Industrial development in the Southeast is on the rise, according to some developers. After the recent economic slump, they are reporting increased activity in the marketplace. Southeast Real Estate Business recently spoke with developers in three areas of the Southeast, and here’s what they had to say about the current industrial market.

South Florida

Dinner

South Florida’s industrial sector has remained strong despite the nation’s economic woes, according to Larry Dinner, vice president of leasing with Atlanta-based IDI. Dinner says the market’s strength is partly the result of a shortage of developable industrial land in South Florida. “The ocean is on one side of us, the Everglades are on the other, and a growing population is in the middle,” says Dinner. “Because of this limited amount of available land, there has not been overbuilding here like in other places.”

The economies of Latin and South America also play a critical role in South Florida’s economy, according to Dinner. “We’re often part of a different cycle than the rest of the country,” he says. “South Florida is part of the U.S. economy, but we grow based on Latin and South American economies as well.”

IDI has several new developments underway. The company plans to break ground on two new warehouse/flex buildings at its 70-acre Miramar Centre Business Park in Miramar, Florida. The 55,000- and 80,000-square-foot buildings will be completed by spring 2004. Currently, there are two existing buildings in the park, and once it’s built-out, there will be nine buildings to total approximately 1.2 million square feet.

“Miramar is one of the fastest growing cities in the country,” says Dinner. “Because of the city’s location in southwest Broward County and the population growth in the area, the demand for industrial buildings remains strong.”

IDI recently completed two warehouse/flex buildings at Marina West Business Center in Sunrise, Florida.

IDI also recently completed two warehouse/flex buildings at Marina West Business Center, which is located on the northeast quadrant of Interstate 595 and the Sawgrass Expressway in Sunrise, Florida. Both buildings — one at 276,000 square feet and the other at 115,000 square feet — have direct visibility to I-595. Signed tenants include Andrx Corporation, Federal Mogul, Schindler Elevator and Abrika Pharmaceutical. According to Dinner, 160,000 square feet is still available.

Dinner believes that South Florida’s industrial market will continue to grow. Rental rates have remained strong, he says, because land prices in the area have only been increasing. Vacancy rates in Broward County have held steady at 8.5 to 9 percent in the industrial market. “This goes back to the lack of available land and the absence of overbuilding,” says Dinner. “Because of this, even in a slower economy, demand has still been good.”

Because of the area’s strong market, IDI has experienced much success in South Florida, allowing the company to continue its program of speculative development. “As we lease a building, we proceed to the next,” Dinner says. “IDI is very excited about the growth in South Florida, and we are planning to start more new projects. We are constantly looking for available land within South Florida.”

Atlanta

McDonald

John McDonald, president of McDonald Development Company, says there is twice as much activity in Atlanta’s industrial market today as there was during the same time last year. “Activity is predominantly from the expansion and relocation of existing tenants already in Atlanta,” he says. “But there are some new move-ins into the market.” An example is the company’s recent 200,000-square-foot lease to H.H. Gregg, a retailer new to Atlanta. McDonald also notes that the market has experienced positive absorption in the third quarter of this year and vacancies have gone down just starting this year.

McDonald Development has two speculative buildings underway. The first is in Southmeadow Business Park, a 354-acre park near Atlanta Hartsfield International Airport just off of Camp Creek Parkway on Welcome All Road. This 350,000-square-foot cross-dock facility will serve as the first of four buildings planned for the park’s third phase of development. The building will be rail-served and 32-foot clear with a 6-inch floor. The company plans to complete the building by summer 2004, and lease it to one to three tenants. There is also 1.5 million square feet of existing space in the park from the first and second phases, and another 4 million square feet will be constructed over the next 7 to 10 years.

The second speculative development will be in Westlake Business Park at the intersection of Camp Creek Parkway and Fulton Industrial Boulevard in southwest Atlanta. This fourth phase of development consists of a 120,000-square-foot rear-loader that will be finished in the summer of 2004. There are nine buildings already in existence from the first three phases, and the company plans to build an additional 2 million square feet.

McDonald Development Company is developing a 220,000-square-foot build-to-suit for Simmons Mattress Company in Waycross, Georgia. It will be completed by summer 2004.

McDonald says the company is also constructing two build-to-suits. A $6 million, 220,000-square-foot facility for Simmons Mattress Company in Waycross, Georgia, is currently under construction and will be completed by summer 2004. The other development will be at Georgia Commerce Center across from Gate 3 at the port in Savannah, Georgia. The first building will be a 290,000-square-foot front-loader for Capitol Cargo Company. It’s currently under construction and will be completed by the third quarter of 2004. The second phase will be a 150,000-square-foot building.

McDonald remains optimistic about the future of Atlanta’s industrial market. He believes that the lack of development over the last 2 years will allow the market’s vacancy rate to become more balanced in the next 12 to 18 months. “There’s a lot of activity in every part of Atlanta,” says McDonald, “and we’re making leases in every submarket in which we have a presence.”

Columbia, South Carolina

Kahn

Activity in Columbia, South Carolina, has recently picked up, according to Alan Kahn, president of Kahn Development. “We’ve had more opportunities to talk to people than we have in the last 2 years,” he says. “We’ve seen an increase in interest, and warehouse leasing has picked up.”

Kahn says that occupancies are on the rise because of this increased activity. And although his company hasn’t done a build-to-suit in the last year, he does say he will be glad to build when he sees an opportunity that can’t be filled with existing inventory. In the meantime, he says there’s existing inventory that needs to be occupied.

Kahn Development has recently re-leased 60,000 square feet of warehouse space to Carrier Corporation at its Seventy Seven Business Park in Columbia. In January, Carrier Corporation also leased 10,000 square feet in the Vista Center Building located on Huger Street in downtown Columbia.

Kahn believes that Columbia is a natural distribution point because three major interstates — I-26, I-77 and I-20 — cross through the city. The three largest cities in South Carolina are all within 110 miles of Columbia. Also, Augusta, Georgia; Charlotte, North Carolina; and Savannah, Georgia, are within 140 miles. “Columbia is the geographic center of South Carolina,” says Kahn. “Its prime location will allow it to become a strong distribution center for the area. As South Carolina grows, the state can be better served from Columbia than from Charlotte,” he says. Although Kahn says the market has a long way to go before it’s back to normal, from all indications it seems to be on its way.

©2003 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.