Southeast - and South Carolina - to benefit from supply-chain change, report says
Jul 21, 2020 10:29AM
By David Dykes
(Photo credit: SCPA - Walter Lagarenne)
By Cindy Landrum
The Southeast – and South Carolina – will benefit as U.S. supply chains shift away from an overreliance on China to include more expanding Asian and European markets in response to both recent trade wars and Covid-19, according to CBRE’s newly released international trade report.
Many companies will adopt a “China plus one” strategy to diversify their supply chains, in large part to limit the impact of tariffs, the report said.
“While we will not see a widespread exodus from China, we will see a shift in trade patterns that will trigger broader effects on U.S. supply chains, including increased industrial distribution development and increased domestic manufacturing,” said John Morris, Americas leader and executive managing director for CBRE’s Industrial & Logistics and Retail divisions.
The shift will particularly benefit the Southeast, according to the report. That’s because the Southeast should capitalize on growth in trade with Europe and parts of Asia that access the United States through the Suez Canal. More than 85 million people live in the Southeast, an area projected to grow 4.8 percent in the next five years, it said.
The top industrial growth markets in the United States are along the Southeast coast because of significant logistics capacity, available land for industrial and manufacturing development, lower asking rents and access to the country’s largest population concentration, the report said.
Charleston is among the four fastest-growing seaports in the country, CBRE said.
During the first quarter of 2020, Greenville and Charleston were among the top three industrial real estate growth markets in the country (along with Savannah, Georgia) in terms of net absorption as a percentage of existing inventory, the report said.
Greenville's appearance in the top 10 nationally for overall net absorption was "particularly impressive" because it has 200 million square feet or less of total inventory, yet it absorbed more space than much larger markets, the report said. CBRE said that directly results from increased demand for products in the Southeast.
S.C. Ports President and CEO Jim Newsome said diversifying S.C. Ports’ cargo base is key to growth.
Over the past decade, S.C. Ports has doubled its cargo volume. Much of that growth came from increases in imports and exports tied to the state’s advanced manufacturing boom.
“We’re probably not going to forever double advanced manufacturing. I don’t think anyone would say that BMW will double their footprint in Greer. I wish they would, but I don’t think they will,” Newsome said. “We’ve got to continue to grow, and the way we grow is to diversify our cargo base into other areas, one of those being retail distribution. Getting more in the consumption-based retail distribution is critical.”
S.C. Ports COO Barbara Melvin said infrastructure improvements coming online in 2021 – the first phase of the Hugh K. Leatherman Terminal, the first new container terminal in the country since 2009, and the deepening of the Charleston Harbor to 52 feet – prepare S.C. Ports for when volumes return to normal levels after the pandemic and hits a growth spurt again.