Results are in for the fourth quarter of 2013, and quarterly commercial real estate market reports just released show that industrial, office and retail sectors finished out the year strong, and area commercial real estate firms expect an upward trend continuing in 2014.
INDUSTRIAL
The Upstate industrial market is still showing improvement and rounded out the fourth quarter of 2013 with a positive absorption rate, and the lowest total vacancy rate (8.4 percent) seen in years, according to the Colliers market and forecast report.
The region continues to attract manufacturers and distribution companies through county tax incentives, logistics support from the Inland Port and a skilled labor force. Colliers also states that construction is gaining momentum with several industrial speculative buildings announced and new companies entering the market.
A new 108,000-square-foot spec building by Atlanta-based Pattillo Industrial Real Estate is expected to break ground soon in Spartanburg County. Also in Spartanburg County, Corporate Center is adding 100,000 square feet of Class A space to its existing park. Construction also continues on the 156,000-square-foot Class A spec building at Caliber Ridge Industrial Park in Greer being developed by Liberty Property Trust.
Demand for build-to-suit buildings has come to the forefront as available class A space has declined, says the Cushman & Wakefield Thalhimer report.
Rental rates in the industrial market have continued to rise as well, reports Lee and Associates. At the end of the fourth quarter 2013, the average quoted price was $3.24 per square foot, representing a 0.6 percent increase compared to third quarter 2013.
Lee and Associates also reports the largest industrial projects currently underway are a 300,000-square-foot building at 3288 N. Old Laurens Road and a 120,000-square-foot building at U.S. Highway 123 in Liberty for Taylor Made Gold.
According to Grice Hunt, industrial division broker with NAI Earle Furman, re-shoring, technology and demand-driven supply are what’s driving the market into 2014. NAI’s report shows that the overall vacancy rate is 8.1 percent with 4,016 buildings and 14.4 million square feet in overall vacant space.
OFFICE
Keith Jones and Stuart Wyeth, office division brokers with NAI Earle Furman, report the office market in the Upstate is very active. Both the suburban and central business district submarkets have approximately 10,000,000 square feet of for-lease multi-tenant office space.
A good portion of the activity in the suburban market is centered on tenants seeking to move from Class B properties to Class A properties.
Within the central business district, the NAI Earle Furman report says that small companies are showing more interest to be located near 24-hour amenities. Greenville Health System is expected to expand its 300 E. McBee Ave. location, backfilling space vacated by Smith Moore Leatherwood when it moved to new space at ONE.
The largest transaction in the office sector was the sale of Highwoods in Greenville. Eight buildings, which included the Patewood Business Park, totaled 697,771 square feet and sold for $58.2 million dollars in December 2013, according to the Lee and Associates report.
Vacancy decreased in the office market to 7.1 percent, decreasing for the fifth consecutive quarter. Lee and Associates reported a positive net absorption rate of 411,370 square feet in the fourth quarter 2013. Class A space was a positive 125,159 square feet and Class B was at 162,151 square feet.
Cushman & Wakefield Thalhimer reported that asking rents continued to rise, especially in the central business district with an average of $19.88 per square foot for Class A buildings.
With the ONE building almost at full occupancy, Colliers predicts that the Greenville office market will show further improvements with vacancy rates declining and rental rates increasing.
RETAIL
In the retail sector, “growth” was the key word for most retailers, according to Jimmy Wright, retail division broker at NAI Earle Furman. Redevelopment in markets like Clemson Boulevard in Anderson, Haywood and Woodruff roads in Greenville and W.O. Ezell Boulevard in Spartanburg will continue. Diversification of retailers like Wal-Mart through its neighborhood market and Wal-Mart Express should also continue, according to Wright, along with expansion of retailers such as Sherwin-Williams.
The Greenville retail market ended 2013 with an occupancy rate of 90.73 percent, said the Colliers report, with big-box closings leading to an increased availability of anchor space, mostly in the eastside and Haywood Road submarkets, but spaces are being backfilled by new tenants.
Part of the former K-Mart on Wade Hampton Boulevard has been leased to Planet Fitness and Ollie’s Bargain Outlet with 50,000 of the 104,000 square feet remaining. Conn’s, an electronics and appliance store chain headquartered in The Woodlands, Texas, plans to occupy the former Babies R Us location on Haywood Road.
Completion of contemporary, upscale space such as the ONE project downtown and the renovations and construction at Magnolia Park are all contributing to Greenville becoming a shopping and dining destination, according to Lee and Associates.
