A Blog About Tax Savings for Building Owners
Data Centers are the hottest play in big time commercial real estate. Billions are at stake. South Carolina looks to be a player in the data center business and will do whatever it can to make sure we have enough electricity to power these centers.
Here’s a map of data centers in South Carolina.
There has been some news that Spartanburg County is about to get a $2.8 Billion investment from an unnamed company at this point. Fox Carolina has a news story about what the Spartanburg County Council is considering with this investment. I’m assuming there will be massive tax breaks provided to this company to have them invest in South Carolina.
“Councilman David Britt said the county is still in negotiations with the company, which he described as a high-performance computing center that supports engineering, technology and aerospace sectors.” Furthermore, “Britt specified the project is not a data center and would also be an energy-self-sufficient facility.”
There’s lots of information coming out of Columbia, SC lately that South Carolina wants to get in front of the data center boom and be sure that SC gets more than its fair share of data center investments. Here’s the South Carolina Data Center Map.
Google’s Data Center Dorchester County, SC.
META’s Data Center Aiken Couty, SC.
Data Journey purchases Spartanburg Data Center for $12MM.
Data Center Dynamics – South Carolina Data Center News
EATON Expands in South Carolina to support growing data center demand.
Greenville continues to go vertical. Maryland-based The Meridian Group is proposing a new mulit-family project next to The McClaren in Greenville’s West End. The property is a one acre lot located at 2 Oneal St., Greenville, SC. The fact that TMG is looking to invest here in Greenville, SC is massive!
The multi-family property will have 8 stories but stair step down it sounds like to 6 stories. The presented this during a project preview meeting in Greenville this week.
There is always some outcry when these buildings are proposed although I don’t see what the issue will be with this one. My guess is if there is any push back it will be minimal given all that is occuring in this part of Greenville’s West End. The McClaren is a massive project and this won’t be quite a big. I am impressed with what they look to accomplish with a one acre lot though.
If history is our guide, they will have to make part of this property meeting the affordable housing criteria set forth by the City of Greenville. One can’t really building anything like this in the city without going through the hoops to show how you are complying with their regs when it comes to affordable housing.
I’m just going to put this here for my own editorializing, but this project would be an awesome one for Green Zip Tape. In case someone from The Meridian Group is reading this, I’d be happy to have a discussion and show you how it can benefit your project.
It was announced today on LinkedIn that top retail brokers, Dustin Tenney and Daniel Holloway of the Reedy River Retail Team at SVN Blackstream have joined a couple of their fellow colleagues as partners in the newly formed commercial real estate brokerage, SVN Palmetto.
Tenney and Holloway join Lars Gruenfeld and Stephen Ahnrud as partners in the new venture.
Tenney and Holloway have had a very fast and successful run as retail brokers in Greenville, SC and across the southeast. It seems like a natural move to go from running a successful team to launching their own brokerage operations.
Those who self-construct their own properties and qualify under the Small Business Rules for 263A might be able to EXPENSE much of their indirect / soft costs to develop, finance and construct the building. This can often be between 10-30% of the cost of the overall project. It’s a game changer. Everyone I know capitalizes these costs because that has been the norm, but it’s been available for expensing since 1/1/2018 due to the Tax Cuts and Jobs Act.
Let’s say you build a new $1,000,000 office warehouse. What if instead of capitalizing those indirect and soft costs across various class lives if you do cost segregation (5, 15, 39 year) you could just expense those and take the deduction right now. It’s has a dramatically different tax impact saving you tens of thousands in income taxes. It also is not subject to recapture tax.
If you meeting the qualifications as a Small Business owner and this is a self-constructed asset, it will be worth it for you to reach out and get an estimate of the costs for the study and the tax savings you’d be looking at if you apply this to your building.
What costs are eligible?
Might you qualify?
Most people are not aware of this because it was only instituted with the Tax Cuts and Jobs Act back during Trump’s first term. This applies to buildings constructed since 1-1-18.
BTW, we can do a look-back study on properties you have developed and still own going back to 1-1-18. Our team will take care of drafting the Change of Accounting Form 3115 and do the negative 481(a) calculation. Your tax advisor would then sign off.
For self-constructed assets, it might be that you are operating your business out of the property. It could be that you are an investor having a property built and you’re hanging on to it. The study works on tenant improvements and building expansions as well. If the construction costs are $250,000+, it’s likely the cost benefit will be in your favor. Take a look. Reach out. I’d be happy to talk with you and get you the information you need to talk with your tax advisors.
Constructing buildings is not cheap these days. I know many have a difficult time of making the numbers work. If you could expense 10-30% of the project right away in year 1, I would think your financials on the project would suddenly look a whole lot better.
We don’t get into ceiling height when it comes to cost segregation other than it likely affects the kinds of dock doors that are installed at the building. I’m posting this because I thought it was a fantastic explanation by @ChadGriffiths of the differences between ceiling height and ceiling clearance. No doubt this is a critical feature of industrial buildings.
I was touring a resi agent and his client through a warehouse yesterday and he brought out a laser measurer and shot it directly to the underside of the roof deck.
I don’t blame him, I blame the limited amount of resources out there for those who want to learn more about the… pic.twitter.com/cS6xLNH7Ub
— Chad Griffiths (@ChadGriffiths) February 26, 2025
Office to residential conversions are continuing to happen but maybe not at the pace many of us expected as we started to come out of the morass of the Corona lockdowns. They are progressing but the costs to convert these buildings are enormous. We have a product that might make these projects a lot more doable.
We know there are many projects that are sitting on the shelf and are not moving forward because the proformas don’t work. But what if a most of that interior cost associated with the renovation could be reclassified as 5 year class life instead of 27.5 years? That would be a game changer for many of these projects.
Office to residential conversions do not qualify for QIP – Qualified Improvement Property. QIP gets 15 year class life and it’s what many are used to when they are doing interior renovations on commercial buildings. Those improvements, if not structural and aren’t part of an elevator or escalator, automatically get a 15 year class life. Now we study a lot of these projects because they want to properly identify everything, but let’s look at the buildout of an office conversion to apartments.
Depending on where these conversions are happening, those costs might be $300-$500/SF. Those costs generally will get depreciated over 27.5 years. Perhaps 15-20% of it can get reallocated to 5 year life with a cost segregation study. But what if 60-80% of those costs could get 5 year class life. That’s a game changer because it opens up a lot more of the building costs to be able to be taken as either bonus depreciation or accelerated depreciation. You can do this if you spec in and use our patent protected drywall tape called Green Zip Tape. It allows for more of the building to be accelerated. Everything that touches the Green Zip Tape gets a 5 year life – the sheet rock, the paint, the studs in the wall, the electrical, plumbing and cable in the walls. It’s a massive game changer.
The costs for the Green Zip Tape run $3/SF. We guarantee you’ll see a $30/SF tax benefit by using our tape. No other tape or product frankly can do this. If you are working on an adaptive reuse project with a significant sheet rock application, Green Zip Tape might be right for you. Want to learn more? Reach out and lets have a conversation about it.
No, deferred depreciation is not eligible for bonus depreciation. Bonus depreciation applies to qualified property that is newly placed in service during the tax year. Deferred depreciation typically refers to depreciation that was not claimed in prior years but is now being caught up, often through a Form 3115 (Change in Accounting Method) adjustment or a Section 481(a) adjustment.
Here’s why deferred depreciation does not qualify for bonus depreciation:
Panera Bread continues to expand in the Upstate of South Carolina and will soon be opening a new store later this year in Anderson, SC.
Garrison Smith and Zane Landwerlen of McCoy Wright announced on LinkedIn that the Freddys will be converted to a new Panera Bread. The address is 1702 E. Greenville St., Anderson, SC 29621.
Freddys building was about 2,700 SF and sits on an acre lot. This property just closed in January 2025 for $1,725,000.
I’m a Panera Sip Club member so it’s always nice to have more places where I can stop in and grab a coffee or lemonade as I’m out and about studying commercial property.
The City of Greenville, SC has just signed a lease to open a Design Center right on main street so the public has easy access to planners and can see what is happening within the city. This is such a great idea and I love this concept as goverment moves toward greater transparancy.
The City of Greenville is one of the most remarkable small cities in the country and the leadership has been very deliberate regarding the growth and design you see in the city. They are to be commended for the work and planning that they have done.
I love the idea of street access to the City of Greenville Design Center. It looks like it will be beautiful space and I can’t wait to stop in to check it out and attend public meetings and presentations. The new space will open later this year and will be located at 15 S. Main St., Greenville, SC.
Well done City of Greenville, SC!
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