(Roundtable participants Robert Benedict, left, and Micah Williams. Photo by Nill Silver/Greenville Headshots)

Commercial real estate has been a driver of South Carolina’s economic growth in recent years, as more large companies locate or expand in the Palmetto State and need space to operate. But what are the challenges and the opportunities?

Integrated Media Publishing hosted a roundtable discussion with two leaders in the world of real estate on April 30, 2025. The topics ranged from infrastructure to vacancy rates to the hybrid work trend.

Here are excerpts from that conversation, edited for brevity and clarity.

The participants were:

Micah Williams, senior associate, Lee & Associates

Robert Benedict, director, Master of Real Estate Development program, Clemson University

Integrated Media Publishing Editor David Dykes moderated the discussion.

Question: Robert, let me start with you. Commercial real estate, as we all know, is a fundamental pillar of the American economy, offering vital benefits for business owners and investors. For business owners, a commercial property provides a place for a business to operate. That creates jobs, stimulating sectors of the economy. Building ownership can help a business build equity. Over time, it also offers tax benefits. So can you talk about the reasons to focus on South Carolina commercial real estate?

Robert Benedict, director, Master of Real Estate Development program, Clemson University: First and foremost, strategically, we're in a very advantageous geographical position here in the Upstate, being midway between Charlotte and Atlanta, but also Columbia, Charleston. We have a major port in Charleston. We also have an inland port near us, and we're one of the main drivers with industrial development right now. And looking ahead, I think there's been a major shift with the equity markets, the investors, where they see more and more opportunity in the secondary markets like we have here. I think going forward, the numbers are good here in the Upstate. The Urban Land Institute, back in the fall at their national conference said (that) the three preferred asset classes are single-family housing, industrial, and multifamily. If you just look at those three sectors, we've had really good success in South Carolina with all three of those. So who knows what's ahead, but I think we're located in a very good position to move forward and continue to see strong growth here.

Q. What do you see for real estate trends? You started to touch on that, but could you amplify that a little bit in terms of retail office market and data center development?

Benedict: Let me start with retail first, because retail is especially interesting to me. We started heading into 2025, and the U.S. consumer backdrop was very solid at that time. There were a lot of positive forces going on at the end of 2024. Healthy household, balance sheets, continued job growth, positive wage gains. Today, there's a little clarity related to the size and scope of tariffs, and the policy shift is already impacting the retail sector. But something that's noteworthy, and it's happening quite a bit here in South Carolina, there's more and more opportunities to repurpose retail space, especially with fitness medical uses leading the way. Here locally in Mauldin, it was announced this week that a former BI-LO has been repurposed into a first-class fitness center. If you look at Charleston, the Medical University of South Carolina converted a former JCPenney department store into the West Ashley Medical Pavilion. A very interesting piece that came out was by McMillan Pazdan Smith, an architect named Aaron Jeffers did an interesting piece on repurposing a large retail store into health care. Now, they pointed out there are some challenges with it, such as most large retail stores have a 20-foot high ceiling, and most of them have a square layout, which can complicate the creation of clinical pods and distinct circulation flows for patients and staff in health care facilities.

And even the HVAC systems in retail stores, they're designed for high-volume air movement in open spaces, and they have to be replaced to suit more of a partitioned layout for health care. But I think that's a tremendous opportunity. It's good to see how that's happening here in the South Carolina markets.

Q. Micah, following up on that, the South Carolina industrial real estate market is currently experiencing a period of strong growth and positive momentum, particularly in areas like Greenville and Spartanburg. The vacancy rates are decreasing. Net absorption is increasing. Construction activity remains robust, focused on large-box warehouses. Distribution of manufacturing businesses are being attracted, driven by factors that you've heard mentioned, the presence of major automotive manufacturers in the proximity to highways and ports. What's your assessment and what are the key trends that you're seeing?

Micah Williams, senior associate, Lee & Associates: It's a very interesting market in the industrial space because you've got all this product on the ground that's been sitting vacant for a while since 2021, 2022. Because all these developers rushed to get to Greenville, Spartanburg. And in the wake of Covid, there was all this e-commerce, and the thought was, e-commerce is going to continue to explode. And so we need all these big distribution facilities and cross-dock facilities. And quite frankly, a lot of these buildings that are larger than 400,000 square feet got built, and it was the wrong product for our market. So there's still a good bit of vacancy. So when people talk about the amount of vacancy that you see in Spartanburg, most of that is held in these larger facilities, 400,000 square feet and above. But everything below that, the activity has been strong. To your point, fourth quarter of last year is very strong. A lot of absorption. First quarter of this year, even more absorption that we've seen. And so everything in the smaller manufacturers, smaller distributors in our market has really stayed strong. Lots of suppliers to the automotive industry. But yeah, I think that's been the main thing to watch is a tale of two markets. You've got a market in the large space, 400 to a million square feet, that has been a much slower churning. And then you've got this 50,000 to 200,000 square foot spaces that have been flying off the shelves. And we've been churning through that much quicker.

Q. Robert, there's been a lot of talk about data center development. What does your crystal ball tell about that in South Carolina? And do we have the water and power infrastructure needed to support a lot of data center development?

Benedict: We have the resources today. The problem is going forward because they are such strong users of water, infrastructure. I think the interesting trend there is what's happening where more and more of the users, the Googles and the Amazons of the world, are focusing on creating their own power source for the data centers. I think that's going to help eliminate some of the pushback that we're seeing in some of the communities for that right now. But we have land that's relatively inexpensive to a lot of the other areas of the country. I think we have the infrastructure, the resources. But going forward, they're going to grow and grow and grow. It's important that we really look for them to create their own internal power source.

Q. When we read about major investments in data center infrastructure. Alphabet, example, planning $3.3 billion to build two new data centers in Dorchester County and expand its facility in Berkeley. You don't normally hear about those investments in areas like that. Is that infrastructure? How long will it take to catch up or accommodate that?

Benedict: You don’t hear as much about that as you would think. You don't have the labor impact. But at the same time, they're strategically located. They're largely on the outskirts of a major market, but largely still in rural areas. In Berkeley and Dorchester County, just growing like crazy right now. So I think you're going to see more and more users like Alphabet looking for sites in South Carolina. And I think it's important that they strategically select their sites and do it where it's going to have the least impact on the water and power resources of that area.

Q. Micah, what about the construction activity? We've got groundbreakings on the rise in Greenville, Spartanburg, which you talked about. But what about the rest of the state? Some of these other areas, you can call it urban versus rural. But is this going to be a statewide benefit or is it going to be the haves and have-nots going forward in terms of industrial locations?

Williams: That's a good question. You're starting to see counties in more rural areas really invest and spend county dollars on industrial facilities. (With) private money and these large investors coming, everybody wants to hug the interstate corridors and be where everybody else is. I think it's going to take some time. I think probably not the next five years. I think it's going to take potentially 10 years before you really start to see big construction projects and big industrial folks outside of, let's say, a data center that just needs resource, just needs to be somewhere where they can just use a lot of power. But if you're talking about manufacturers and distributors, I think they're going to really hug the interstate corridors. Until all that space is gone, and then you’ve got to grow outward.

Q. But with industrial projects, what about workforce? I hear a lot of concerns still, and even growing concerns about the workforce readiness in South Carolina. Is that what you're hearing?

Williams: We are. It is a concern. I think one of the things that's been interesting as we talk to the Greenville Technical College and Spartanburg Community College is they've been really focused on workforce readiness and even taking on the training of some of these folks coming through their programs in the trades. We have companies that are moving here from out of the market. As they come to set up their manufacturing process, these folks at Spartanburg Community College will get trained on whatever their machines are, and then they will go out and do the recruiting and train some of their own students or just people in the community. They'll host it at Spartanburg Community College. It's really unique, really cool. So there's certainly opportunities. It is a growing concern of a lot of people are working from home, working from their computers, and how many folks are we going to have continue to work in manufacturing? How much labor are we really going to be able to pull from? But I think that community colleges in our area are doing a great job at equipping them.

Q. Robert, what other trends do you see?

Benedict: Hybrid work has become the norm still. As of mid-2024, 80 percent of the companies in the United States offered some form of remote work. And the average lease size has dropped by 11 percent compared to pre-pandemic rates. The other thing that's going to be interesting looking ahead is there's 1. 4 billion square feet of space (with) leases (that) are set to expire between 2025 and 2027. And you have tenants rethinking how much space they're really going to need. So that sector is really evolving. We're fortunate here in the Upstate, and it seems true in Charleston and Columbia, but tenants really are redefining their needs going forward, what they're looking at. The office market here in Greenville Spartanburg, our vacancy rates are around 11 percent. But that's largely in Class B space. Now, the Class A office space is very strong here. And that gets back to investors seeing what's happening in the secondary markets like Greenville, Spartanburg, Columbia, and Charleston. And they're taking note of that. So I'm cautiously optimistic about office.

Q. As you mentioned, investors are returning to the office market. Leasing activity is picking up, but that's leading to increasing rents in desirable business districts. Is that a concern?

Benedict: The gap has narrowed between Class A office and Class B office. Class A office in Greenville-Spartanburg is running roughly 36, $37 per square foot. Class B has been about $10 less per square foot, but that's starting to inch up a little bit now. You look at somebody's pro forma, and they'll do a five-year, 10-year spreadsheet. And they used to project rinse-out increasing 3 percent a year. It's going to be hard to sustain that right now especially if everything tails off with a slower economy right now. So I think we're pretty much maxed out for the short-term future at 36, 37 dollars a square foot on Class A.

Q. What about flexible spaces and co-working hubs? Has the novelty worn off of those?

Benedict: You know, Covid certainly had an impact on that. It seems like they really had good momentum, but that's been hard to rebound to the same extent. It seems like that niche may have been overbuilt a little bit a few years ago, and it's tailed off. I think there's still a place for that. And there's been some quality co-working space, but it's not capturing the attention of investors like it did eight, 10 years ago.

Q. Micah, what do you see as the biggest potential challenges in the industrial space? I know there's a lot of uncertainty, economically, particularly around tariffs. What do you see?

Williams: Hopefully, the tariffs in the long term will create some real value and bring some more business here and bring some more manufacturing here. I think right now, the biggest challenge that we are facing here in the Upstate is generally slow tenant demand, meaning the demand is there, but everyone's slow to make a decision. And you've got landlords that are eager, developers that are eager to get their warehouses filled up. And with rising rents through all of that over the last few years, you've got so many folks that would have been tenants a couple of years ago that are saying, “We’re not leasing anymore. We're just going to purchase.” And you've got a lot of people that just don't want to sell. And so you just have this stalemate in the market, which I think that over the last six to 12 months has been the biggest challenge we’ve faced, is seeing that we've got buyers with nothing to buy, and we've got landlords with few tenants to choose from. So it's created a little bit of a stalemate. Again, absorption has still happened through all of that, and there's still business going on. It's just created a lot slower market.

Q. What about elsewhere in the state? Lowcountry, Pee Dee, Grand Strand?

Williams: The Charleston market has been very tight. Their rents have been significantly higher than the rents that we're achieving here in the Upstate. For the most part, their activity has been a little bit higher. I think the challenges that they face may be a little bit different than the challenges we do.

Benedict: Let me add something to that. If you contrast the Charleston Port and even the Savannah Port with the West Coast ports, the West Coast ports are projecting 35 to 40 percent reduction in imports. Here, our port in Charleston saw an 11 percent increase in March over a year ago. But a lot of that may have been due to the anticipated effect of tariffs going forward. But it just seems like there's been a major shift, and a lot of it is China, Asian countries going to the West Coast ports. But we've got solid numbers here on the East Coast with our ports. So hopefully that's going to carry on. Who knows what's ahead, but hopefully that's got us well positioned.

Williams: I think March was the inland ports’ biggest month by a large margin. So the growth even in the inland port has been significant.

Q. One of the key takeaways that I've read about is that investor interest is pivoting away from pricey trophy assets toward smaller secondary markets where pricing momentum is building. The office sector still weighs heavily on the overall market, but targeting bets in rising metros could pay off in the second half of this year. What are the rising metro areas in South Carolina that you pay attention to or are looking at seriously?

Williams: Where we see a lot of activity rising, everybody wants to be in Greenville County, it sounds like, from an investment play. Now, Anderson has grown a bunch, and I'm working on seven or eight projects in Anderson County right now. I'm starting to see some with tax incentives over there and also just more land opportunities. I'm seeing a lot of investors start to look at Anderson County and some of the surrounding municipalities within Anderson County. And then as you go to South Greenville and Laurens County, those are places where the industrial market is growing as well.

Q. Let me ask you, what's your assessment of South Carolina's position compared to other states like North Carolina and Georgia?

Benedict: The Urban Land Institute put out in their Emerging Markets report back in the fall, Markets to Watch, and Greenville, Charleston were two markets that were markets to watch closely. But you look at the top 20, and it's still largely gateway markets, big markets. And in North Carolina, it had Raleigh-Durham, it had Charlotte, and then, of course, Atlanta was listed. So we still compete against those major markets, but I think there's been a shift from looking at trophy assets in those markets and focusing more on a Greenville, Spartanburg or Charleston, even Columbia, in terms of maybe a safer bet. I mean, the Charlotte office market has just been ravaged the last several years. Some of the national investors that I've worked with that have come to Greenville, there's a wow factor here, certainly in Charleston. They know Charleston. But coming to Greenville-Spartanburg, I had no idea that Greenville-Spartanburg, that was such a dynamic market. I think we are getting some of the benefit of the spillover from Atlanta and Charlotte, even Raleigh. That I-85 corridor is one of the hottest corridors in the country right now. And Charleston has got so much going forward. Even Columbia does, too, in terms of the university, state government, military presence. So they like the fundamentals that they're seeing in the market right now.

Q. Given what you know about the South Carolina economy, is there anything on the economic horizon that bothers you in terms of commercial real estate or industrial development? Are the tax situations productive?

Williams: We're going through a situation right now with certain municipalities where taxes have just gone up and up and up, and we've got tenants that are really unstable about it because as these landlords are passing these tax bills down, these property tax bills down, these tenants are starting to say, I can't afford my rent anymore. And that is a concern. How can we sustain solid rental rates in the industrial market as the taxes just continue to rise? Is there going to need to be a shift in expectations on what the rental rate can be because of how high the taxes are? Maybe. I think that's been in the last few months as we had the reassessment, we had the end of 2024 tax bills come in. I think that was one of the big things that stood out to probably two or three of our developers and the tenants that are in their buildings.

Q. Robert, your thoughts?

Benedict: Looking ahead, we've got challenges incoming from several different directions. We've got stubbornly high interest rates. The 10-year treasury is still running about 4.2 percent. We've got, at least in my opinion, an incoherent tariff policy right now. I think that's being reflected in consumer confidence. We saw what happened with the consumer confidence this past week, and this dropped to the lowest level in five years. So I'm concerned right now that the consumer is now stepping back. In terms of how that affects South Carolina, we're not immune from it. I don't think it would have the same effect as South Florida or Las Vegas or some of the other major markets like that. But we're not immune from it. I feel like the rest of the spring, summer, maybe even into the fall, it's going to be challenging. And we're at a key point right now. I still feel optimistic for the long term in our real estate markets here. But it's going to be interesting to see how this plays out over the next six months.

Q. Finally, let me ask you each to talk about if you were in a position to change one thing, do one thing differently from your respective positions, what would that be?

Benedict: I'd have to look at sustainability. Climate risk, it's influencing home buyers’ decisions, along with affordability and quality of life. Even in the commercial sector, and then specifically South Carolina, we're seeing the effects from climate change. We need to be attuned to what national investors are starting to do also. That is when risk assessments are made with our properties, we need to factor in what's happening in terms of, is the infrastructure there to support more and more impacts from climate change? We're resilient here, but me personally, I like to see more of an emphasis on what we're doing to have infrastructure that's resilient and promote more sustainable practices in the different sectors.

Williams: Mine may be some low-hanging fruit here, but we've had so many investors that have been on the sidelines for so long that want to put capital here, that want to invest in real estate here, particularly the Upstate of South Carolina … and they just can't do it because of interest rates. And so if we could make the debt market more attractive, if that was something I had the power to change, that would be probably what I would do, because I think there would be a floodgate of opportunity for investors that are in the market currently and investors that are coming from outside of the market that want to make opportunities happen here.

Q. Do you think the Fed is attuned to that?

Williams: I think they probably have some bigger things in their mind rather than just our market or even the real estate investment market. But I think from what I've been hearing, they are being prompted to move. So we'll see what happens.

Benedict: I would hate to be (Federal Reserve Chair) Jerome Powell. I mean, one of the keys, you're still seeing decent employment numbers right now. I know unemployment has inched up some. Wage growth is still inching up. So it's a dilemma. I think we're still going to see some bad cuts in interest rates. I anticipate, too. But it may be June before we see the first one. I think the consumer confidence index, when that came out last week, that captured a lot of people's attention. I think they're focused more on making at least one and possibly two rate cuts for the rest of this year.

Q. Are you seeing lenders tightening up on their underwriting requirements?

Williams: I have, yeah.

Q. In terms of down payments or payment terms?

Williams: Mostly from loan-to-value and debt coverage ratio. I think those have been ones that they've really shown that those are important to them. Of course, down payment. We've got some lenders that have come back to us and said, “Well, if they want to put 40 percent down, then we can make this work.” The last two years, really, for us, has been navigating that with lenders.

Benedict: It's gone on for a couple of years now. The underwriting has been tough, and you factor in what's happened with interest rates. And I've heard so many of my developer friends say, “I just can't get the numbers to work. I just cannot get the numbers to work at all,” which is frustrating. Some of them really want to do additional projects right now. They're not overbuilt, which is fortunate, and the demand's there, but they need some relief in terms of interest rates.

Q. What have I not asked you that you’d like to comment on? Permitting process once somebody does buy land? Is that an obstacle? How much time does it take from that point for them to actually be operating?

Williams: If someone's buying a raw piece of land and then they're going to develop it, permitting for land and getting your building permits and all of that can take quite a bit of time. And that's why there are so many developers who are trying to handle that side it and get land entitled for the next guy to come in and actually operate it, or some developers hold for the long term. That can take anywhere from eight to 18 months just to get that part done. Fortunately, in South Carolina, we're protected a lot compared to other states. If you go to many, many other states, you might be looking at really long lead times, and they're discouraging. By their processes, they are discouraging development, they're discouraging business. And so we're fortunate that we live in a state where it's not discouraged. There are hurdles to be gotten over, but it's not discouraged at all.

South Carolina wants business. South Carolina wants development. We are at the mercy of the Fed and other things right now. But the good news is we're in a place where business is very much invited and encouraged.

Benedict: Yeah, population growth here in South Carolina, it's so strong. And the need for housing, we're woefully short. So I think most of the markets in Mount Pleasant would be a key exception. They've welcomed additional housing. At the same time, I think people want something that It has some character to it. It's well-planned. And that's the challenge going forward. How can we produce housing that's affordable, but also housing that has some character, it's well-planned, it's designed, and the infrastructure can support it, which is a real challenge right now.

Q. I want to thank you for your time this morning. It was a fruitful discussion.