Exclusive: Trucking Trends Could Heat up Already Strong S.C. Industrial Market

Richard Breen

Thursday, November 1st, 2018

Rule changes in the trucking industry could work to the benefit of South Carolina’s warehouse market, according to a local real estate brokerage.

“As trucking regulations are switched from Automatic On-Board Recording Devices to Electronic Logging Devices, secondary markets will become more attractive than primary markets for new manufacturing and distribution centers,” Colliers International wrote in its third quarter industrial report.

Charleston and Greenville-Spartanburg are both considered to be secondary markets. Colliers cites both markets’ proximity to the Port of Charleston, its linkage to inland ports in Greer and Dillion, and interstate highway connectivity as advantages.

Similar to airline pilots, truck drivers have federally mandated safety limits on their work hours. Truckers are held to a 14-hour workday, 11 hours of which can be spent “on duty” (driving, loading/unloading, etc.).

“They used to record those hours on a paper log,” said Rick Todd, president and chief executive of the S.C. Trucking Association. “There was always a little bit of wiggle room there.”

The AOBRD method electronically records information such as time and mileage, but can be edited. ELD automates the entire process.

“It’s hard-wired to the engine,” Todd explained. “You really can’t cheat.”

While ELD is intended to protect the motoring public – including truckers – from fatigue-related issues, it also creates scenarios where a driver can hit their limit while still a couple of miles from their destination.

“If you’ve been gone three days and you’re only 30 minutes from home, what are you going to do?” Todd asked.

It could cause adjustments on multiple fronts.

“There might have been some trucking runs that could have been squeezed into two days that now will take three days,” Todd said.

There’s also the issue of congestion in major cities and whether businesses can allow truckloads of merchandise to sit in Interstate 285 traffic trying to get to an Atlanta-area warehouse when drivers’ automated timeclocks are ticking down to zero.

“It provides a lot of opportunities for communities that don’t have those freight bottlenecks,” Todd said.

If it comes to fruition, it will add fuel to an already hot market.

“Demand for warehouses and distribution centers remains driven by the growth of e-commerce and the general strength of the U.S. economy,” CBRE Group Inc. recently reported. “Preliminary data show that net absorption across the 55 markets tracked by CBRE amounted to 63 million square feet in the quarter, outpacing construction completions of nearly 50 million square feet.”

Net absorption (new leases minus vacated properties) in the Greenville-Spartanburg-Anderson area was 2.6 million square feet during the third quarter, according to Colliers.

“We’re having absorption on par with markets twice our size,” said Garrett Scott, a vice president in Colliers’ Spartanburg office and part of its industrial brokerage team. Colliers also has offices in Charleston, Columbia and Greenville. “The state is firing on all its economic development cylinders right now.”

Net absorption in the Charleston market was 923,000 square feet during the quarter, with more opportunities to come, according to Colliers. It estimated there is 2.93 million square feet of construction underway in the market and another 4.33 million square feet of proposed construction.

The Midlands remains busy as well. Colliers recently reported that a 200,000-square-foot spec building in Lexington County Industrial Park was fully leased before construction was completed. The developer now has plans for another 200,000-square-foot building, also geared toward logistics tenants.

Scott said in the current environment, it is typical for industrial buildings to have a tenant as soon as they’re delivered to market.

“Right now, we’re in a very healthy dynamic,” he said. “People who are dragging their feet are losing their place in line.”