Greenville-Spartanburg’s economy shifts gears to fuel growth and attract talent seeking quality of life

Greenville-Spartanburg has evolved from a cluster of booming textile mill communities to a region powered by modern manufacturing, energy infrastructure and advanced materials, all strategically linked to an inland port. With this shift comes record-setting manufacturing expansions in the industrial sector and an influx of requiring both cutting edge work environments and multifamily housing, according to CBRE Research’s 2017 Southeast U.S. Real Estate Market Outlook.

The Greer Inland Port has consistently beaten operational projections for the last three years, inciting developers to double down with the building or announcement of more than 2 million sq. ft. of speculative development in the last two years.

Investors are taking note of the progress in Greenville-Spartanburg and whether it is the rapidly growing industrial corridor or the series of award-winning, unique downtown districts, the attraction is on the rise. All sectors are seeing increasing interest from outside investors.

Office

Greenville-Spartanburg pushed record-setting trends that are expected to continue through at least the end of 2017. The combination of rapid market growth coupled with a lack of new development indicates landlords will continue to wield leverage at the negotiating table until new product is released to the market.

Increased out-of-market investor interest spurred several properties to trade hands in 2016 resulting in more than 20% of the competitive inventory trading hands.

Despite slowing down from the double digit rent growth experienced in 2015, tenants and landlords can expect higher asking rates in the coming years. This is largely attributable to the rising cost of construction, which now requires rents 15% higher than at ONE, one of the most expensive space in market.

Vacancy will continue to fall to record lows until construction costs stabilize and speculative space is brought to market. Until then, tenants and landlords will need to be flexible and creative to find suitable space.

The first relief valve will break ground in 2017 in the form a mixed-used development in the heart of CBD, Camperdown, featuring multifamily, hospitality, retail and 110,000 sq. ft. of office space.

In addition to record-setting market fundamentals, the introduction of new ownership will likely cause the continuation, if not acceleration, of these trends.

Industrial

2016 experienced record-breaking absorption levels and a pivot toward a more distribution-oriented market. South Carolina exports more goods per capita than any other state in the Southeast and Greenville-Spartanburg is home to the Greer Inland Port. This direct connection to the Port of Charleston, coupled with high levels of market growth, is attracting a wide ray of developers to the industrial market.

Largely fueled by build-to-suit and owner-built activity, there is a substantial flow of speculatively built warehouse product. While growth in manufacturing explains a significant component of the record setting development, a shift in new construction is occurring to accommodate the distribution of goods. Proof of this evolution is in the recent development patterns as 45% of the Class A warehouse space in market was built after the opening of the inland port in 2013.

Retail

Nationally, retail is the slowest to recover from the recession. While Greenville-Spartanburg matches this trend, local market drivers are headed in the positive direction. Job growth and housing values have reached pre-recession levels and new residential construction propels grocery store and ancillary strip center development with the market entry of Harris Teeter, Lowes Food and Lidl.

Restaurant retail, particularly in downtown markets, is very active. Regional restaurant brands are demonstrating success and forcing an evolution away from locally-owned retailers.

While momentum is relatively slow outside of grocery and restaurant related activity, investors have reasons to be bullish. Lack of new product means vacancy rates will decline and rent growth is likely. Greenville-Spartanburg can expect to see increased development in the next two years.

Multifamily

The Greenville-Spartanburg multi-family market is at a crossroads. Increased outside interest and a strong appetite for product has resulted in an unprecedented amount of multifamily development in downtown Greenville. While vacancy is expected to rise in the coming years, the possibility of the market absorbing large amounts of new product could touch off a new round of development.

 

For full report please visit http://www.cbre.us/o/greenville/Pages/market-reports-test.aspx

 

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.