South Carolina Report: Could it be Finer?

By Bea Quirk

South Carolina contractors are optimistic, and it's reflected in predictions from the Carolinas Associated General Contractors as well as the word on the street.

"Everyone appears to have a good bit of work, and there's more on the drawing board," said Carroll Heyward, president of Guimarin & Co., a Columbia-based mechanical contractor.

Bill Caldwell, vice president and general manager of Turner Construction Co.'s Charlotte office, added: "We're excited about South Carolina. In 2003, our company didn't have any revenues from South Carolina, and now we're doing about $200 million worth of business there."

Turner is the general contractor for one of the state's biggest projects, the $90 million expansion and renovation of Lexington Medical Center in West Columbia. It also is working on an eight-school contract with Greenville County Schools, which is in the midst of a four-year, $800 million program that's revamping 72 schools.

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According to the Carolinas AGC Construction Barometer for the third quarter of 2004, the most recent data available, "a significant surge in business activity…swept through South Carolina" and "business indicators covering South Carolina commercial construction are pointing in a positive direction."

Nonresidential commercial activity was up 2.2 percent in the third quarter, the Barometer reported, and Tony Plath, author of the report, predicted a 3 to 3.5 percent increase for 2005.

McGraw-Hill Construction has predicted that the institutional sector - the state's largest - will grow by 2 percent to about $1.7 billion, while commercial and institutional activity will grow by about 5 percent to about $1.3 billion.

"Small businesses that were waiting to see if there were legs to the recovery are making investments and spending money," said Plath, an associate professor of finance at the University of North Carolina-Charlotte.

But it's not a statewide phenomenon. In the northern part of the state, called the Upstate, growth in the third quarter was 2.3 percent, compared to the Lowcountry's 1.9 percent.

"You don't have the population growth and broad-based economy and commercial activity in the LowCountry," Plath said. "Along the Interstate 85 corridor - Greenville, Spartanburg, Anderson - you're seeing lots of activity in response to population growth." He forecasted the Upstate construction growth could hit 4 percent this year.

It's not Class A office space that's being built. Rather it's retail, distribution and automotive-related. An example of that combination of activity can be seen in Greenville, at two exits off I-85 along Woodruff and Lauren roads. Two shopping centers are going up - the $64 million Shops at Greenridge, with two Charlotte companies, Shelco and Myers & Chapman, as the general contractors, and the $30 million The Shops at the Point.

Nearby is Clemson University's International Center for Automotive Research. Morgan Corp. of Spartanburg built the road system for the 250-acre campus, and Harper Corp. of Greenville is the general contractor for the 80,000-sq.-ft. high-tech center that will be the signature building. Construction began last fall.

Nearby, the Millennium Campus will be a global trade center/business park. The first tenant, Hubbell Lighting, is currently in the design stage of its $25 million facility.

Also in Greenville, the $88.5 million Pelham Wastewater Treatment Plant, one of the biggest projects in the state, is set for a 2007 completion by Pizzagalli Construction Co.

Columbia, the state capital, is seeing a flurry of activity. Atlanta-based Holder Construction built the city's first high-rise in 15 years, the 17-story Meridian, last year and is currently constructing a nine-story corporate headquarters for First Citizens Bank.

In addition, voters in Richland County School District I recently passed a $250 million bond for school construction.

There are smaller projects, too. "When I drive to work each day, I see small shopping centers and restaurants popping up like mushrooms after a rain," Heyward said.

Class A office space is driving the boom in York County in the Upstate. Last year, CitiFinancial announced a major operations center in Kingsley Park, where it could employ up to 1,600. Now under construction by Shelco of Charlotte, it will be completed late this year.

Kingsley Park is a small corporate park that's part of Clear Springs, a 7,000-acre master-planned community being created adjacent to the Annie Springs Close Greenway.

Located in Fort Mill at Interstate 77 and State Hwy. 160, the community includes not only residential neighborhoods but also retail centers and commercial areas dedicated to office as well as to light manufacturing and distribution.

Nearby, at I-77 and Carowinds Boulevard, Lakemont East, a 117-acre office park, is being developed. It will eventually hold 1.2 million sq. ft.

As the state Department of Transportation's $5 billion "27 in 7" roadbuilding program winds down, highway construction is down from its peak of $1.1 billion in 2001. However, roadbuilding remains strong. McGraw-Hill Construction has forecasted an 8 percent growth this year to $686 million.

"South Carolina highways remain a good market," said Gene Ellison, CFO of Cherokee Inc., a highway construction firm based in Columbia.

Ellison added that SCDOT has begun outsourcing a number of road maintenance programs it used to do in-house, and contractors are getting work from that effort as well.

One dark cloud on the horizon is the increasing cost of oil. "The recovery looks reasonably sustainable, but we have to see how much damage rising gas prices do," Plath said. However, he added that China's economy is not growing as rapidly as it had been, which should ease demand pressures.

Ellison agreed. "The cost of fuel is what concerns me most," he said. "It will have an impact on materials across the board. All we can do is be careful and try to anticipate the increases. I don't see prices going down."