As it continues to lose ground in the textiles industry — 56,000 jobs have been lost since 2001 — South Carolina has taken major steps to grow its manufacturing base in other industries Generous financial incentives and its below-average wages have led to new factories — most notably auto plants — coming into the state. As a result, despite the hit in textiles, South Carolina's economy has grown and it is drawing in a whole new wave of migration. That, in turn, is creating an attractive market for new development.
“The Carolinas are experiencing growth,” notes Robert H. Spratt, president of Charlotte-based Hill Partners, Inc., which has projects rising in both states. “You have migration of people from the Midwest and Northeast looking for a better lifestyle and more moderate climate.”
South Carolina's economy has grown at a pace of 3 percent annually. in recent years Gross output grew by 3.4 percent last year alone to a total of $136 billion. It offers any company locating a plant in state the possibility of paying a set fee in lieu of property taxes, which would amount to a fraction of property taxes levied at standard rates.
Additionally, the state offers a job creation income tax credit, ranging from $300 to $1,500 per new job per year depending upon unemployment conditions in the vicinity of the site. A Regional Industrial Area that includes Spartanburg and Union counties was created to qualify companies for the highest income tax credit.
“You have employers moving in from all over the country, as well. An interesting trend is people parking their families here, commuting to Washington, DC, or New York and keeping a primary residence in the Carolinas,” Spratt adds.
The state is also one of the beneficiaries of a new phenomenon of half-backs moving in from Florida. In the Carolinas they find a lower cost of living while finding many of the amenities they're looking for.
The Beaufort-Jasper County region, which includes popular tourist destination Hilton Head Island, is seeing exponential growth, according to Bill Bosley, senior advisor in Hilton Head for Irvine, Calif.-based Sperry Van Ness. He notes that 60,000 new homes are planned in the two-county area as it attracts commuters from Savannah, a 30-minute drive south, as well as second-homebuyers and retirees. Southern Beaufort County has a median household income of $80,000 annually.
And like its northern neighbor, South Carolina is also becoming a hot spot for retirees. A survey of 7,500 people requesting relocation information from the Carolina Center for Living (CCL), a private research and marketing firm, indicates that 37 percent of an estimated 150,000 annual South Carolina transplants are over age 50. Patrick Mason, codirector of CCL, however, predicts as Boomers reach traditional retirement age over the next few years, the percentage of older adults migrating to the state will escalate. A 2005 Census prediction estimates the state's 65-plus population will grow by 134 percent between 2000 and 2030, from 4 million to 5.1 million.
The 2006 survey suggests more Florida retirees may be heading for the Carolinas, as the highest number of CCL requests for relocation information came from Florida, whereas in the previous year the most requests came from New York.
Based on the CCL survey, newcomers, overall, are affluent and well educated. A 2006 CCL study for a developer in the Myrtle Beach market, for example, indicates that families moving to the Grand Strand region, which stretches from Georgetown, S.C., to Calabash, N.C., have an average household income of $113,000 and 77 percent are college educated. Forty-three percent of newcomers surveyed are over age 50 and have annual household incomes of $145,000.
Although Hilton Head Island's permanent year-round population is only about 35,000, its consumer base is much broader. The city welcomes 2.3 million visitors annually, which brings an average 50,000 consumers per day to market. Additionally, a new four-year campus of the University of South Carolina and Country Technical College opened over the last two years, adding a student population to the mix, Bosley points out.
Noting that many national-brand retailers are entering second- and third-tier markets for the first time, Spratt contends that consumer buying power is fast becoming the primary consideration for specialty retailers, rather than market size. For example, Myrtle Beach, which has a year-round population of only 90,000 and regional population of 350,000, rivals Disney World for tourist traffic, welcoming 14 million visitors annually.
“I think 9/11 affected the Carolinas in a positive way,” Bosley says. “A lot of people are moving out of populated areas, and what has happened is retail sales are strong and there are good opportunities for retail growth in less densely populated markets that have strong growth trends.”
Due to strong sales at the 300,000-square-foot Barefoot Landing in North Myrtle Beach, which has a population of 15,000, Hill Partners has been able to bring in a number of tenants new to South Carolina, including House of Blues, Australian Grill, and Ron Jon Surf Shop. Spratt notes that this lifestyle center, which is on the waterfront, gets significant tourist traffic and is located adjacent to an affluent resort-style, master-planned development.
New mixed-use projects under way in Myrtle Beach include Withers Preserve by New York-based RWO Acquisitions, which is located on a 3,970-acre Air Force base that has been returned to civilian use. The 560-acre project, which includes 2,000 residential units and a mix of offices, hotels and retail space, as well as lakes, lush green spaces and recreational facilities, is adjacent to Market Common, a 100-acre pedestrian-friendly urban development by local developer McCaffery Interests, with a mix of residential, retail and office uses.
Hill Partners, in a joint venture with Kahn Development Company, recently opened Phase I of a 400,000-square-foot lifestyle center in Columbia, S.C., the capital and largest city in the state with a population about 123,000 and nearly 700,000 in the metropolitan area. The Village at Sandhill is the lifestyle component of a 1.2-million-square-foot, master-planned development in Northeast Columbia.
While the primary engine driving the Columbia economy is government and related services, Tom Demont, senior advisor for Sperry Van Ness, notes that the region has enjoyed a fairly large increase in businesses relocating there, particularly light manufacturing and distribution facilities.
The Columbia employment base now has 70 foreign-affiliated companies and 14 Fortune 500 companies, including the headquarters of SCANA Corporation, a local energy company, as well as manufacturers, such as Square D, SMI Steel, International Paper, Honeywell, Westinghouse Electric, Intertape Polymer Group and Bose Corp.
The region's economy is also about to get a shot in the arm with the establishment of the University of South Carolina's new 200-acre Innovista research campus in the historic downtown Congaree Vista district which will focus on emerging technologies' and intellectural clusters — biomedical, environmental, nanotechnology, and future fuels.
While the overall economic impact of the campus has not yet been quantified, the seven buildings in Phase I of the project, which includes 5 million square feet of laboratory, office, retail and residential uses, has a construction value of $141 million and an estimated economic impact of $337 million a year, according to Harris Pastides, USC vice president for Research and Health Sciences. Completion of Phase I is slated for mid-2007.
The city's downtown redevelopment program has already converted many historic buildings in the 1,200-acre Congaree Vista district, which runs from the central business district to the Congaree River, to new uses and was recognized with an award from the International Downtown Association.
The Canal District of the Vista, located along the remaining portion of the Columbia Canal at the confluence of the Broad and Saluda Rivers and beginning of the Congaree River, is currently one of the hottest redevelopment areas in the city center. The former site of a large textile mill and S.C. Electric and Gas Company facility is now home to state and children's museums.
The last large downtown tract, the 178-acre site of the former state mental hospital, will also be converted to a high-density urban development with a 1,200 residential units and over 800,000 square feet of office and retail space.
The Greenville area, however, has been the most successful in attracting major manufacturing facilities, including BMW and Michelin Tire plants, which chose the Greenville region in 1992 thanks to generous financial incentives provided by the state, says Demont. He says the expansion of the economy is propelling new residential projects and many national retailers are entering the region's markets for the first time.
Incentives played a big role. BMW will save $70.7 million over 20 years through various tax breaks. The state upped the ante to seal the deal, offering $40 million more than Nebraska — the closest contender.
While Greenville's population is only about 56,000, the metropolitan area, which includes Spartanburg and Anderson, has a population of nearly one million.
The region is home to seven colleges and universities and Greenville Hospital System University Medical Center, an academic medical center and one of the largest employers in the region. A consortium of leading businesses and Clemson University also recently formed the International Center for Automotive Research (ICAR).
At the forefront of redevelopment initiatives, Greenville in the 1980s began laying the foundation for its downtown vision, developing a master-plan and facilitating investment through public-private partnerships, resulting in a convention hotel on Main Street.
Recently a group of private developers formed a public-partnership with the city to redevelop the Reedy Riverbank with a $65-million mixed-use project. RiverPlace will include a 100-room hotel, about 50 residential units, 87,000 square feet of office space and shops.
Space underneath the hotel and residential components will provide riverfront studio space for artists.
The city's involvement will include construction and ongoing operation of a 550-space parking facility, streetscape improvements and help with construction of a proposed boardwalk.
Population: City, 123,000; Metro 690,000
Median Household Income: $31,144
Total retail square footage: 10,405,119 sq. ft.
Average rent: $13.70
Population Year-round: 33,800
Median Household Income: $60,438
Median Household Income: $33,144
Population City: 118,300
Median Household Income: $35,295
Popluation Year round: 23,000
Tourist season: 1.1 million
Median Household Income: $35,498
Source: CB Richard Ellis Inc.