Greenville’s central business district alone has 268,000 square feet of office construction ongoing currently, including a 150,000-square-foot, Class A office building at 305 S. Main St. and an 18,333-square-foot Class A office building at 485 N. Main St. Eight more buildings are in the planning stages, and if built, would bring 382,000 additional square feet to the market, Colliers said. “As more high quality construction is delivered to the market, the rental rate should continue to climb before it levels out,” Baker said. The Greenville-Spartanburg-Anderson office market’s average rental rates increased to $20.95 per square foot this year, up from $20.19 late last year, Colliers said. Meanwhile, the market vacancy rate dropped slightly to 12.72%. “While the market has experienced an overall market asking rate increase of more than 30% in the last six years, expectations for further increases should be held in check given the quantity of space available on the market,” Chorey said. “Demand for quality space is still prevalent.”

Lowcountry office market Following years of concern that the Lowcountry office market would run out of space for tenants, new office construction is booming. The Charleston region has 14 more buildings under construction currently, which will add 782,000 square feet to the market once completed. An additional 689,000 square feet of offices are awaiting construction to begin. Two new office buildings were delivered to the Lowcountry market in the first quarter — a 100,000-square-foot office building opened in Summerville and a 17,714-square-foot office opened in Mount Pleasant. “The suburbs are in high demand. …

in the market demanding expansion space, they have a desire to downsize as officeusing jobs decrease. “ The continual rise of construction costs exacerbated the slowdown of new office construction. “The cost to construct a new office building does not provide the returns to entice investors,” Baker said. “The rental rate required of a newly constructed office building would need to be much higher than current market rental rates.” The newest building in Columbia’s central business district was completed in 2016 when asking rates were about $26 per square foot. Construction costs for tenant improvements have risen by nearly 25% since then, but asking rents have not kept pace, Chorey said. “In order for new construction to become feasible, rental rates will need to increase significantly or construction costs considerably decrease,” Chorey said. The overall market vacancy rate increased to 11.81% this year, up from 10.62% late last year, Colliers said. The availability of some higher quality office space pushed

average rental rates to $17.71 per square foot in this first quarter, up from $17.36 per square foot, in 2018. “With no new construction activity occurring, movement in rates is more associated with a tightening office market,” Chorey of CBRE said. Chorey said the challenges of bringing new product to the Columbia market remain, but she anticipates an increase in both rental rates and investment activity in the coming quarters. “Investors have cited the region’s recent growth potential and lack of new construction as for reasons why the market is attractive,” Chorey said. Baker said she also expects rental rates to increase in the coming months despite the slowdown of new projects in the pipeline. “While this may seem like Columbia is headed for an inevitable downturn, that is not the case,” Baker said. “High quality space is still in short supply and owners will continue to try to raise market rental rates. The Columbia economy is still robust, and there is a significant supply of capital investment within the region.”

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New construction deliveries each quarter are causing the weighted rental rates to rise quarter-over-quarter,” Baker said of the Lowcountry suburban market rental rates. The ongoing trend to develop higher quality office spaces, which companies have long said are needed in metro areas and particularly in downtown Charleston, drives up rental rates in city centers and suburban markets alike. The average rental rate for the Lowcountry market increased from $23.55 per square foot at the end of 2018 to $24.38 in the first quarter, Colliers said. Vacancy rates rose slightly from 13.5% to 13.7% during the same period. Rental rates for Class A spaces increased from around $25 to $28 per square feet this year. The downtown Charleston office market — which boasts Class A rental rates of $35.50 per square foot, or $35,500 for monthly rent of a 1,000-square-foot office — remains tight as tenants compete for limited space, CBRE said. Several new projects will bring muchanticipated square footage to the peninsula, such as 22 WestEdge, a 150,000-squarefoot building for medical companies, and Charleston Tech Center, a 90,000-squarefoot office building for tech companies and startups. Both office developments are slated to open in 2020. As new product is continuously brought to market, the Charleston region’s lack of available land with the necessary zoning and infrastructure for future office projects remain a concern. “In spite of these potential obstacles and a slow first quarter of 2019, demand for available office space shows no sign of slowing,” Chorey said.

Columbia office market

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Construction of new office buildings has stalled in the Columbia market. Colliers said the market’s sluggishness is partially caused by decreased activity from office users. The firm said that the market has been flat following a peak in officerelated job growth from late 2016 through spring 2017. “A decreasing number of office-using jobs diminishes the need for office space,” Baker said. “Therefore, instead of tenants

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BULL STREET BUILDING MOMENTUM By Abbie Bennett, Contributing Writer

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hree weeks after celebrating the grand opening of a sleek, new modern event space, the BullStreet District redevelopment project landed the first national retailer for the 181acre former site of the state mental hospital. Developers of the ambitious, 20-year buildout say the building momentum shows the project is on track and attractive to potential tenants. On March 26, BullStreet District master developer Hughes Development Corp. announced plans to build a 20,000-square-foot location of Washington-based outdoor outfitter REI in the district’s northwest corner at the intersection of Bull Street and Freed Street. The news came just weeks after BullStreet celebrated the opening of Central Energy, a former steam plant at 2030 Gregg

St. now transformed into a light-filled event venue that can accommodate up to 900 guests. “We have been really focused on finding retailers,” Chandler Cox, project manager at Hughes Development Corp., said in announcing the second S.C. location of REI, which opened a Greenville store in 2011. “We are so excited.” Crawford Pressley, an operating partner for Central Energy and owner of the venue’s in-house catering company, Loosh Culinaire, said the venue’s grand opening represented years of hard work and investment with the goal of keeping event business in Columbia. “There are only so many Saturdays, and we lose a lot of people to other cities because we lack the type of venue space they’re

Central Energy, which celebrated its grand opening last month, is the BullStreet District’s newest event venue, with seating for up to 900 guests. (Photo/Joshua Aaron for Central Energy)

looking for. I think this is a solution,” Pressley said. “I’m fortunate because in my line of business I get to see people at their happiest, and I think Central Energy will be the site of many happy memories to come.” Project architect Becky Brantley of Garvin Design Group said Central Energy is one of the biggest transformations she’s been part of. “This was a building never intended to see the light of day,” Brantley said, sitting in a pool of light shining through one of the building’s new windows. “When we first got here, we had to use flashlights to see from one end to another. Nobody expected something this good to come of it.” Five years into the 20-year project, BullStreet boasts it will be “the largest citycenter development east of the Mississippi”

National outdoor outfitter REI Co-op plans to build a 20,000-square-foot store in the BullStreet District at the intersection of Bull and Freed streets. (Rendering/Provided)

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Map/Provided

First Base Building, finished four full building renovations (three historic), added five new townhomes and created more than 300 jobs. The southeast corner of the district, where Central Energy is located, will ultimately become a gateway to a planned 20-acre public park, Cox said. “Hundreds of people at a time gather at Central Energy for weddings, parties and more, filling the streets with activity, which matches our new urbanist vision of density and a variety of uses for different parts of the neighborhood,” Cox said. “If you look at other major special event rental venues, they are bustling and brimming with people almost every day of the week. That is now happening at Central Energy. The developers of Central Energy did an amazing job turning an industrial structure into a

“Hundreds of people at a time gather at Central Energy for weddings, parties and more, filling the streets with activity, which matches our new urbanist vision of density and a variety of uses for different parts of the neighborhood.” Chandler Cox

project manager, Hughes Development Corp.

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on project website bullstreetsc.com., though the project has encountered some setbacks. Plans to build a 10-screen movie theater fell through in July 2016, and in 2017, Hughes Corp. shifted its strategy to focus on developing smaller, individual stages of the 400,000 square feet of available retail space. Nearly 150 acres of the former site of the S.C. state mental hospital have been transferred from the S.C. Department of Mental Health to the BullStreet District, and now that they’re private property, they are back on tax rolls, Cox said. Since the district’s first groundbreaking in January 2015, Cox said BullStreet has launched Ballpark Digest’s 2016 Ballpark of the Year in Segra Park, home of the Columbia Fireflies, opened the largest private office building in Columbia since 2009 with the

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Central Energy is a former steam plant at 2030 Gregg St. in the BullStreet District that has been redeveloped into an event space that can accommodate up to 900 guests. BullStreet master developer Hughes Development Corp. hopes people will flock to Central Energy for weddings, parties and other gatherings. (Photo/Joshua Aaron for Central Energy)

stunning event space, with soaring ceilings, massive windows and a unique aesthetic that we know will be very attractive to event clients.” With the grand opening of Central Energy in the books, the public park is slated to open this summer, and Smith Branch, a stream currently flowing in underground pipes, is being daylighted. The Central Carolina Community Foundation opened its new headquarters in the First Base Building in February, and senior living community Merrill Gardens is scheduled to open in 2020. Groundbreaking for new infrastructure to support the REI project is planned in coming weeks that will extend Boyce Street to Colonial Drive and extend Freed Street to Bull Street. As part of the BullStreet District project, four historic buildings were planned to be salvaged: Babcock men’s and women’s dining halls, the Chapel of Hope and the center portion of the Williams Building. Cox said redevelopment has also preserved the Babcock Building, the property’s

mid-19th century focal point with its spire visible from Bull Street, along with the Ensor Building, the state hospital’s former bakery, Central Energy and Parker Annex. The Ensor Building, adjacent to Segra Park, is now home to Bone-In Barbeque, the district’s first restaurant which opened in April 2018. The bakery, built at the turn of the 19th century and renovated in 2016, is home to SOCO BullStreet, a collaborative workspace for freelancers and business employees, while the Parker Annex, built in 1919 to relieve overcrowding of male black patients at the state hospital, houses Parker Annex Archaeology Center, where the Department of Natural Resources’ Heritage Trust program operates. More than $100 million in building permits have been issued for the project since the first groundbreaking in 2015, Cox said, and more than 2,000 construction jobs have been created. More than 300 full-time employees already are working in the district, with that number to increase to 500-plus with

the expansion of global insurance technology company Capgemini. Last August, the company announced an expansion of its First Base Building offices, opened in December 2017, that will create at least 200 jobs in fields including digital strategy, cloud-based technology, artificial intelligence and cybersecurity. More than $75 million has been privately committed to the BullStreet District, Cox said, along with $9 million from Disadvantaged Business Enterprises. More than $20 million of the project’s funds have gone to local contractors, she said. Disadvantaged Business Enterprises are state-certified small businesses with majority owners who are socially and economically disadvantaged. “We have a lot going on, and there’s a lot of things happening on site,” Cox said. “There’s a lot of construction going on even as we speak. All I can say is stay tuned.” Columbia Regional Business Report editor Melinda Waldrop contributed to this story.

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