Credit the port. Give a shout-out to Boeing. Congratulate the backers of speculative buildings and industrial parks.
Whatever the case, the Lowcountry's industrial business has outpaced the nation as of late and has helped drive the state's manufacturing efforts.
Those are observations from two large commercial brokerages: NAI Avant and Avison Young.
The companies each unveiled reports in April detailing the region's economic outlook, most specifically related to jobs and manufacturing investment.
"Locally, the Charleston industrial market continued to improve with a solid mix of leasing and sales activity," says Derek Mathis, broker with the Charleston office of NAI Avant.
By comparison, U.S. economic growth suffered, as the Gross Domestic Product projects to increase a "meager" 0.5 percent in the first quarter.
"Weather had a real impact on first quarter national growth numbers as it cut into sales of big ticket items such as new and existing homes and automobiles. Nevertheless, the first quarter ended on a strong note with an uptick in job growth and consumer consumption," Mathis says.
South Carolina's economic momentum, meanwhile, gained steam as BMW in March revealed it would invest $1 billion by 2016 while launching production of the new X7 sport activity vehicle at its Greer auto plant.
The expansion will lead to 800 new jobs and boost capacity to 450,000 vehicles, the most of any BMW plant worldwide.
All the while, the Charleston area industrial posture has steadied.
The region ended the first quarter with a 2 percent vacancy rate in top-notch industrial space and 7.8 percent overall. Average lease rates "held fairly steady" at $4.75 per square foot and $5.25 a square foot for the highest quality space, Mathis says.
According to Avison Young, "Class A space continues to command a premium, while older spaces are leasing for much less."
The brokerages agree the Charleston port plays a pivotal role in manufacturing growth.
President Obama included more than $15 million in funding, notably the "Post-45" fee harbor deepening project, in the fiscal year 2015 budget, Mathis says.
Since 2010, the SC State Ports Authority has captured nearly half of all container volume growth in the South Atlantic market, Avison Young notes. Container traffic was up 7 percent year over year in January, and intermodal rail lifts were up 18 percent in January.
"Through investment in infrastructure and the Post-45 harbor deepening project, Charleston is well positioned to be a primary port of call for the large Post-Panamax ships," Mathis says.
He offers bullish comments on aerospace businesses, which "continue to move operations to the Southeast in order to take advantage of the region's lower cost of doing business, competitive state incentive packages and right-to-work laws."
Boeing had "all hands on deck" throughout the first quarter, Mathis says. The aerospace giant delivered 18 Dreamliners from its North Charleston plant during the quarter. "By mid-2014, Boeing SC should produce three 787s for every 10 planes built per month," he says.
Mathis, of NAI Avant, believes the Charleston area's commercial activity should benefit from the healthy manufacturing outlook.
"Industrial land prices along with prices of existing facilities will continue to increase," he says. The broker also expects construction of a 150,000 square foot speculative building in Palmetto Commerce Park. "An anchor tenant will not be required to kick off" the project, likely in the third quarter. Lease rates should be in the $5 per square foot range.
Further, "We will likely see a new (roughly) 100-acre industrial park open across from Bosch," he says, and increased activity in the Winding Wood Industrial Park in St. George.
"Speculative development is coming out of the ground at Northpointe, as MeadWestvaco moves forward with a 350,000 square feet" distribution facility, according to Avison Young. "While some of the defense contractors have shrunk their footprints, additional (research and development and information technology) firms have come to the area to serve the growing IT, auto-related, and aerospace clusters," Avison Young says.
Mathis foresees "big box" distribution tenants and developers choosing the Upstate inland port terminal over the Jedburg area because per acre land prices are much less.
Charleston area expansions in the second quarter could include "local companies in the boating and call center industries," he says.
"From Summerville to North Charleston," Avison Young notes, "multiple industrial tracts are under contract for build-to-suit and speculative development."
In Mathis' opinion, the national economic forecast will be fraught with uncertainty. "Charleston however, should remain somewhat insulated from the national trends and see continued prosperity though 2014."
Reach Jim Parker at 937-5542 or firstname.lastname@example.org.
(Charleston metro area)
1Q 2014 - 54.6 million sq. ft.
1Q 2013 - 44.8 million sq. ft.
1Q 2014 - 7 percent.
1Q 2013 - 8.9 percent.
1Q 2014 - $4.45/sq. ft.
1Q 2013 -- $4.08/sq. ft.
Source: Avison Young