INDUSTRIAL TRENDS & OVERVIEW
INDUSTRIAL & MANUFACTURING IN THE SOUTHEAST
OFFICES PROJECTS
The Southeast US is particularly well positioned to take advantage of strong anticipated growth in the industrial market. A number of trends, from the rise of ecommerce to growth in onshoring, will lead to the continued demand for industrial facilities of all types; the last decade has seen a steady rise in advanced manufacturing across the region with the growth of automotive and aeronautics clusters in particular. A highly skilled workforce, bolstered by significant investment in advanced manufacturing training facilities, creates a win/win prospect: a ready pipeline of talent for the employers, desirable jobs for the employees, and stronger local economies. The Southeast also boasts some of the country’s fastest-growing cities such as Savannah, GA; Columbia, SC; Charleston, SC; and Charlotte, NC. A high quality of living for workers, affordable land costs for companies, and proximity to major ports and rail systems will support continued growth as the economy rebounds.
Greensboro/Winston-Salem/High Point, NC • Asking lease rates currently rising at 9.1% to around $4 PSF FS. • Vacancy rates have dipped below 5.0%.
Jacksonville, FL • An additional 3 million SF of spec and ecommerce space is anticipated in 2020. • Recent JAXPORT improvements will support competitive access. • Asking rent is currently around $5 PSF FS and is anticipated to rise another 9% in the next two years. • Vacancy rates are hovering below 5%.
Greenville-Spartanburg, SC • Spec development is at record highs in the area. • The market has been driven in recent years by significant demand from automotive industry. • Asking rents are economical at around $3.50 PSF FS, with vacancy around 8%.
BY THE NUMBERS
According to recent CBRE research, the industrial sector shows solid growth potential across the Southeast. Occupancy rates remain high, and current absorption rates are meeting or outpacing new construction rates to support steadily rising asking rent rates with vacancy rates approaching historic lows in some markets. *
Columbia, SC • High tenant demand and declining vacancy means opportunity. • Central location between Atlanta and Charlotte with easy port access is a huge benefit. • Absorption is currently outpacing completion rates. • Asking rent is economical at around $4 PSF FS.
Savannah, GA • As the fourth-busiest container port in the US, Savannah generates a demand for diverse industrial property types. • The market will likely see short-term volatility due to competition however, the areal is very well positioned for growth in the long run. • Asking rent rates are currently around $4 PSF FS, with vacancy around 3%.
• High land and construction costs tend to limit supply in the area. • Flex industrial represents 35% of this marketa significant percentage compared to other Southeast locations. • Vacancies are currently hovering around 5%; with asking rents around $8 PSF FS.
Charlotte, NC “With approximately 50% of the U.S. population living within a one-day truck drive of Charlotte, industrial space in the market is very desirable to large distributors.” • Demand for industrial space is outpacing supply; the very low 5.4% availability rate in 2019 shows that absorption levels remain at record highs. • Asking rent is around $8 PSF FS.
Charleston, SC Atlanta, GA • Rapid absorption rates have accommodated record levels of industrial construction activitymore than $22 million in 2019 alone. • Atlanta is a significant national distribution hub, and industrial space near the airport is in high demand. • Asking rent are approximately $5 PSF FS, with a vacancy around 6%.
Raleigh, NC • Raleigh’s strong industrial tech sector will continue to require significant lab space and build-out activity.
• Charleston has also seen significant automotive industry investment in recent years. • E-commerce is rapidly increasing in the area, representing more than 20% of leases. • Robust demand for industrial space has led to a limited supply; anticipated spec development may boost vacancy rates temporarily, but absorption will continue to be strong in the long run. • Asking rent rates are currently around $6 PSF
FS, with vacancy around 7%. * All data from CBRE’s 2020 SOUTHEAST U.S. REAL ESTATE MARKET OUTLOOK
TRENDS TO WATCH Several trends in the industrial market are likely to influence long-term growth and drive the demand for particular types of facilities. These trends include:
Continued expansion of ecommerce Ecommerce was on the rise long before the advent of COVID-19; however, consumer demand shifted dramatically towards online shopping as stay-at-home orders were enacted across the US. According to Digital Commerce 360, online sales were almost 50% higher in April 2020 than in April of 2019. As long as the virus remains a widespread threat, many consumers are likely to continue to rely on online retailers for consumer goods from groceries to home goods. Long after the public health crises subsides, once shoppers become habituated to primarily online shopping, this trend may prove to be enduring.
Third-party logistics Third-party logistics (3PL) facilities allow companies to outsource some business elements to companies specializing in procurement, transportation, and distribution. The increase in ecommerce is likely to lead to a demand in 3PL facilities as well, as companies scale up production and distribution processes to meet increased demand.
Onshoring Onshoring/reshoring of industrial facilities located overseas is not a new trend, but is likely to accelerate in the wake of supply chain disruptions from COVID-19. As the New York Times reports, “Many companies have realized that offshoring creates risks that often outweigh the incremental efficiencies. Long supply lines flow at the whim of local politics, labor unrest and corruption.� Intellectual property theft is a growing concern at many international sites, particularly in the tech sector. Bringing manufacturing facilities back to the US will come with economic pros and cons, but may allow better control of the process and product while creating US jobs over the long term.
TRENDS Life sciences facilities The demand for life sciences facilities such as biotech, laboratory, research, and biomedical buildings was burgeoning before the COVID-19 crisis; the need for research, testing, production, and widespread discussion of a vaccine and effective therapies for treatment may accelerate this trend. These specialized facilities may have a variety of program spaces such as clean rooms or quality control areas, but also include traditional manufacturing, shipping, and receiving spaces.
Greater need for flexibility Evolving technologies demand flexible spaces which make it easy to adapt, expand, and retool.
More renovations to existing facilities Companies are increasingly seeking shorter construction time frames with less capital investment, and are likely to lease facilities instead of own them. A strengthening manufacturing economy also demands more warehouse and distribution space, even as footprints become smaller and more efficient.
Big Data and the Internet of Things Data-driven manufacturing leads to higher production, lower costs, better quality control, and better real-time communication. The “Industrial Internet� which connects processes, systems, and people is helping manufacturers to use operational data to monitor, analyze, plan, and react.
Robotics, cobotics, and augmented reality Robotics are useful in performing certain tasks; cobotics, or the process of aligning automation tools with automation staff, may well be the wave of the future in helping employees improve efficiency, safety, and productivity. Augmented reality, likewise, can be a powerful tool in training or performing intricate tasks.
Market-driven sustainable manufacturing Today’s consumers are more aware than ever of how their goods are sourced and produced, and sustainability is becoming a key differentiator in purchasing decisions. In addition to reducing operating costs and contributing to a healthier workplace, responsibly manufactured goods are in high demand.
INDUSTRIAL FACILITY TYPES The size, layout, and design of an industrial facility varies widely according to its function. Building types predominantly fall into the following categories:
Heavy manufacturing: These facilities are often large-scale to accommodate heavy equipment and require spaces tailored to specialized machinery. This project type requires a significant amount of truck space.
Light assembly manufacturing: In these facilities, companies are often assembling, storing, and shipping parts manufactured elsewhere. Light assembly buildings are typically smaller and require less investment in specialized upfits.
Distribution center warehouse: Location is the key priority for distribution centers, which allow large ecommerce retailers to pick and ship goods quickly to local markets. These facilities are often quite large in order to store sufficient inventory to meet one-day shipping demands.
General warehouse: General warehouses typically accommodate longer-term storage than distribution centers, and therefore require less truck space for transit. Size may be substantial, but location is less crucial than for distribution centers so lower-cost locations may be desirable for this function.
Truck terminal warehouse: This type of facility serves as a transfer point in the supply chain or distribution process, so truck terminals typically require much less storage space than other warehouse types and may have a more compact footprint.
Research and development flex space: R & D facilities for life sciences, technology, pharmaceutical, automotive, and other companies often require large footprints to accommodate specialized program areas for prototyping, high security processes, and product development.
Showroom flex space: Some industrial facilities require showroom space to market products and welcome visitors. Finishes in these areas may be higher-end to support a more public-facing function. Showrooms may be associated with product displays, offices, or meeting spaces and may occupy part of a larger warehouse building.
Data center flex space: The need for data centers to house servers and other technology infrastructure will continue to grow. Data centers require flexible spaces and strategies for heightened security to protect intellectual property, data, and equipment.
LS3P and the Thriving Southeast Market LS3P has a long history of successful projects in the industrial and other markets. We seek to understand each projects’ needs and we work as a team to develop a project quickly. Our efficient process leads to projects that are designed, permitted, and built more rapidly than those of many competitors, and with a higher level of quality. This streamlined process and our substantial expertise allows the building owners to bring the building to market earlier, save money and financing, and if leasing, start cash flow earlier. Together, our team comprises people who like to work together, and it shows in the quality, quantity, and speed of work produced for our clients and friends. In designing for our industrial projects, our aim is to provide highly functional, flexible, economical, and durable spaces to support our client’s operations. From manufacturing to logistics to warehouses, we are experienced in providing facilities solutions that are efficient and cost effective to help our clients thrive
and grow. Our work across the region spans all scales from small renovations to large-scale new construction. Over the course of this important work for our clients, we are honored to have forged enduring relationships and to continue to serve these repeat clients as trusted advisors across multiple projects. Our team will work closely with both owners and building users to generate maximum return on your investment while providing highly desirable work environments for employees. Our firm also has an extensive portfolio of design-build projects, and our experience allows us to anticipate and address the risks associated with this delivery method. We believe that a successful project requires a commitment from the entire team that we will succeed together. Trust and fairness are critical to all team interactions, and we begin with an understanding from day one that all team members are expected to assist other team members as needed. We begin with a solid work plan that includes all project activities, which serves as a visual reference for each team member to understand the critical path and stay on target. The design team remains an integral part of the designbuild team throughout the construction period and is available to serve as a resource for both Owner and Contractor.
C L E M S O N U N I V E R S I T Y R E S TO R AT I O N I N S T I T U E
PROJECT BIG TRUCK This industrial and office building provides state-of-the-art production and testing space for building heavy wheeled and tracked armored personnel vehicles for military applications. The industrial space includes multiple heavy lift cranes, a production line, shipping, receiving, warehousing, assembly and testing areas, a 3D printing/prototyping lab, electronics and systems integration labs, machine shop, and paint booth. The 50,000 SF office space meets the edge of the industrial area, accommodating a tech-oriented user group with an open office environment, break out spaces, meeting rooms, phone rooms, and other areas to facilitate teaming. This office space allows the research-based tenant to join the engineering, procurement, and management side of the operations with its manufacturing team in order to provide rapid customization and development for their government clients. The office overlooks the manufacturing line and includes a public-side conference center with secure office area. The facility houses a SCIF as well as secret-level open storage environments and reading rooms. Services include a large pantry/ kitchen/break area, indoor and outdoor dining areas, coffee bars and pantries throughout, a gym, shower facilities, and locker rooms for both gym and worker equipment.
BLICKLE U.S. OFFICE AND DISTRIBUTION HEADQUARTERS The new US office and distribution headquarters for a global German manufacturer of wheels and casters features a two-story, 14,500 SF office building and an adjacent one-story, 50,000 SF warehouse facility. The administration building serves engineering, operations, customer service, marketing and sales functions, and features high-end office, meeting rooms, and training space. The program also includes a state-of-the-art testing lab, customer experience center, and warehouse for US distribution. Skylights and curtainwall panels in the warehouse serve as excellent sources for natural daylight. The warehouse structure is precast concrete panel walls with steel frame and a jointless floor system; the office is steel construction with curtainwall and storefront glass, TPO roof, and metal panel exterior. In addition to designing the buildings, LS3P also facilitated the furniture selection and procurement.
GKN DRIVELINE NORTH AMERICAN HEADQUARTERS Getrag, a German automobile transmission manufacturer, expanded its plant operations to include a high profile two-story office building adjacent to an existing plant. The initial concept drawings and engineering were developed in Germany. The LS3P design team preserved the German building technologies and aesthetics, and adapted them to US codes and construction techniques, and translated European sustainability requirements to US Green Building Council levels, to maintain a close collaboration with the German team throughout the project’s implementation. The 27,771 SF project entails the complexities of demolition, retrofit of the existing plant, and construction of a new office building adjacent to the existing plant. Design emphasis is on employee comfort: the ceilings are 11’-0” tall with all glass facades and all regularly occupied spaces are less than 30’-0” from exterior glass. The facades are designed with automated shade devices with solartracking capability. An 8’-0” wide covered, cantilevered balcony wraps the two glass facades providing shading and an additional employee amenity. First floor spaces adjacent to the plant have glass doors and windows to create a sense of unity between office and plant workers. Second floor conference rooms and all regularly occupied spaces on the plant side of the office building have clerestory glass for additional natural light. The significant use of daylight reduces the need for artificial lighting throughout the new office building. The project achieved LEED® Silver certification. The company was acquired by GKN Driveline in 2011.
DIRTT This new facility for DIRTT provides 129,000 SF of manufacturing space for heavy timber and cross-laminated timber (CLT) wall systems. The 180’ x 720’ footprint is designed for future expansion to up to 229,000 SF. The main body of the building complements other structures in the industrial park with insulated precast concrete structure on three walls and insulated metal panel on the rear wall for ease of expansion. Loading docks on either end facilitate flow of raw material in and finished product out the other side. A distinctive wood-look entry reflects the owner’s design ethos, which is also represented in the 16,000 SF two-story heavy timber office area inside the building. Program spaces include an open office, conference rooms, cafeteria, gym, break room, restrooms, second-floor client meeting space, and product display floor.
VOLVO GM HEAVY TRUCK COMPLEX The Volvo corporate campus master plan was conceived as a complex of compatibly-scaled buildings linked together by a series of external and internal linear circulation spines. The campus includes the Technical Center, a Dynamometer Testing Lab Facility, the Communications Center, and Administration Office Building, all with compatible exterior palettes of brick and glass with stone accents. The 136,000 SF Technical Center provides approximately 58,500 SF of space for offices, and the remaining 77,000 SF for experimental engineering shop space. All of the office portion of the space is over a raised floor for ease of power and communication distribution. The two-story high shop area houses garage space, a clay studio, and testing facilities as well as shipping/ receiving and loading dock facilities. The Dynamometere Lab is a separate testing facility for measuring various engine components in development. A two-story atrium buffers the noise and vibration within the cube that houses the testing equipment. The 24,000 SF Communications Center is sited on axis with the drive-through entry plaza and exterior truck display and serves as the front door and reception center for the entire complex. Housed in this building are a truck display area, training and meeting rooms, dining and kitchen facilities for 350 people, and the visual connector to the remaining buildings of the corporate complex. Functionally, the Communications Center is half dining facility and half training facility joined by a central skylight galleria spine.
CONFIDENTIAL ATHLETIC COMPANY DISTRIBUTION CENTER This contractor-led design/build project consists of a 232,000 SF fully-sprinkled expansion to one of the company’s existing 1,000,000 SF distribution centers. Constructed of a steel superstructure enclosed with a non-insulated concrete tilt-wall system, the interior of the expansion consists of a 25,000 SF sortation zone, 75,000 SF of decked-case racking, and 100,000 SF of pallet racking used to stock athletic footwear. Stocking merchandise onto these racking systems is accomplished via forklifts controlled by an automated line-driver system which simplifies operation, reduces accidents, and increases productivity by freeing operators of steering responsibilities and allowing them to focus directly on order picking tasks. Merchandise is shipped in and out of the expansion via the addition of 13 new dock doors and extended truck court. The design/construction team was charged with keeping the existing facility fully operational during the accelerated sevenmonth construction period. Through careful planning and coordination with the operational schedules of the facility, the contractor/owner were able to synchronize the necessary shutdown periods due to the installation of MEP systems with downtimes in the existing schedule. Responsiveness and attention to detail by the design/construction team were the two key factors which allowed the project to move successfully from start to finish in such a short period of time.
HONDA OF SOUTH CAROLINA PLANT EXPANSION An expansion of Honda of SC’s manufacturing plant, the 47,000 SF addition to an existing facility features a 28,000 SF conditioned production area to house a new packing conveying line. The addition also includes a 19,000 SF unconditioned secure storage zone to allow staging of completed all-terrain side-by-side vehicles prior to packing for shipment to distributors, and a covered and enclosed secure walkway between the buildings. Built in concert with Thompson-Turner Construction as a designbuild project, the building used a Nucor Metal Building as its basis, and is designed for future expansion if needed by Honda of SC. A fast-track project, the building was awarded in August 2017 for design with completion prior the end of January 2018 when production equipment arrived.
IKA WORKS NORTH AMERICAN HEADQUARTERS The expanded North American headquarters for this German manufacturer tailors a German aesthetic to an American workplace. The addition maximizes the constrained site and strict budget, with clean lines and modernist design. The result is crisp, contemporary, and comfortable. A double-height lobby welcomes visitors and leads into a product showroom, while administrative spaces include offices, workstations, conference rooms, and a centralized break area. A renovated facility includes administrative offices, a machine shop, and a state-of-the-art laboratory for research and development. The updated facade blends seamlessly with the administration building. A new pilot plant was added to supplement the manufacturing capacity. The client required a building which would help build brand identity in the United States, and wanted the headquarters to be a visual symbol of their sleek, modern, European products. The resulting bold design incorporates large expanses of glass walls, white metal panels, and accents of color to highlight important spaces. Renovations to an existing facility, a single story brick building built in the mid-1980’s as a spec manufacturing building, were phased so that operations in the manufacturing and assembly areas could continue with little interruption. The existing facade also received a facelift, creating a seamless look transition to the new administration building. As a “deep dive” into the project, the design team traveled to Germany to learn about the client’s services, products, processes, and goals.
UNIS WAREHOUSE This 268,850 SF front-loaded storage warehouse serves a crossshipping distributor located in Pooler, GA close to the Port of Savannah. The efficient, economical, and durable tilt-up building includes a 2,000 SF office area with warehouse break room and restrooms, 58 dock doors, and drive-in doors to allow rapid loading and unloading of vehicles.
RIVERPORT 1 WAREHOUSE Riverport 1 is the first of several tilt up concrete warehouses in the Riverport Industrial Park in Hardeeville, SC. Nestled into the landscape six miles from the Port of Savannah, Riverport 1 provides quick access to the Port while minimizing congestion from other areas. It provides 40 dock doors with dock levelers and bumpers and two drive-in doors. The front is configured for up to three office areas if tenants want to sub-divide the space.
DEAN FOREST WAREHOUSE Dean Forest 1 is a 357,000 SF tilt up speculative single loaded warehouse built along Dean Forest Rd. in Savannah, GA. The project includes 51 dock doors with levelers, additional knock outs for future dock doors, and three drive-in doors with ramps. The building leased three months before substantial completion to a clothing warehouse and distribution company who is currently building out roughly 7,000 SF of tenant improvement space including offices, remote restrooms, a large break room area, and a truckers’ lounge/shipping office. Dean Forest 2 is a 95,000 SF tilt up industrial building configured as divisible into as many as three different parts for tenants to provide rare smaller industrial space in the Savannah market. This building is shell and core but has restrooms and full lighting, allowing immediate occupancy for a tenant while office build-out takes place. Each office has a distinctive front entry area with place for signage.
ICON
ICON WAREHOUSE This 400,000 SF distribution warehouse for a gym equipment company in Savannah, GA is located in the Northpoint Industrial Park owned by North Point Development. The project was contracted as a design/build project with Evans Construction. The construction is uninsulated concrete tilt-up with standard steel framing, roof deck, rigid insulation, and 45 mil TPO roof draining to gutters and downspouts. Multiple dock doors serve loading docks on both sides of the building.
Why LS3P?
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We are experts in industrial facilities strategies
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We understand the impact of each design choice in terms of costs and benefits
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We know how to maximize space and efficiencies in your building systems
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We know how to expedite your project delivery through a collaborative approach to construction
World-class client service across the Southeast region For more than 57 years LS3P has contributed to the Southeast’s rich culture and thriving business communities, both through the built environment and through service to our clients. Though we are now one of the largest architectural firms in the Southeast, LS3P is uniquely positioned to offer small-firm client service with large-firm resources. With offices in Charleston, Columbia, Greenville, and Myrtle Beach, SC; Charlotte, Raleigh, and Wilmington, NC; and Savannah, GA; we are strategically and uniquely positioned to provide client services that are both global and local. With the resources of our eight offices, we are able to draw on the expertise of a large firm while giving each client personal attention. We collaborate as a team of both specialists and generalists regardless of location. Our firm leads the profession in technological communication to facilitate seamless project management and design services. We
continue to deliver design excellence, and we continue to be motivated by our enduring commitments to the communities we serve. The Southeast region is thriving and growing; competition in all markets is brisk, and construction costs are escalating along with the economy. In a saturated market, it can be very difficult for any particular business to distinguish itself. Architecture plays a key role in helping clients streamline workflows, make wise investments in facilities, and provide leadingedge workplaces to attract and retain the most highly skilled workers. Our process begins and ends with listening, and our goal is to deliver a project which is efficient, durable, cost-effective, sustainable, and inspiring. Your success is our success, and we want to exceed your expectations and serve as your trusted design advisor for years to come.
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