Industrial, office and retail sectors show overall signs of improvement
Commercial real estate mid-year markets reports are out, and the industrial, office and retail sectors are all showing signs of overall improvement.
Lee Commercial and NAI Earle Furman reports show steady rental rates, increased momentum in Greenville’s Central Business District, a decrease in the vacancy rate and positive net absorption. A report from Colliers shows the office market ended the second quarter of 2013 with increased availability and lower rental rates.
INDUSTRIAL
In the industrial sector, reports are all showing a long-awaited drop in vacancy rates and available industrial space beginning to become sparse. According to the NAI Earle Furman report, the vacancy for Class A industrial space is under 2 percent in Greenville County and 3.4 percent in Spartanburg.
Liberty Trust is constructing the first speculative building developed in the last five years at 110 Caliber Ridge in Greer. Other new industrial buildings are under construction at the 605,000-square-foot multi-tenant park.
Another 131-acre industrial park, Velocity Park, is shovel-ready near the new Inland Port. The port is expected to open in October after heavy rains delayed the opening and is expected to increase commercial real estate demand in the area.
Lee Commercial reports a drop in vacancy rates to 8.9 percent. This consistent decrease is supported by a positive net absorption of 1,524,749 square feet in the second quarter of 2013. Industrial rental rates averaged out at $3.14 per square foot. This represents a 0.3 percent increase in quoted rental rates from the end of the first quarter 2013.
OFFICE
The office market continues to see improvement, according to reports, with a significant jump in absorption of existing office space and development of new office space, which is being inhabited as quickly as it can be constructed.
According to Lee Commercial, the Greenville/Spartanburg office market has seen another drop in vacancy this quarter. As of the end of second quarter 2013, the rate stood at 8.1 percent. This is a 1.4 percent decrease over the course of one year.
The Greenville Central Business District (CBD) saw the highest level of transactions, according to NAI Earle Furman’s report. Overall vacancy was down with net absorption increasing, and asking rents were down slightly for the second quarter of 2013.
Overall average rental rates for the market were down to $16.36 per square foot per year from the first quarter, but remained 18 cents higher than the second quarter of 2012, according to Colliers’ report.
Planned tenant relocations to ONE Greenville, the newest office building in the Greenville market, are generating increased availabilities in other CBD office buildings. As a result, according to Colliers, the CBD submarket’s second quarter vacancy rate was up to 16.41 percent from the previous quarter’s 15.61 percent with average asking rental rates declining slightly to $18.45 from $18.57 per square foot earlier this year.
RETAIL
This sector has also seen a lot of activity with many new-to-market retailers to the Upstate. In downtown Greenville, new retailers include Jack n’ Diane’s dueling piano bar, Anthropologie, Gringos Mexican Restaurant, Kilwins at NOMA Square (opening soon) and Tupelo Honey.
Magnolia Park on Woodruff Road has been heating up as well with Cabela’s (opening soon), Toys R Us, Babies R Us, and the delivery of retail space to Bad Daddy’s Burger Bar, Firebirds Wood Fired Grill and Babaziki Restaurant Services, which are expected to open in the fall of 2013.
According to the NAI Earle Furman Report, Wal-Mart is the king of the big box, and in April, they opened a 90,000-square-foot Supercenter in Pickens, adding 150 new jobs to the growing economy. In addition, Wal-Mart recently acquired the 7.18-acre Kevin Whitaker Chevrolet site at the corner of North Pleasantburg Road and Furman Hall roads. It is unclear when construction will begin, but the new site is expected to increase shopper convenience and traffic to the dynamic retail mix of the Cherrydale submarket.
In Clemson, Publix opened a 54,000-square-foot store to anchor the newly developed Gateway Village. Other notable tenants in the center will include Red Bowl Asian Bistro, McAlister’s Deli and IHOP Restaurant.
Powdersville continues to be a hot spot in the Anderson market, recently attracting two very notable tenants near the intersection of Hwy 153 and Hwy 81, next to the CVS and newly-opened 144,000-square-foot Wal-Mart. There are three strip center developments being discussed for this area, which would add an estimated 30,000 square feet in 2014.
The NAI Earle Furman report also saw continued improvements with vacancy decreasing while net absorption increases, but asking rents decreased slightly. Lee Commercial said the overall vacancy has hovered around the mid-6 percent point for the past few quarters and continues to do so with a reported rate of 6.8 percent at the end of Q2 2013.
Lee Commercial also reports that net absorption was strong for the second quarter 2013, with positive 256,766 square feet absorbed. Rental rates were quoted at $9.46 per square foot this last quarter and are down from their levels at Q1 2013, but up from this same time last year.
