Market analysis derived from first-quarter 2018 commercial real estate market reports provided by Avison Young, CBRE, Colliers, CBC Caine, Cushman & Wakefield | Thalhimer, NAI Earle Furman, and Newmark Grubb Wilson Kibler.
Some large chunks of space are still available in the Greenville market, and overall vacancy is between 7.4 percent (reported by CBC Caine) and 15 percent (reported by CBRE). NAI Earle Furman reported a negative net absorption in the first quarter of 2018 of 52,512 square feet. The large chunks of space are “perfect for a headquarters location,” Colliers says.
CBRE reports space “given back” this quarter is concentrated among Class A office product in the Greenville suburban submarket, where vacancy climbed by “over 1,200 basis points to 20.6 percent.” CBRE also reports that this is the “first time in the market’s history that tenants have had as many of four different options of 50,000 contiguous Class A square feet in the local market.”
Construction of office buildings continues with seven buildings totaling 151,057 square feet under development across the Greenville-Spartanburg market, reports Newmark Grubb Wilson Kibler. Avison Young forecasts a continuing demand for co-working space and points out that many private landlords are filling vacancies by signing multiple leases with individual office users.
Industrial space in the Upstate continues to be hot with record-low vacancy rates. Avison Young reported a 5.6 percent vacancy rate, “the largest decrease in industrial vacancy in the last eight quarters.” NAI Earle Furman reported that total inventory grew by more than 2 million square feet in the first quarter of 2018. Rates are at an all-time low of 6.6 percent, CBRE says.
Industrial speculative development continues but still is not outpacing demand. According to CBRE, the market is “attracting a large number of developers who are delivering new product and acquiring land at an unprecedented rate.” Cushman & Wakefield | Thalhimer says much of that space will be leased prior to building completion. Developers and brokers continue to look for viable land sales, but the biggest hurdle is a lack of utilities. Twenty-two leases were signed during the first quarter of 2018, Colliers reports.
Expansion at the Port of Charleston continues to be a huge driver for the Inland Port Greer and continues to fuel industrial-space needs in the Upstate. Several large industrial developments are in progress, including the Inland 85 Logistics Center in Greer on 324 acres with 500,280 square feet, expandable to 1.2 million square feet. Also under construction is the Apply Valley Industrial Park in Spartanburg with 373,000 square feet of Class A industrial space — 177,000 square feet has already been pre-leased. Newmark Grubb Wilson Kibler reports the new Smith Farms Industrial Park could “yield up to 11 buildings totaling nearly 6 million square feet of Class A space.”
Even with some national retailers (Toys R Us, Babies R Us, Bi-Lo) closing stores in the Greenville-Spartanburg market, retail space continues to remain strong. NAI Earle Furman reported a 4.4 percent vacancy rate for the first quarter of 2018 with an average asking rent of $11.82 per square foot, up 9 percent for the same period in 2017 and 5.5 percent higher than fourth-quarter 2017. On Main Street in downtown Greenville, rents continue to rise, reports Avison Young, with little vacancy on South Main Street. North Main Street, however, has struggled to fill vacant retail and restaurant spaces.
Colliers cites an example of the difference in the Greenville urban retail submarkets with average triple net rental rates of $33 per square foot on Main Street. North Main Street is at $36 per square foot, and the West End is at $25 per square foot.
The Greenville Health System Swamp Rabbit Trail continues to attract commerce, even outside of downtown Greenville. Avison Young reports local retailers are locating businesses along the trail in the Overbrook, Gower, and Parkins Mill neighborhoods. Downtown Spartanburg also continues to draw new retailers and investors, Colliers says.