Analysis derived from fourth-quarter 2016 market reports supplied by CBRE, Colliers, NAI Earle Furman, and Cushman & Wakefield | Thalhimer
In Greenville’s Central Business District, lease rates continue to rise and vacancy is nearing an all-time low. NAI Earle Furman reports an 8.1 percent vacancy rate in the fourth quarter and a net absorption of negative 1,119,085 square feet. Both suburban and CBD rates continue to climb in both Greenville and Spartanburg. Mixed-use projects have been driving the market, with Colliers reporting that these types of developments “have seen more success on Greenville’s Main Street than any other Main Street in the state.”
Investors have also amped up their game in the Upstate with more than 20 percent of the competitive inventory trading hands in the last two quarters, according to CBRE. Major office sales in the fourth quarter include the Bank of America building, The Wells Fargo Center, Liberty Square buildings, Park East, and Park Central.
The market will continue to be landlord-driven, reports Cushman & Wakefield | Thalhimer. Available space is low and there are few significant new office development projects underway. There are also very few remaining developable sites in downtown Greenville, which will shift new office development projects off Main Street.
Last year was a record year for industrial space in the Upstate. Colliers reported 30 new buildings delivered with nearly 8 million square feet being absorbed. In comparison, in 2015, absorption was at 2.4 million square feet. Manufacturing, automotive, and logistics companies continue to drive this market. In the fourth quarter, more than 340,000 square feet of speculative space was absorbed by multiple tenants, with the two largest being Senator International and Brose, both in Spartanburg, reports CBRE.
Look for new speculative construction to continue into 2017. Cushman & Wakefield | Thalhimer says three buildings — a 332,000-square-foot space at Augusta Grove, a 170,000-square-foot space at Caliber North, and 234,000 square feet at White Horse Industrial Park — should ease pressure for “users looking for larger blocks of space.”
Vacancy hit an all-time low at 5 percent in the Upstate, down from 6 percent in 2015, reports NAI Earle Furman. Rental rates are also at their highest average since 2009 at $10.36/SF. For premium retail locations, asking prices are above $30/PSF. As development expands off Main Street in downtown Greenville, the North Main Street and Stone Avenue corridors are “Greenville’s new in-town destination,” says Colliers.
Greenville has become well known for its restaurant scene, and there are more than 30 new restaurants planned for 2017, according to the NAI Earle Furman report. New grocery store options will continue to enter the market. Fitness boutiques have been popping up everywhere, but this market is close to saturation, so don’t expect to see too many more.
Colliers expects more national and regional tenants to continue to enter the Upstate market, backfilling anchor and junior-anchor empty boxes. Cushman & Wakefield | Thalhimer reports national and Upstate retailer growth trends will continue to be driven by discount, dollar stores, off-price apparel, food (grocery and restaurant), and service retail concepts.