Analysis derived from fourth-quarter 2015 market reports supplied by CBC Caine, CBRE, Colliers, Lee & Associates, NAI Earle Furman and Cushman & Wakefield | Thalhimer.
As manufacturing continues to dominate the Upstate market, industrial space remains strong. Approximately 7 million square feet of industrial space is currently under construction. Several speculative buildings were delivered in 2015 and pad sites were developed, paving the way for more to come in 2016. South Carolina had the highest level of industrial construction in the Southeast in 2015.
Overall vacancy remained somewhat steady in the fourth quarter at roughly 7.5 percent and net absorption was 919,276 square feet, according to most reports. Asking rents were averaging $3.62 per square foot in the fourth quarter.
Expect to see new speculative projects in 2016. The SC Inland Port and its possible expansion will continue to attract distribution centers to the Upstate.
Asking rates, especially in the downtown Greenville CBD, continue to rise, with prices in the mid-$20s per square foot for Class A space. At the end of 2015, total vacancy came in around 16.5 percent, down from 17 percent reported in 2014. That brings us to a record low vacancy rate of 12.2 percent. Office developers continued to compete with hotel and multifamily developers for sites and are paying top dollar.
The Upstate continues to attract out-of-state investors, especially in the office market. Expect several large towers downtown to change hands in 2016, including Liberty Towers, Wells Fargo and SunTrust. Bank of America is already on the market and offers are coming in. With less Class A space available (even with new projects such as EP3, Falls Park Place and others), expect to see increasing rental rates and possibly some speculative office construction along with build-to-suit and adaptive reuse projects.
Grocery stores continued to dominate the retail market, with several new Walmart Neighborhood Markets and ALDI stores constructed in the fourth quarter of 2015. This is expected to continue in 2016 with Harris Teeter, Lowes and Lidl all entering the Upstate market for the first time.
Vacancy rates declined slightly from the previous quarter, coming in around 6 percent for the fourth quarter. Average asking rentals rates are around $10.20 per square foot and net absorption continues to increase.
In 2016, expect to see vacancy continue to decline and rental rates climb. Downtown Greenville, Woodruff Road and Pelham Road corridors should remain strong for retail.