The large buildings looming up from the tree-lined streets of downtown Greenville are somewhat tucked away from the street-level shops and restaurants. Greenville, to most visitors, is a bustling, thriving city.
And it is. But within those downtown office buildings, there’s a different story playing out. Companies leaving downtown, like Wynit and TD Bank, and others that have downsized, are leaving large blocks of office space sitting empty. More than half a million square feet of office space is available in downtown Greenville.
At the surface, it might not seem like a big deal. But, that empty space means no employees filling up cubicles — employees that used to visit shops and eat at restaurants before, during, and after work. Those workers may have lived nearby, in one of the many apartment buildings that have sprouted in the past few years.
“The Greenville office market is in a unique position with lots of large block availabilities,” says Taylor Allen, brokerage associate at Colliers International. “These availabilities will span throughout both the suburban and downtown markets. As new projects have been developed over the past few years such as ONE and 110 E. Court St., the tenants experienced a flight to quality, which has left large chunks available.”
What does this mean for downtown Greenville? We checked in with some of the city’s top commercial real-estate firms to see what they think.
Changing needs of office space
Having enough parking for employees has always been a challenge for downtown office employers. “Greenville is handicapped with parking issues,” says Rhett Craig, an associate with Avison Young. “If employees cannot get to work, it makes it difficult for new companies to sign a lease in the CBD [Central Business District].”
To combat the parking issue, some employers are offering telecommuting and flex-time options. Some companies are also looking for more building amenities and green space to provide a better workplace for their employees. There’s also the desire to keep costs down by decreasing the space needed for employees. That means landlords need to be competitive with the rates they are charging and consider offering incentives.
“The consolidation in the engineering industry, the diminishing square feet per employee, and the evolution of co-working space has placed tremendous pressure on office landlords to add amenities and update the look of their buildings and parks to remain competitive,” says Brian Young, managing broker with Cushman & Wakefield | Thalhimer. “There is great opportunity for tenants in the market to likely get fresh/updated space with more rental concessions.”
Craig agrees. “Listing rates are likely to remain the same. However, effective rates will decrease as landlords become more aggressive. Months of free rent will be offered, so the value of the building does not decrease as future NOIs [net operating income] will not change.”
Does that mean office tenants can expect to see a reduction in rates? Not necessarily. “The Greenville CBD has aggressive market rates and strong competition with potential tenants,” says Shannon Caldwell, a broker with NAI Earle Furman. “Leasing rates range from $25 to $30 per square foot, with each building providing recent renovations or new construction. The Greenville market continues to show low vacancy rates and record-setting asking rates.”
Do building renovations matter?
The good news is that even with vacancies, several downtown buildings like Bank of America, Wells Fargo, and One and Two Liberty Square have recently undergone significant renovations. Investors are capitalizing on the Greenville market, says Kyle Berdugo, an associate with Cushman & Wakefield | Thalhimer. “Over the past four years, there are more institutional investors coming to Greenville, investing in the commercial real-estate market, injecting capital into new buildings, and renovating buildings and corporate office parks.”
Renovations do make the property attractive to companies and investors, but that may not necessarily equate to a lower vacancy rate.
“One and Two Liberty Square were acquired by the Virginia-based Lingerfelt CommonWealth Partners LLC in 2016. The building had a significant renovation in 2014 but continues to have quite a bit of vacancy. The building was purchased with approximately 70 percent vacancy rate,” Caldwell says. “2 W. Washington St. has had an unfortunate vacancy with the bankruptcy filing of Wynit in 2017. They currently show 40,000 square feet vacancy and are in negotiations with Wynit regarding their bankruptcy and lease of an additional 57,330 square feet through 2023.”
It’s not just happening downtown, either. The ’burbs are also finding large chunks of office space available as tenants downsize, move, or have a change in their office needs. Those buildings, too, are being renovated to make them more attractive to potential clients. In Greenville County, more than 1.4 million square feet of office space is available.
“A shift in the suburban market has occurred, as many buildings and office parks have recently changed ownership and are experiencing renovations, such as Harbinger, Park 37, and Axis Office Park [former Fluor campus],” Berdugo says. “The 200,000-plus square feet of space available in the Axis Office Park is a large amount of square footage new to the market. This increase in supply of space is expected to place downward pressure on lease rates. Assuming market conditions stay constant, it will take some time to absorb this new space as it comes to market. Office tenants are demanding more on-site amenities such as fitness centers and cafeterias. Tenants are also looking at ways to cut costs and are decreasing the amount of square footage per worker needed and are also demanding more green space.”
What is being done?
As Greenville continues to grow, the city is addressing the need to attract new business. City leaders have put together a committee on economic development and finance to look at the city’s strategy when it comes to attracting businesses to downtown.
The committee is newly formed, though, says Mike Panasko, Greenville’s business development manager. “There’s not a strategy in place yet. We’re being thoughtful about the process and what is the best approach.” City Councilman George Fletcher is heading up the committee.
“I think the city is doing everything they can; our cost of living and operation is still lower compared to other cities,” says Colliers International’s Allen. “We do a great job of recruiting manufacturing and need to create more incentives from an office standpoint to really increase the office momentum. It is something that is top-down from the state.”
|Downtown Greenville Office Space Availability|
|Building Address||Building Name||Total Square Footage Available|
|55 Beattie Place||One Liberty Square||53,582|
|75 Beattie Place||Two Liberty Square||48,854|
|110 E. Court St.||Erwin Penland Building||39,196|
|131 Falls St.||12,652|
|101 N. Main St.||Bank of America Building||42,920|
|220 N Main St.||21,374|
|300 N. Main St.||The Ogletree Building||3,136|
|15 S. Main St.||Wells Fargo Center||11,061|
|104 S. Main St.||Poinsett Plaza||79,487|
|550 S. Main St.||RiverPlace Office||24,179|
|201 W. McBee Ave.||Piedmont Natural Gas Building||27,981|
|325 W. McBee Ave.||11,411|
|2 W. Washington St.||ONE Greenville — Phase 2||51,413|
|301 N. Main St.||Landmark Building||48,179|
|305 S. Main St.||Camperdown||150,000|
|1 N. Laurens St.||9,870|
|*Information provided by Avison Young, NAI Earle Furman, and Colliers|