The Birth of a Spec Building
Jul 05, 2018 10:59AM
By Kathleen Maris
By Upstate SC Alliance
Cherokee County leaders recently welcomed a new addition to their community: the Upstate Corporate Park speculative building, the fruit of years of labor.
A speculative, or “spec,” building is a property for which no buyer has been pre-identified, something that can be a bit of a gamble for investors. The Upstate’s newest spec building is located within a 500-acre, multi-county development shared by Cherokee and Spartanburg Counties.
The building had its start as a “vision of an extraordinarily forward-thinking county council,” says Ken Moon, deputy director of the Cherokee County Development Board. “They saw an opportunity to position our community for success, for high-paying industrial jobs, and for more business—and they took it.”
While spec buildings present financial risk to developers, they provide a vital asset for economic development—whether for new business recruitment or in fostering existing industry expansion.
Within South Carolina, there are 28 existing spec buildings, 18 under construction, and 14 in the planning stages, according to an April report from the S.C. Department of Commerce.
“Economic development is a competitive environment, and companies are drawn to locations that mitigate risk and reduce the time it takes to achieve production,” says John Lummus, Upstate SC Alliance President & CEO. “A spec building is nearly a must in today’s environment.”
Welcome to the Neighborhood
Upstate Corporate Park has existed for more than a decade, and Moon notes that the first tenants, Bericap, located in 2007 during an economic downturn.
“We were worried given the forecast, but Bericap thrived. In 2014, Dollar Tree started courting us to get some property within the park, and they became our second tenants,” recalls Moon. “That same year, Cherokee County Development Board director Jim Cook and our board began to discuss doing a spec building. They convinced our county council, who had great foresight with this one, to use the help of Santee Cooper for $4 million in funding and move ahead.”
Preparing for its Arrival
Among the many players in bringing the project to life was Broad River Electric Cooperative, which provided help with infrastructure, utility tax credits, and overall funding for the project.
“We recognize that, many times, to attract good businesses to the area, you have to have a facility that is readily available,” says Terry Mallard, CEO of Broad River Electric Cooperative. “Being available means preparing infrastructure—water, sewer, power—because often companies move quickly and require a building that can be retrofitted or upfitted fast. Our cooperative’s decision to participate was to increase the quality of life for people in our community; we know this building and the business it brings will do that.”
In the months ahead of construction, it was “all hands on deck,” says Mallard. Santee Cooper provided a low-interest loan for the building, with deferred interest that has not yet become due.
“Our role was to partner with Cherokee County Development Board and liaise with Santee Cooper. As a local utility, Broad River Electric Cooperative utilized utility tax credit (UTC) dollars to assist with the funding; these monies are available each year to allocate to community projects. We directed $100,000 to the project, and that sum was matched by statewide utility SC Power Team. Bringing $200,000 to the table makes the facility far more attractive and feasible for a future tenant or owner.”
All this collaboration, Moon and Mallard agree, positioned the community to achieve a single goal: to stimulate additional activity at Upstate Business Park.
“We serve as a conduit to the extent we can, using our tax credit dollars and helping projects find zero-interest loans like this one from Santee Cooper. It pays off for the entire county through jobs, capital investment, and quality of life,” says Mallard.
Cherokee County’s Sossamon Construction was hired to prepare the physical aspects of the facility.
“We built the county’s administration building and have worked with Cherokee County’s recreation district as well, so we were a familiar face,” says President Matt Sossamon. “Word in the community was that this was a vision the Development Board had, that a spec building had been approved and plans were being made for the design. We knew right away we wanted to participate.”
No stranger to sizable industrial projects, Sossamon Construction recently completed a $13 million facility for Freightliner Custom Chassis in “just seven months and 15 days,” he notes. That 200,000-square-foot project required Sossamon’s team to work nimbly, finishing weeks early to align with Freightliner’s holiday schedule and enable a smoother move between facilities.
“Even though our schedule was projected to go into January, we met with all subcontractors to sketch out a critical path that allowed us to finish in early December. Freightliner was very pleased we could fast-track it with minimum cost, something that took several different contractor mobilizations and a lot of planning.”
It Takes a Village to Construct a Building
Other players had a hand in bringing the spec building to life.
“We had support from every angle,” says Moon.
An early hurdle to overcome was a required $700,000 upgrade to the existing sewer. Piedmont Natural Gas and Broad River Electric both contributed funds.
On the construction side, Sossamon Construction employed subcontractors from across the area. Sossamon’s team began construction in October of 2015 and completed the 60,000-square-foot building eight months later.
“Our source for concrete was Tindall in Spartanburg. Our steel company was in Greenville, our paving contractor was from Gaffney, our paint and glass contractors were in Spartanburg, and Sossamon’s office managed the project less than five miles from the site,” says Sossamon.
“It’s very important to us that we’re so local. We want industry to come to our community, and playing a part is huge. If we can have a successful project and show that buildings like this would help the county, employ our labor force, that’s a positive all the way around.”
Cherokee County’s Pride and Joy
For the Cherokee County community, the spec building is a point of pride, Moon says.
“Most spec buildings this size are located on 10 acres, but ours is on 24, making it more expandable—up to 240,000 square feet. We made sure it had enough capacity for 17 loading docks, allowing it to be customizable for any number of future tenants. Higher and bigger is always better in these projects. Our building has 32-foot clear ceilings that are 34-feet tall at the center, with 50 feet of space between columns to make sure future occupants can make use of the space. Wider is better too,” he laughs.
“Sossamon built a world-class building, and because of that it is quite attractive to potential occupants. They have room to expand or can use a top-notch building as is.”
Product of a Supportive Community
This new addition was a true collaborative effort, Mallard, Moon, and Sossamon all emphasize.
“Upstate Corporate Park is a true multi-county park,” explains Moon, “because a third of Dollar Tree is in Spartanburg and the rest in Cherokee County. We work very closely with their economic developers and even their utility providers, as our sewer company is in Spartanburg County. Whatever we need, we always have it. Spartanburg County is kind of like a big brother to us—always there to help. That can be said about the whole Upstate. Sure, there’s a competitive spirit, but as long as these new projects are coming into our area, we are all happy about it.”
Sossamon remembers a similarly supportive construction environment, saying that Moon and director Jim Cook at CCDB were “absolutely wonderful to work with—very understanding, decisive, and helpful. Holland Belue, the county administrator, our on-site architect from Greenville’s McMillan Pazdan Smith and the entire team at Cherokee County were a pleasure as well. It was a good group working for one common goal: a high-quality building with the least amount of cost. We succeeded, and I’m proud to be a part of that.”
Mallard agrees that the countywide effort will yield benefits for the entire community.
“For Broad River Electric, economic development is vital not only to us as an organization but as members of the Upstate community,” says Mallard. “While our principal business is to provide electricity, we also care about the opportunities for community members to have stable, high-quality jobs. This spec building provides that.”