While that treasure may remain entombed by legend, Amherst’s industrial assets are its real gold. The region has one of America’s most skilled workforces in a right-to-work environment, with extraordinary expertise in advanced manufacturing, material handling, nuclear engineering and logistics. There are over 45,000 university students and exceptional community colleges within a 50 mile radius of Amherst. Coupled with the Center for Advanced Engineering and Research in nearby Lynchburg, workforce development assets are on a par with anyone in the nation. With highways that put it at the hub of access to both east-west and north-south interstates, it’s no wonder that companies like J. Crew, Fleet Laboratories and Glad call the region home.

The Hollingsworth Companies have teamed with the Town of Amherst to bring these advantages to expanding companies at the L. Barnes Brockman Business and Industrial Park. A picturesque, uncongested location at the base of the Blue Ridge mountains, the Brockman Park features lots of up to 50 acres and an excellent infrastructure. Pre-permitting and an execution plan assure that industrial buildings can be ready in as little as six months, with flexible financial terms to lease or purchase. A prototypical building will feature wide column spacing, clear heights of 32 feet or more, laser leveled high strength industrial floors, and energy efficient lighting systems.

Communities like Amherst are the reason that Forbes and Site Selection consistently recognize Virginia as a top state to do business. The Hollingsworth Companies are blessed to count the community among the locations that can truly offer the best of confederate gold – the Southern Advantage.

Market Watch
Southern Industrial Development

by Joe A. Hollingsworth, Jr.

For the last 25 years, we have been a strong proponent of taking “risks” on interest rates on our real estate loans by tying them to floating LIBOR (the London InterBank Offered Rate). While this decision has often been controversial, we have been very positively affected by insisting our rates float with LIBOR versus long-term fixed rates. In the past, our view for being tied to LIBOR was based on: (1) the difficulty of long-term lenders (life insurance companies, etc) to “re-open” the loans for alterations, expansions, or sales of property; (2) the penalty of fixing long-term rates seemed to have too big of a premium putting some projects closer to debt coverage ratio problems and reducing profits; and (3) the penalties to get out of long-term fixed rate deals were often onerous. So, as a policy, we decided instead of paying a premium for the fixed rate, why not use the excess cash flow provided by the lower short-term interest rate to amortize the debt more quickly? Therefore, every year you decrease your exposure to the floating interest rate because of reduced principal.


Now this equation has radically changed. For the first time in 25 years, our opinion is that there is increasing risk in holding debt floating with short-term LIBOR rates. A few of the reasons are as follows. According to the International Monetary Fund, gross US government debt is currently at 107% of GDP. A fiscal crunch will force the central bank to pursue inflationary policies, a situation that’s called fiscal dominance. Running higher than targeted inflation is one politically feasible method for “reducing” the outstanding US public debt. When there is little will to harm domestic voters, politicians might turn to this seeminly harmless way to solve the problem.


With the above said, there is a very possible scenario for major medium-term inflation. Long-term fixed rate lenders have become more aggressive and also more flexible by reducing restrictions and pre-payment penalties to place money in this slow-growth economy. Changing now to a higher fixed interest rate will immediately impact your bottom line by paying a premium over floating LIBOR. However, the premium could be just viewed as insurance against the potential possibility of catastrophic losses from runaway inflation.

Beyond the clutches of Norfolk traffic, and closer to Interstate 95, are the City of Franklin and Southampton County, Virginia. In a place teeming with whitetail deer, an entrepreneurial economy has emerged built on the traditions of pro-business government and an agricultural work ethic. The once dominant paper mill has been transformed into a modern operation delivering materials for hygiene and medical products. Another company has broken ground on a new $90 million renewable fuel facility. Cleared land and industrial infrastructure stand ready for the next business that wants to move quickly. And the Paul D. Camp Community College has a proven Workforce Development Division to respond to rapidly changing requirements for training.

The Hollingsworth Companies have been blessed to partner with Franklin Southampton at the Pretlow Industrial Park. Advance design and pre-permitting make it possible to deliver facilities in as little as six months at this exceptional highway location. A prototypical building will feature wide column spacing, clear heights of 32 feet or more, laser leveled high strength industrial floors, and energy efficient lighting systems to serve modern logistics and manufacturing operations. With attractive incentives and options to lease or purchase the real estate, we can make the numbers work for industrial organizations focused on performance and flexibility.

Low cost, labor rich communities like Franklin Southampton are why the Hampton Roads region and the Commonwealth of Virginia consistently rank among the top places for business in the United States. You may not find big city traffic jams in Franklin Southampton, but you will find people who will go the extra mile.

The unspoiled natural beauty of Meigs County is hard to match. Gently rolling pastures, bounded on the west by the Tennessee River, make it a place that many local residents find hard to leave. The world has found the region and made it the place to come to. The region has been attracting investments from across the world. Volkswagen and Wacker AG have each invested over a billion dollars in high tech manufacturing less than 40 miles away.

Amazon.com has also located a huge distribution center close by. Other employers who have been in Meigs County, stay in Meigs County. Shaw Industries has been in Meigs County since the 1970’s producing filaments for the carpet industry and employs over 500 people.

Meigs County is located in Tennessee which is a Right-to-Work state that has no individual income tax on wages. Within Meigs County, there are no organized Labor Unions. This ensures a highly flexible, highly productive, and highly motivated workforce at below average wages. Lower payroll costs with higher productivity can easily generate savings in excess of the cost of the rent on a new factory built there. In addition to the eager workforce, the local government is fully supportive of industry in their county. Reduced paperwork and regulations make start-up and operation of a facility in Meigs County as simple as it can be.

Decatur is also ready for action. Decatur has joined the Hollingsworth Companies Southern Advantage Program. In the Meigs County Industrial Park located on US Highway 58, lots are ready for immediate construction with all needed infrastructure already in place and pre-approved, pre-permitted plans ready to be built to a company’s specific requirements in just 6 months for lease or purchase. That is the Southern Advantage. The Hollingsworth Companies partner with communities throughout the south to help them: prepare, market, and construct industrial buildings in their existing industrial parks for interested clients. For more information contact Rick Meredith at 865.414.1157.

Our first partner community in Georgia was Jeffersonville, in Twiggs County, Georgia. With its proximity to the junction of I-16 and I-75, Twiggs County is an important crossroad location for today’s complex global supply chain and distribution operations. For over two centuries, Twiggs Countians have been doing business with not just their neighbors, but with people across the globe.

We have an approved set of plans for a 130,720SF Hollingsworth Prototype Industrial Building; located near the I-75 and I-16 interchange in the I-16 North Industrial Park, see pricing on facing page. The beauty of the pre-permitted prototype design is that it can be completely constructed and ready for use in just 180 days. And within the 180 days, we can tightly tailor the prototype to meet the exact needs of virtually any industry. The building can be made larger or smaller, add cranes, equipment foundations or pits as needed to make any operation efficient. Because The Hollingsworth Companies is a totally vertically integrated industrial development company, we control all cost and time factors to ensure timely delivery of the construction customized to meet your company’s needs. Our integrated organization also includes Value–Engineering from the very first day. We work with clients in a number of different industries and can often offer solutions that save money and thereby make your company more competitive. The combination of our integrated organization, multi-industry experience and our extremely efficient and flexible pre-permitted prototype will give your company the Southern Advantage.

At The Hollingsworth Companies, we do not just build buildings. We build businesses. If you are a community looking for a way to beat your competition, come to The Hollingsworth Companies and let it bring you the Southern Advantage!

Market Watch
Southern Industrial Development

by Joe A. Hollingsworth, Jr.

Necks that are stuck out sometimes get chopped off. Well, as I mentioned in my last couple of hotline articles, we were predicting a Romney victory with a 5% GDP growth starting in March 2013. The “thud” you heard was from the guillotine hitting my head. As the water cooler jokes around my office indicate, thank goodness we are much better at spotting industrial real estate trends than we are political trends. The question is: “Where do we go from here with industrial real estate?”

Our sense is with the President’s re-election the maximum GDP growth will stay at 1.75% to 2.50% for the next four years. Those of us that positioned our properties aggressively with shorter term leases with renewals that are subject to current market rates are in a weakened position from what we had hoped. The market rates will not go up as much as a faster growing economy would have dictated. Those of us that have invested defensively (i.e. long term leases with locked-in specified rates) will see these assets continue to be very popular. With a slower growth economy over the next four years, there will remain very little speculative building proportionately. As a result, existing properties will experience cap rate compression. A few lenders are becoming more aggressive on lending as the real estate side of their balance sheets has deteriorated.

The reasons we believe we should remain a selective buyer over the next couple of years is due to 8% to 10% cap rate return and interest rates in the 3.0% to 4.0% range producing a good yield play. Furthermore, with pricing on “interest rate caps” being as reasonable as they are, you can obtain rate protection cheaply for several years.

While yield and rate protection is one thing, there are other opportunity drivers such as:
1) An economy with an ever-increasing velocity of domestic and international trade has to have more space every year for manufacturing and logistics;
2) The tremendous energy cost savings that are occurring due to the natural gas price dropping will continue to be a “boom” for keeping and creating manufacturing jobs in the United States; and,
3) The vast on-shoring of jobs that the nation as a whole, but more particularly the “right to work” South is experiencing, will give industrial real estate a lot of strong support for several years to come. Thus, we believe this is an ideal time to buy for medium to long-term holders.

Market Watch
Southern Industrial Development

by Joe A. Hollingsworth, Jr.

In our September 2011 hotline article, we said, “Once again we see that business hates variables and can only factor very few variables at one time in the decision to deploy capital.” In July 2012, we indicated that “we see things beginning to pick up momentum above a trepid last twelve months with a ‘hockey stick’ looking economy from March 2013 on.” Then, we followed it up with, “Regardless of which party you are in, the sense of optimism and excitement will clearly ignite this economy by the election of Romney by March 2013. In fact, I would like to be on record as saying three years of 5% GDP increase is obtainable.”

As my immediate team knows, I am very seldom right, and I often provide much humor for their water cooler jokes. So, it’s with a less than perfect track history of predictions that I continue to stick my neck out and say, “The above all remains true; and, in the months of August and again in September, our new prospects across our entire footprint were up five fold.” Not only that, but the proposals for build-to-suits were more definitive in nature and more time driven. Furthermore, the icing on the cake is that the quality of our shows for industrial property has gone from the general manager or plant engineer to the CEO or CFO.

All the above indicates to us that those with capital to deploy are positioning themselves for a “first out of the gate” break for a much higher GDP growth. I have had a tremendous number of positive comments on our prediction of a Romney victory along with the fundamental reasons why (in the last article), and it is apparent that more and more smart money seems to be betting on a strong rebound. Additionally, the smart money is buying insurance by making heavy donations to those candidates representing common sense business interests and conservative principles.

After several dry years of lackluster offers for existing prospect owners, now is not a bad time to get out if you are under any kind of financial pressure at all. However, our sentiments are that there are really more reasons to buy and there will be a huge surge in demand once the market has clarity of our election and tax cliff measures. In fact, we see cheap usable and flexible older structures disappearing fairly fast. From March 2013, we are on a 5% GDP increase for 3 consecutive years – so, position well!

Robeson Community College and the University of North Carolina at Pembroke partnered with The Carolina Commerce and Technology Center offer training programs designed to industry needs. These institutions partnered together provide a technology-focused education and training center to attract, incubate, support and partner with dynamic, leading-edge, technology-based business and industry in order to stimulate significant economic development to improve the quality of life for the people of Robeson County and the region. The Hollingsworth Companies have teamed up with Robeson County to bring these advantages to expanding companies in the 800 acre COMtech Park.

Our integrated organization also includes Value –Engineering from the very first day. We work with clients in a number of different industries and can often offer solutions that save money and thereby make your company more competitive. The combination of our integrated organization, multi-industry experience and our extremely efficient and flexible pre-permitted prototype buildings customized to meet your company’s needs.

At the Hollingsworth Companies, we do not just build buildings. We build businesses. Robeson County is situated perfectly to improve the quality of life for the people of the region in a true Southern Advantage.

Market Watch
Southern Industrial Development

by Joe A. Hollingsworth, Jr.

In our September 2011 hotline article, we said: “Once again we see that ‘business hates variables’ and can only factor very few variables at one time in the decision to deploy capital.” Today, there still are a great number of variables: 1) the tax cliff of 2013; 2) Greece and the Euro; 3) the election of the President and whether the Senate goes conservative; and, 4) the stability of international economic growth, etc. For industrial real estate, we see things beginning to pick up momentum above a trepid last twelve months with a “hockey stick” looking economy from March 2013 on. With this prediction, we are factoring in: 1) The national mood will be more conservative, practical, and debt cognizant; 2) We will have a new President and a conservative Senate; 3) The tax cliff and debt issues will not be gracefully solved but on a much better path; and, 4) The taming of the entitlement stampede will begin.

So, how does the above affect industrial real estate? We believe precisely right now would be a great time to purchase leased facilities. While this trend has been building momentum during the last year, it is now evident that a lot of “parked money” is coming off the sidelines and making decisions not only to purchase grade A industrial facilities with creditworthy tenants, but now B+ properties with weaker tenants. We believe this trend will continue to strengthen.

As I write this article, I have just returned from the Park City, Utah retreat for Governor Mitt Romney. This article is partially based on that experience. The retreat was 800 of Romney’s most powerful national supporters. The quality and substance of those in attendance were beyond anything that I have ever experienced. For two days, we reviewed current state by state polls, polls indicating wrong/right track results, resulting momentums, and projections. We reviewed the funding cycles in comparison to previous campaigns and projections going forward as well as the targeted groups of voters and the potential 10 swing states that will determine this election. Overall, with a very few exceptions, every one of these trends looks very positive.

What really impressed me was the youthful, energetic, and Reaganistic-like “Morning in America” mood and feeling of the entire event. They conveyed their belief that this is the chance to recapture the heart and soul of “American Exceptionalism”. It is true that sometimes a fluke can happen resulting in Romney losing, but it is also true that momentum could magnify Romney’s win. Most of all, it requires a lot of hard work, but it is definitely doable. We as a company are betting on this outcome.
Regardless of which party you are in, the sense of optimism and excitement will clearly ignite this economy by the election of Romney by March 2013. In fact, I would like to be on record as saying three years of 5% GDP increase is obtainable. Therefore, now is a great time to buy.

Market Watch
Southern Industrial Development

by Joe A. Hollingsworth, Jr.

Broadly speaking the American South is in the most ideal position for future job growth than ever before. Between 2000 and 2010 the U.S. lost roughly 3 million jobs that were sent off shore and a little over one half of those was from manufacturing. It is estimated the American South lost around 800,000 of the 1.5 million manufacturing jobs that was lost overseas.

From 2000 through today the American South’s manufacturers have been able to decrease labor cost per unit substantially. While the rest of the emerging markets, specifically China, are experiencing as much as a 20% annual wage growth per unit so, the gap has rapidly closed. Additionally, the productivity in the American South has surged over other competition. This, coupled with tsunami’s, logistics nightmares, and more need for “just in time” inventory controls has ideally situated the American South for the most dramatic job increase that it has ever had the capacity to achieve in the next 10 years. In fact, we estimate that between 1 and 1.2 million manufacturing jobs will be created in the American South during the next 10 years with this massive re-shoring of jobs and investment.

With the United States total GDP at 15 trillion dollars per year growing at 2.5% annually and China’s total GDP at 6 trillion growing at about 10% annually it becomes clear that China, by all projections, will overtake the U.S. within 12 years. However, this view is very deceiving because it relies on simple math. The proper approach is to view this equation by focusing on productivity per manufactured unit, which is where the real growth will be sourced from. This approach clearly demonstrates China is losing its advantage over the U.S.

While the south has traditionally come out of each recession proportionally much stronger than the rest of the U.S. this time it is going to benefit, not only from the migration of jobs to the south from other areas of the country, but the world also. This will be accented by the fact that the American South by and large has right to work laws in place that have been the backbone of its growth for years. These laws provide the security for foreign investors as well as domestic expansions.

So, who will benefit? Clearly communities which are prepared with available industrial parks and infrastructure that are located in a conducive business environment will get the first looks and by far the most growth. We have already seen this massive wave beginning to happen over the last three or four years in spite of the recession. But, the future numbers are so great that virtually all communities will benefit within the next decade. Those that market effectively in several venues and are prepared will lead the charge and will participate in this historic and wildly successful southern expansion.