The "Asphalt Premium": Why Paving is the New Roof

If you walk onto a typical 5-acre drop yard in Spartanburg County, you'll usually see one of two things: a dust bowl in the summer or a mud pit in the winter.

For years, "crusher run" gravel was the industry standard. It was cheap ($15/ton), permissible by code, and "good enough" for old fleet trucks. But the tenant profile in Upstate SC has shifted. We aren't just parking dump trucks anymore; we are parking $200,000 tractors, sensitive power equipment, and overflow logistics trailers.

The market is now bifurcating into two distinct asset classes: Functional Dirt (Gravel) and Institutional Surface (Paved/Lit/Fenced). The spread between them is widening.

Why the Premium?

It's not just aesthetics. It's operational cost for the tenant.

• 01
  Tire Wear & Damage.Gravel, especially when rutted, chews up heavy truck tires. A single replacement set for a tractor can cost $4,000+. Paying an extra $1,000/mo in rent to save three sets of tires a year is simple math.
• 02
  Dust Control & Liability.In dry months, gravel dust coats everything. For tenants storing sensitive equipment or high-end vehicles (like the BMW supplier fleet), this is unacceptable.
• 03
  Stormwater Compliance.Mud tracks on public roads lead to EPA fines. Paved aprons and stabilized yards prevent "track out."

The Capex Equation

Paving isn't cheap. In 2025, heavy-duty asphalt (suitable for loaded trailers) is running $3.50 - $4.50 per SF in the Upstate. For a 3-acre yard, that's a $500k+ check.

However, if that capex moves rent from $3,000/acre to $5,500/acre, you are generating an incremental $90,000/year in NOI on a $500k spend. That is an 18% Yield on Cost for the improvement alone. In a world of 6% cap rates, finding an 18% return on capital within your own fence line is a no-brainer.

The Spearhead Strategy

We actively hunt for "ugly" gravel yards in A+ locations (near I-85 exits). We underwrite the cost to pave, fence, and light them. We effectively "flip" the surface, moving the asset from Class B Functional Dirt to Class A Institutional IOS.

We don't buy the pavement; we build it. And the market pays us for it.