Mills offer empty
promise
Market slump leaves older plants behind
By Ken Elkins, Charlotte Business Journal
Most of the towns encircling Charlotte once had a common bond as the home to bustling textile or furniture production plants that were each community's prime employer.
Now scores of those plants sit idle, as each community's eyesore.
No one tracks exactly how much former industrial space is vacant in the 16-county region, but a quick check of area economic development Web sites shows 133 available manufacturing buildings in three of the region's most industrial counties -- Catawba, Gaston and Rowan.
Many are out-of-date buildings that stand little hope of finding a buyer or tenant, says John Shell, principal with McGuire Properties, an industrial real estate firm in Charlotte.
"There are a lot of buildings in locations that no one wants," he says. "There are millions of square feet available around the Charlotte region. You can have them for a song, and no one wants to play that tune."
Many of the older buildings are hampered by the way they were built, says Shell and Ron Leitch, area manager for the N.C. Department of Commerce. Most have 10- to 15-foot ceilings -- too short for use as modern industrial or distribution centers.
"Ten years ago, they were attractive for warehouses," Leitch says. "Now distribution centers need 24 feet, and some want 36-foot clearances for automated stacking equipment."
Most also lack high-pressure sprinkler systems, which fire codes often require for large manufacturing and distribution operations. "Sometimes we refer to them as dinosaur buildings," says Randy Harrell, executive director of the Salisbury-Rowan Economic Development Commission.
Occasionally, Harrell will receive a call from a demolition company that wants to raze an old textile mill or furniture factory for its building materials. "Some people want the wooden floors and the bricks," he says.
He has received at least one proposal for a 229,661-square-foot former Pillowtex Corp. plant on North Boundary Street in Salisbury, but so far no one has shown interest in occupying the plant, which is listed at a lease price of $1.50 per square foot or a sale price of $795,000.
Finding a tenant or buyer for some of the old buildings -- which real estate agents label as Class C -- is made more unlikely by the growing vacancy rate for modern, Class-A industrial buildings in the region, says Lester Osborn, president of Piedmont Properties Inc./Corfac International in Charlotte.
"The good buildings are sitting empty," he says. "The large ones will do a deal for $2.25 a square foot for the first few years. That leaves the ugly buildings in a poor situation."
Their locations, 20 to 45 miles from Charlotte, make it difficult for a large employer to occupy the buildings, Osborn says, citing the relative small pool of employees in some communities.
Nothing like the 1980s
Still, today's glut of Class-C buildings is nothing like what the area faced during the economic downturn in the late 1980s, Osborn says.
"Times were just tough then," he recalls, noting that the buildings of that era were financed with loans that carried double-digit interest rates, boosting the lease rates owners had to charge.
With today's decades-low interest rates, building owners can afford to discount the rates they charge for both the Charlotte region's best and worst industrial buildings, market watchers say.
While manufacturers are passing over the Class-C buildings, other buyers are finding different uses for them.
In Rock Hill, for example, Winston-Salem-based Landmark Asset Services/Anderson Development Co. wants to redevelop a pair of 1880s textile plants near downtown, converting them into housing and offices. Eventually, Rock Hill's Cotton Factory is to be transformed into a $14 million mixed-use facility. And the former Highland Park mill will become a $10 million assisted-living center, if all goes as planned.
"You have to look at the historical value of the facilities," Harrell says. "Many of them are found in the heart of the cities, and some could be really beautiful when restored."
In Hickory, the five-story Brookford Building -- overlooking the South Fork of the Catawba River -- is in a prime location for redevelopment, says Scott Millar, president of the Catawba County Economic Development Corp. "It's perfect for office condos or retail," he says.
Return to production
Not all of the less-than-perfect industrial buildings in the Charlotte area are languishing as unwanted property or awaiting redevelopment.
Within the past year, Chesterfield County, S.C., has found tenants for eight of its 12 former textile buildings, some of which have been vacant for more than five years, says Cherry McCoy, county economic development director. "We see things really turning around here," she says.
Six companies have announced a combined $72 million in capital investment this year in that county, with those plans promising to create more than 400 jobs.
In some cases, manufacturers are leaving Mecklenburg and other counties in search of Chesterfield's lower operating expenses and more space.
Conbraco Industries Inc. plans to spend $5.4 million on an existing building in Pageland as it moves 150 jobs from Matthews. The company makes metal ball valves and screw machine products.
And PDQ South Inc. will move 25 jobs -- also to Pageland -- as it exits Monroe and invests $2.4 million in an existing, 12,000-square-foot building for a custom plastic molding operation.
In addition, the Chesterfield Manufacturing plant, an aging 75,000-square-foot former textile plant that closed five years ago, has a new tenant: Mullins Wood Products. Mullins is expected to spend $1.25 million to upfit the building to make kitchen and bathroom cabinets for sale in Lowe's Cos. Inc. stores. The Mullins operation will employ 50. "We've gotten rid of a good many of our old buildings," McCoy says. "We sold them."
Find out what commercial real estate professionals in these companies have been up to!
Colliers Pinkard
First Colony Corporation
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