February 2022 Edition - More Good News for the Southeast!
Each month I attempt to decide what is the most important current topic to report to you on that has a direct or indirect impact on our multifamily business. I try to stay away from most political subjects, although they very strongly influence our decisions, and concentrate on the other activities that are influencing our markets. This month it was particularly challenging to make a decision as there are so many positives that are driving factors (Interstate highways, airport expansions, industrial growth and mayor economic development announcements).
Greensboro, North Carolina, where I am located, has the historical nickname of “The Gate City”. This name goes back to the 1800’s when rail was the king of transportation and Greensboro had multiple rail tracts that connected north-south-east and west. We are located in the center of the State and the State is located in the center of the east coast.
Jump forward from the 1800’s to the present and into the future. North Carolina is still in the center of the east coast where 58% of the U.S. population reside. Greensboro is still in the center of North Carolina and is still The Gate City. But now, in addition to the railroads, we have an international airport and several interstate highways. This transportation infrastructure has been and is a major driving factor in the life and growth of Greensboro since the beginning.
Of the interstates that pass-through Greensboro, I-85, the north-south corridor of the Southeast, and I-40, the east west corridor, are the two most important. These two major interstates intersect in Greensboro and run parallel east from Greensboro through Alamance County before separating in Orange County (Durham area). -From there, I-40, which runs from Barstow (Los Angles) California to Wilmington, North Carolina, a total of 2,555.1 miles, passes through Durham, Chapel Hill, the Research Triangle Park area and Raleigh. I-85, which begins in Montgomery, Alabama and runs 666.05 miles north through Alabama, Georgia, South Carolina, North Carolina, continues north to its termination in into I-95 in Petersburg, Virginia just south of Richmond. I-85 has become the industrial corridor of the Southeast and is often compared to the Interstate 78/81 corridor (Lehigh Valley/Northeast Corridor) that traverses Central Pennsylvania an several major markets on its way to New York City. Along its route, I-85 passes through Auburn and Opelika, Alabama, LaGrange, Newnan and Atlanta, Georgia, Anderson, Greenville, Spartanburg, South Carolina, Charlotte, Gastonia, Concord, Salisbury, Lexington, High Point, Greensboro, Burlington, Graham, Durham, Oxford, and Henderson, North Carolina, and South Hill and Petersburg, Virginia.
Of all of the regions in the country, the southeast has the most high-growth markets, several of which are located along Interstate 85. This interstate connectivity is vital to the success of Industry as they seek to eliminate as many supply chain hurdles as possible. In 2021 the reconfiguration of supply chains added fuel to the already booming industrial market. In the Upstate of South Carolina alone (Greenville/Spartanburg areas) more than 10 million square feet of new industrial projects have been announced since January and with the rapid absorption expected this year, this market is poised for a record -breaking 2022 and beyond.
Growing demand for supply chain reconfiguration space is challenging companies to look outside of congested core markets. Situated between the core markets of Atlanta and Charlotte, the Upstate of South Carolina is seeing this trend unfold as a booming industrial spec pipeline. As growth continues, these three markets (Atlanta, Greenville/Spartanburg, and Charlotte) are rapidly converging into a new megaregion known as “Charlanta”.
The I-85 industrial expansion on the north and east side of Charlotte continues on through the cities of Gastonia, Concord/Kannapolis area, Salisbury, Lexington, High Point Greensboro, Burlington, Graham and Mebane. As a result, the outlook has never looked more promising and optimistic as it does now. The three major Triad cities of Greensboro/High Point and Winston-Salem are poised for continued growth in 2022 solidifying these areas as major hubs for the distribution and logistics industry. The region will also benefit from two large manufacturing projects that are expected to yield more than 4,000 new jobs. The first of these projects is the Toyota manufacturing plant at the Greensboro-Randolph Megasite. Phase I of the project is expected to bring 1,750 jobs and a $1.3 billion plant investment. Phase II could yield 3,875 additional jobs and another $3.4 billion investment.
The second major project, announced by North Carolina Governor Roy Cooper and Boom Technologies President and Chief Business Officer Kathy Savitt on January 26th, is the selection of the Piedmont Triad International Airport as the site for the construction of Boom Technologies $500 million “Superfactory” and its launching pad from which Boom is poised to take the aircraft industry, and Piedmont Triad International Airport into the future. Boom’s supersonic passenger plane, dubbed the ”Overture”, will be the first supersonic passenger plane since the Concorde was retired in 2003. “The Wright Brothers made North Carolina first in flight and now Boom Technologies will make North Carolina the first sustainable supersonic flight” manufacture (Kathy Savitt). The facility is expected to create 1,761 new jobs by 2030 at an average annual wage of $69,000 and ultimately ramp up to 2,400 full time positions at full production. The Overture is designed to be 199-feet long, carry 65 to 88 passengers and travel it at a speed of 1,451 mph (Mach1.7) making it twice as fast as contemporary commercial aircraft. It is designed to be powered by sustainable jet fuel and will have net-zero carbon emissions.
As exciting as these two projects are for the area, they are only the beginning. Boom’s superfactory will occupy 65 acres of the Piedmont Triad Airport Authorities available land of approximately 1,000 acres and the Toyota megasite project will take a similar amount of land. The Greensboro-Randolph megasite has a total of 1,825 acres. The is plenty of land at both sites for expansions and other industry. Also, the Greensboro-Randolph megasite and the Piedmont Triad International Aerospace megasite are not our only megasites. North Carolina has a total of seven megasites with four of these (Triad International Aerospace, Greensboro-Randolph, Chatham Advanced Manufacturing and Moncure/Triangle Innovation Park megasites being located in the “Carolina Core” area which stretches 120 miles along Highway 421 from Davie County to the west of Greensboro southeast to Fayetteville.
There is also the “multiplier effect”. When a major project comes to an area the number of ancillary projects follow. In addition to supply chain providers to the facilities there are the indirect and induced jobs that result which include construction, transportation, retail, and service industries to support the facilities. Industry publication Business Facilities reports that for each dollar spent in manufacturing, another $2.74 is added to the economy. Additionally, the Economic Policy Institute reports that every 100 manufacturing jobs creates 289 supplier jobs and, by the time those dollars ripple through the local economy through all other sectors, creates 455 induced jobs.
Economists say landing these two projects and the work they will create could lead to as many as 12,000 new jobs. But where are all these new employees going to live? Given the current development there aren’t enough homes to accommodate current demand, much less the new workforces in the years ahead. Developers are scrambling for new residential land to develop in all counties in the Piedmont Triad. They expect employees to elect to live somewhere with a 30-45-minute drive to the facilities, which opens up most all of the Triad because of the region’s interstates and road network.
Interstate highways, international airports megasites, population growth, educated employees, technical schools, universities, top medical facilities, quality of life, lower cost of living, lower traffic congestion and a clean environment make central North Carolina a very attractive place to live and work. It is going to be a challenge to keep up with the housing demands in front of us but this provides a very positive outlook for our multifamily industry throughout the Southeast for years to come.
“Just-In-Case You Missed It” is a monthly letter prepared for multifamily owners and prospective owners. It is a compilation of multiple articles from multiple sources or a reprint of an article from a specific source (source credit given). Its purpose is to present both facts and opinions that may influence our multifamily business in the Southeastern U.S. If you have any questions and/or would like to discuss any of the comments above, my conclusions or your multifamily business, please contact me at your convenience. I can be a valuable resource to you without adding expense to your budget. I look forward to speaking with you and having an opportunity to meet with you. I am always at your disposal to assist you with your multifamily business. If you would like to review previous editions of my monthly “Just-In-Case You Missed It” letter they are posted on my website, www.rickbakermultifamily.com.
Respectfully,
Rick
G.F. Rick Baker, CCIM
Multifamily Specialist/Investment Advisor
www.RickBakerMultifamily.com
2504 Tinderbox Ln.
Greensboro, NC 27455
Cell: 336.549.6083
Email: rickbakermultifamily@gmail.com
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