5/22/23 South Carolina Mastermind Group Meeting

South Carolina May 2023 – Key Take Aways

Laura Turner of Cherry Bekaert mentioned that the Inflation reduction act increased the IRS budget by 80 billion over 10 years. The majority of that will be used for enforcement. She was happy to report that you now have a 52-85% chance of getting someone from the IRS to pick up the phone. This is a huge improvement as it was 11% in 2023. We are seeing great improvement there. They are also looking forward to the IRS updating their business systems. She also wanted to mention the Corporate Transparency Act that goes into effect in January of 2024 where companies will have to register their ownership with the Financial Crimes Enforcement Network. JR Charles of City of Mauldin is following Senate bill 284 that would allow municipalities to use accommodations tax to fund work force housing – an amendment was made to cap it at 15% and sunsets in 7 years. He also informed the group that Bridges Road is getting resurfaced starting the beginning of June. He announced the Maverick Yards groundbreaking will be June 12. David Lewis of Context Design Group says that they remain busy. The automotive supply market is still strong. A few of their clients are holding to see if prices will drop. He shared that there is still a year wait time for electrical switch panels. Chuck McShane of CoStar shared that the data shows that in the 1 qtr of 2023 there was a steepening of vacancy curve in office market nationwide. The increase is driven by larger markets. Greenville hasn’t seen it as much. On the Industrial side, GSP sub-100.000 sqft availability is below 4% while above 100,000 sqft is at 10% and above 250,000 sqft is at16.3%. Construction starts have slowed down, which will create a tighter market. On the Multifamily side, they are starting to see negative absorption somewhat due to household consolidation. They are starting to see rent growth coming back down. Holly Douglas Schaumber of Douglas Development was excited to share that the Governor signed resolution 739 that authorizes up to $25 million in expenditure from the South Carolina Housing Trust Fund’s undesignated balance for use as supplemental financial support for multifamily housing properties. 2024 round for tax credits moving forward – not sure if there is going to be a 2023 tax credit round. Laura Ulrich of Federal Reserve Bank of Richmond is most worried about issues in the office space. Retail sales were up last month after being slightly down the last 2 months. Job market report came in above expectations. Consumption is not falling even with rising interest rates. They continue to hear from businesses that they are doing whatever they can to not have to lay staff off because they worked so hard to build the teams they have. Inflation is coming down, but very slowly. Josh Workman of Tax Credit Marketplace says that deals keep coming their way. A large project is coming to Boiling Springs – an old high school that will be a retail center. Recently closed on town homes in Mauldin. They just got their First deal in Fort Mill. They have another deal in Camden on Broad Street which will be their 4th project on Broad Street. On a side note, the SC Department of Revenue has been extremely slow in their response time. Ryan Swinson of Tax Credit Marketplace is new to her position. Going to Charleston for 2 upcoming conferences. She also announced the SC Municipalities Association meeting is in Greenville this July. Walt Robinson of Wilson Kibler has seen a little bit of pull back from the banks. For the first time, he had a good industrial project turned down by a bank. Deals getting killed because of financing. He said that there is a record number of large industrial completions scheduled for this year. They are hearing about sublease space about to hit market – worried that companies might sublease versus taking on new build. Could be a rocky year for those large new builds. (200,000sqft +). Edward Wilson of Wilson Kibler said that the office market hasn’t changed much since last meeting. He is currently negotiating a lease for a 40,000 sqft tenant. Larger tenants are getting more aggressive. Absorbency in 2k -3k sqft is high. Downtown, there is still high demand for office space. He has 1 hotel requirement looking for 1 – 1 1/2 acre downtown. Mark Freeman of Synovus said interest rates might go up once or twice more this year. In banking, things have calmed down a little bit since March. Some banks are pulling back on their lending, some are not. Tice Welborn of Terracon shared that they are seeing a slow down on proposals. Proposal count is down company wide. Projects are moving from easy projects to more complex projects with environmental issues. They are hosting a lunch and learn about Mauldin’s growth and outlook and their Brownfields and Mauldin’s grants.