Focus Remains on Central Business District

October 21, 2013

 
MARKET OVERVIEW

The Greenville, SC office market ended the third quarter of 2013 with a vacancy rate of 19.44%, 92 basis points higher than the previous quarter and two percentage points higher than a year ago.  Despite the increased availability of office space in the market, the overall average rental rate remained steady for the market at $16.36 per square foot per year.

CENTRAL BUSINESS DISTRICT SUBMARKET

Greenville’s Central Business District (CBD) ended the quarter with a vacancy rate of 18.68% and a positive net absorption of just over 50,000 square feet.  The delivery of ONE Greenville North Tower contributed to the CBD’s positive net absorption.  Although the new class A office building added pre-leased office space to the market’s inventory, the vacancy rate was 227 basis points higher than the second quarter vacancy rate. Average rental rates in the CBD increased to $18.88 per square foot per year.

 
The CBD continues to receive the most attention with proposed redevelopment plans and new hotels and multifamily complexes. 

• McKibbon Hotel Group, Inc. announced plans to open an Aloft Hotel over Greenville’s new parking garage.  The hotel which will have 144 rooms and an outdoor pool is expected to be open in early 2015.

• Developer Phil Hughes filed an application to build an eight-story apartment complex, Rivers Edge, to have ground-floor commercial space.

• Earlier in the year, Grant Peacock announced plans to build a four-story apartment complex at East McBee Avenue and Spring Street.  The $16 million apartment complex is currently under construction and upon completion will consist of 55 units, a health facility and community garden.

• The Beach Company has two projects in the works for Greenville’s CBD.  Last year, the company announced plans to build a 348 unit multifamily complex at the intersection of Church Street and University Ridge.  The 346,000 square foot project is to consist of 7 buildings with approximately 16,000 square feet of retail or office space. Just recently, plans to develop a 225 unit apartment complex on a 4.7 acre site at the corner of Stone Avenue and N. Main Street were announced by the company.  The complex is to include three and four-story buildings as well as retail shops and a parking garage.

The development of apartment complexes and hotels in Greenville’s CBD coupled with recent retail store openings will prove beneficial to the office market as a vibrant downtown and healthy economic environment is attractive to tenants looking for office space. Clemson University, offering its MBA and real estate development programs at ONE Greenville, will likely benefit from the new residential developments.  It is hopeful that further residential developments will draw more educational programs to office space in the CBD.   Leases signed in the third quarter include BMW signing a 10,800 square foot lease at 22 S. Main Street and St. Jude Medical Inc. signing a 3,200 square feet lease at the Liberty Building, 135 S. Main Street. The two leases will occupy spaces that are being vacated due to tenant relocation.  

Additionally, McCallum Sweeny Consulting signed a lease for approximately 5,100 square feet of office space at 15 S. Main Street, the Wells Fargo Building.  The firm will be relocating from 550 S. Main Street during the fourth quarter of the year.
 
SUBURBAN SUBMARKET

Activity in the suburban submarkets remained fairly steady during the third quarter of 2013 resulting in a slight vacancy rate increase of 3 basis points bringing the submarket to a 19.97% vacant.  The positive activity in class A and B buildings was offset by a negative absorption in class C buildings yielding a negative absorption of approximately 1,600 square feet for the submarket.    

The suburban submarket is to become home to Encore Technology Group’s corporate headquarters which will be relocating from Easley.  The company will move into a 10,000 square foot space which is currently undergoing renovations at 2000 Wade Hampton Boulevard, the Liberty Center.  

IN THE MONTHS AHEAD

The future of the Greenville office market is anticipated to be a bright one with decreased vacancy rates and increasing rental rates.  The completion of building two of ONE Greenville will bring increased activity to the CBD.  Retail shops such as Brooks Brothers and Anthropologie attract shoppers to the area increasing consumer spending in the CBD.  Redevelopment of class C office buildings will prove beneficial to the market as quality space runs low.  
 
Click here to download the complete report: COLLIERS INTERNATIONAL | SOUTH CAROLINA: Q3-2013 GREENVILLE OFFICE REPORT