Activity Beginning to Gain Momentum – Greenville Office Market Report

KEY TAKEAWAYS

>    Vacancy rate is down and average asking rental rates are increasing.

>    Office-using employment surpasses pre-recession employment levels in Greenville.

>    New Class A office is planned for the Central Business District.

>    Residential developments announced for the Central Business District.

 

To download the complete report click the link: Colliers International | South Carolina – Q3 2014 Greenville Office Market Report

 

MARKET OVERVIEW

The Greenville, SC office market is gaining momentum and will experience increased leasing velocity in upcoming quarters.  The third quarter of 2014 ended with decreased vacancy rates and higher rental rates.  The vacancy rate was down to 16.68% from 17.58% at mid-year 2014.  Rental rates averaged $17.73 per square foot for the entire market, up from $17.52 per square foot at mid-year 2014.

Office-using employment is on the rise in Greenville, and as of August 2014, 158.8% of office-using jobs lost during the recession had been regained.  As of August 2014, the Greenville-Mauldin-Easley, SC MSA was the largest employer of the office sector with 83,100 jobs, a gain of 11,400 jobs since the recession.  With the presence of Clemson University’s MBA program and other undergraduate and graduate level programs throughout the region, office-using employment is likely to continue to grow yielding a higher demand for office space and lower vacancy rates.

 

CENTRAL BUSINESS DISTRICT SUBMARKET

The Central Business District (CBD) ended the third quarter of 2014 with a vacancy rate of 16.53%, down from 18.05% at mid-year 2014 and the third quarter 2013 vacancy rate of 19.32%.  Asking rental downtown for the entire CBD averaged $20.41 per square foot, up from the mid-year 2014 average of $20.02 per square foot.  Class A and B asking rental rates averaged $22.16 and $17.45 per square foot, respectively, both higher than the mid-year 2014 average rates of $21.46 and $17.31 per square foot.

The CBD has attracted much attention from residential and mixed-use developments over recent quarters.  Most recently, a nationally recognized Dallas-based developer, Trammell Crow Co., announced plans to demolish The Greenville News site, which is currently under contract, and develop a mixed-use complex on the 4-acre site.  The development, which could include office and retail space, a hotel and a residential component, supports the success and growth of businesses and retailers in the CBD.

Erwin Penland, an advertising and marketing firm, plans to develop a new eight-story office building.  Plans consist of a three-story parking garage below five stories of office space.  The firm plans to occupy space in the building upon completion.

The Beach Company also announced plans to move forward with their project at the corner of Stone Avenue and North Main Street, Stone at Main.  The mixed-use project will include 241 apartments, 21,175 square feet of retail space, an on-site restaurant and resident amenities.  The project is anticipated to be completed by mid-year 2016.

 

SUBURBAN SUBMARKET

The suburban submarkets showed improvement during the third quarter of 2014, which ended with a vacancy rate of 16.79%, down from 17.26% at mid-year 2014.  Asking rental rates averaged $16.51 per square foot, up from $16.19 per square foot at mid-year 2014.

Clemson University International Center for Automotive Research (CU-ICAR) is scheduled to break ground on One Research Drive in November 2014.  The four-story facility, located on the CU-ICAR campus, will offer approximately 80,000 square feet of Class A office space.  The building will also include classroom and laboratory space for the Clemson University Department of Automotive Engineering.

 

 

IN THE MONTHS AHEAD

Throughout the remainder of 2014, and into 2015, the market will likely experience higher occupancy throughout the market, as well as higher rental rates, specifically in the CBD.  As employment in the office sector continues to grow, the market is likely to experience an increased demand for quality office space.  The revitalization and growth of the CBD will attract new tenants to the area.  Mixed-use and residential developments will appeal to a younger demographic of employees, further transforming the market.

 

AROUND THE STATE

CHARLESTON, SOUTH CAROLINA 

The Charleston, SC office market has experienced significant growth over recent quarters with the office market seeing declined vacancy rates and increasing rental rates.  As the market continues to grow new office space will be required to support companies entering and expanding throughout Charleston.   With almost no blocks of contiguous Class A space over 15,000 square feet vacant in the market, existing tenants are often times finding themselves limited by the space they occupy prohibiting growth and job creation.  Speculative office developments are essential for the future growth of the Charleston office market.

>  Building I at Nexton Office Campus, which delivered in February 2014, offers up to 55,000 square feet, one of the few large blocks of Class A office space available in the market.

COLUMBIA, SOUTH CAROLINA 

Improvements continued through the third quarter of 2014 for the Columbia, South Carolina office market.  The vacancy rate was down to 16.24% and asking rental rents for the entire market averaged $16.03 per square foot.  Rental rates are reaching record highs throughout the market, especially in the CBD, and are expected to further increase.  Columbia’s CBD is transforming with new mixed-used and residential developments.

>  Most recently announced were plans to convert the former Carolina Properties building at 1321 Lady Street into a residential development to be called Thirteen 21 Lofts.  The $22 million investment will be made by Capitol Places, Painite Capital, and Mashburn Construction.  The development will have 130 units and offer one- and two-bedroom units.

>  Plans to redevelop the former Kline Iron and Steel Co. site, at the corner of Gervais and Huger Streets, into a mixed-use development were also recently announced.  The redevelopment, to be called Kline City Center, will include office and retail space, a 280-unit apartment complex, a hotel and a 680-space parking garage.   The residential portion of the development will be geared toward young professionals rather than students.  Construction is projected to begin during the first quarter of 2015.

 

To download the complete report click the link: Colliers International | South Carolina – Q3 2014 Greenville Office Market Report