4th Quarter 2018 Hotline
by Joe A. Hollingsworth, Jr.
As readers of the Market Watch articles know since September 2016, I have been a persistent optimist about what should happen to the manufacturing and distribution industrial space sector. I have covered: 1) the accelerating GDP; 2) the ever-increasing on-shoring of jobs; 3) the improving protective tariffs and equalizing trade; 4) relentless regulation relief; 5) low inflation and inflation not driving interest rates; 6) more jobs available and more people working than ever in America’s history; 7) reasonable energy costs; 8) more consistent business friendly courts, etc., etc.
With the knowledge that the longest expansion in America’s history would take us to September 2019, I am constantly asked what carries this expansion beyond that. While there are numerous answers and possibilities (some political and some not), I think it comes down to two broad points.
With a stroke of a pen and at the appropriate time when the economy needs a boost, President Trump can simply inflationadjust the capital gains tax rate. The courts have approved that the government can change regulations to reflect the inflation indexing of capital gains. However, the President has the power to do such on his own by executive order to demand treasury issue a “definitional order”. This could be a powerful motivator that can be well-timed and used as a tool to continue to prime the economy. This should be a significant decrease in the capital gains tax, thus prompting more velocity of real estate turns and more key investing which would literally free up billions of dollars for further investment. We have no crystal ball but, I think the 2nd quarter of 2020 would be a politically-potent and economically-viable time to unleash this mighty tiger, if not sooner.
In my opinion, it is not enough to just have 4% growth in the GDP; but, it also has to be coupled with productivity gains. There are so many new workers coming into the workforce that there is a time lag in the learning curve necessary for them to operate in an efficient manner. Within the next 6 months, we will start seeing productivity gains from all the newer employees becoming “seasoned”. Seasoned employees will be using new and more efficient equipment bought under the new tax reform act (allowing 100% write off) producing a productivity miracle. While major expenditures are taking place for capital investment, these will all be productivity based and designed to be operated by less employees; thus, stretching our existing employee base further. This combination of 4% GDP growth and tax inspired capital expenditures will finally restore our natural historic productivity back to the American worker and our economy. This by itself can extend the expansion an additional 3 to 4 years.
Barring any catastrophic political or global economic issues, we continue to stand by last quarter’s comments, “Build Baby Build”! These economic times will be part of the history we will be so proud of in a few years that is leading to the restoration of the American Dream and the fact that our kids will be better off than us. We are not only in for the longest economic expansion in American history but, we project it will go on several years longer than economist project. Now is not the time to dream small dreams!
SouthPoint Industrial Park in Mocksville Continues to Expand
September 18, 2018
Building Number Ten is underway in the SouthPoint Park in Davie County, NC
Mocksville, NC (September 18, 2018) - Less than a year from a 75+ acre expansion in the SouthPoint Business Park, North Carolina; The Hollingsworth Companies are starting the second facility in a four building expansion in their park. The Hollingsworth Companies have been a long time supporter of the Mocksville community with the introduction of the areas first industrial park in 1997. “I would like to thank the community for being willing to invest time, effort, and money into being a true partner in making this park successful and I want to thank the entire county for their willingness to help us develop their area,” Hollingsworth said.
This tenth building, a 253,180 square foot industrial building, will be a similar designed, steel and masonry facility, with 30’ clear height, 60 foot by 60 foot column spacing and high intensity LED lighting. This facility design has been very successful for The Hollingsworth Companies with four industrial parks and over 125 buildings across the Southeastern Manufacturing corridor located from Virginia to Mississippi. From their beginnings as a local development company in Clinton, TN, The Hollingsworth portfolio now includes 18 million square feet of property leased to companies that range from manufacturing to distribution and fortune 100 companies to high growth, early stage companies less than two years old.
The ninth building in the park, a 108,960 SF facility built on spec. is currently available for a long-term lease by a light manufacturing and/or distribution company. Two additional buildings are planned in the park, a 152,160 SF facility that can be expanded to 238,590 SF and a 130,344 SF facility that can be expanded to 259,944. Both are expected to be constructed in 2019.
"Mocksville could not have asked for a better business partner than the Hollingsworth Companies. It has been a pleasure working with such a professional organization that has helped bring so many employers to our town since 1997. With their new buildings coming on line in the near future, Mocksville will remain at the forefront of economic development in this booming economy" stated Will Marklin, Mayor, Mocksville, NC.
Terry Bralley, President of the Davie County Economic Development Commission added “Mocksville-Davie County has been the envy of rural communities in North Carolina for 20 years. Our community has developed the perfect public-private partnership to support an industrial park with speculative buildings bringing 100’s of jobs and new investment to our community.
Hollingsworth believed in our community when others did not. Without industrial buildings in today’s fast paced environment, communities do not have the opportunity to grow future jobs.
The partnership with Hollingsworth, the largest non urban industrial real estate developer and construction firm in the southeast United States continues to creates an incredible winning story for our community, of which we are most grateful.”
The SouthPoint Industrial park is located adjacent to the I-40 between the I-85 and I-77. This location is ideally suited for manufacturing and distribution companies that support the Charlotte, Winston Salem, and Greensboro MSA’s. The Charlotte MSA has seen strong growth with defense-related industries with four of the nation's top ten defense contractors locating facilities in the area as well as a strong market for distribution companies located along the I-85 corridor. Greensboro has well established manufacturers in chemicals (pharmaceuticals), transportation equipment, machinery, and fabricated metals. While the Winston Salem area sees continued expansion in Apparel, Aerospace, and Construction Equipment manufacturing.
About The Hollingsworth Companies
The Hollingsworth Companies are the largest non-urban Industrial Real Estate developer and construction firm in the southeastern United States with 125 tenants, eighteen million square feet of industrial space, spread over 15 states. The Hollingsworth Companies has facilities located in North Carolina, Alabama, Georgia, Mississippi, South Carolina, Tennessee, and Virginia. For more information about The Hollingsworth Companies, contact, Tom Mann, Senior Vice President of Industrial Real Estate, at 865.457.3701, email@example.com