The manufacturing industry - such Volvo's first U.S. car plant under construction in rural Berkeley County - is expanding the Charleston region's perceived geographic limits as the area firmly establishes itself as one of the Southeast's fastest-growing markets, according to a new report by the commercial real estate firm CBRE Inc.
Volvo, which will open its $500 million facility near Ridgeville in 2018, expects to attract suppliers and other industry to the expanding Interstate 26 corridor northwest of Charleston, while existing area employers such as Mercedes-Benz Vans, in the midst of a $500 million expansion, and Boeing are spurring new retail and residential projects farther away from the high land costs closer to the peninsula.
The manufacturing resurgence is giving the Charleston region a more diversified economic base and lessening its reliance on tourism, still a robust sector.
"In addition to a growing tourism industry, employment growth is strong in the office and industrial sectors," according to CBRE's "2017 Southeast U.S. Market Outlook," released last week. "This growth is being fueled by the market’s ability to generate new labor, either through a series of robust educational institutions or by attracting labor to the market’s high quality-of-life."
The Charleston area is projected to have the six-state region's top population growth rate through 2021, at 9.6 percent, with the mix of millennials and adults with four-year degrees the third-highest of the 16 Southeast markets that were studied. The Charleston area's median annual income of $52,719 ranks sixth among those markets, according to the report.
"The desirability of Charleston is sustaining economic growth across sectors," CBRE said. "A rapidly increasing tech scene is taking form in the upper neck of the peninsula and North Charleston. By attracting young educated workers, average salaries will continue to increase and populations will grow, helping to expand residential construction employment."
The report notes that land costs and rental rates on Charleston's peninsula "are among the highest anywhere in the Southeast," pushing rapid expansion into suburbs such as Summerville. A tight industrial vacancy rate of about 4.5 percent - fifth-lowest in the region - is driving speculative industrial development in the area.
CBRE points to the Port of Charleston as a significant driver of the region's economy. The report states an expanded Panama Canal "will continue to create new trade opportunities" while the port's expansion with a new terminal on the former Navy Base and its "efficiency and increasing capabilities" will ensure the area's growth as an East Coast powerhouse.
"Strong market fundamentals will continue to draw the attention of outside investors, introducing new ideas and capital to the Charleston market," CBRE said. "The increasing demand for all property types and already tight vacancies present stable investments and new construction opportunities for investors and developers."
Charleston is one of several high-performers in the Southeast, where the combined GDP would amount to the world's sixth-largest economy if it were a single country.
"Due to rapid growth, the Southeast U.S. is emerging as an economic powerhouse with a diversifying base," the report states.
Other South Carolina markets that were studied include Columbia, which the report says is poised to capitalize on distribution of goods shipped through Charleston and Savannah, and the Upstate, described as "the manufacturing capital of South Carolina."