Analysis derived from third quarter 2016 market reports supplied by Coldwell Banker Commercial Caine, CBRE, Colliers, NAI Earle Furman and Cushman & Wakefield | Thalhimer
Industrial
Summary:
More than 3.4 million square feet of industrial space was delivered in Q3 2016, reports CBRE. It was the “largest amount of square feet delivered in a single quarter since the completion of the original BMW facility 20 years ago.” NAI Earle Furman reports a net absorption of 2,036,879 square feet with an asking average rental rate increase of 0.8 percent to $3.67 NNN per square foot. Two large distribution centers, Techtronic Industries and Dollar Tree, along with speculative industrial projects were delivered this quarter.
Outlook:
Colliers says that speculative construction is not slowing down, but developers are mitigating risk-building flexibility into their projects by waiting for tenant requirements before completing buildout. Strong leasing and supply constraints will feed rental growth in 2017, according to Cushman & Wakefield | Thalhimer.
Office
Summary:
The Upstate office market continues to remain healthy. NAI Earle Furman reports a 0.6 decrease in vacancy from 8 percent to 7.4 percent for the quarter. Downtown office space in both Greenville and Spartanburg continues to be in high demand. In the suburban markets, there is leasing activity but still no new construction, says Cushman & Wakefield | Thalhimer.
Investors looking for steady and secure cash flow continue to be interested in the Upstate as primary markets become saturated and competitive, reports Colliers. Three buildings totaling 23,238 square feet were delivered in the Greenville/Spartanburg market during the third quarter according to Coldwell Banker Commercial Caine.
Outlook:
Continued increasing occupancy and rental rates should eventually drive development to suburban markets. While downtown Greenville is expected to remain hot, expect to see an increased focus on downtown Spartanburg as interest begins to pick up.
Retail
Summary:
The retail market has changed from a product-driven market to an entertainment-driven market, says NAI Earle Furman. Consumers are looking for entertainment, food and services when they go out instead of products.
The Pelham Road retail corridor is taking off, according to the Colliers report. “The area is surrounded by popular residential neighborhoods with immediate access to many of the region’s major employers.” It is estimated that 80,300 people live within a 10-minute drive of the densest retail area of Pelham Road. Redevelopment of the Earth Fare shopping center, which added an additional 44,000 square feet, and the new Shoppes at Pelham, which will be anchored by a 49,000-square-foot Lowes Foods and include 17,000 square feet of retail, are fueling the growth.
Vacancy in Greenville is down to 4.95 percent and rental rates are creeping up, reports Cushman & Wakefield | Thalhimer. Grocery stores continue to fuel growth in the retail sector with the addition of Lowes, Aldi, Lidl and several new Walmart Neighborhood Markets.
Outlook:
Spartanburg and Greenville’s downtown areas will continue to see growth with new restaurant and retail offerings. Grocery stores will continue to be the impetus for retail centers. Chains such as Sprouts and Wegmans have announced plans to enter the Carolinas market.
