New Record Low Vacancy in Both Office and Industrial Markets
May 3, 2016
CBRE Research has released the latest data on the industrial and office commercial real estate markets in the Greenville-Spartanburg market.
Office
High absorption levels, consistent declines in vacancy and rapidly increasing asking rates continued in the first quarter of 2016 for the Greenville-Spartanburg office market, while shared workspaces emerged as a growing trend. Continued market growth amid a lack of new properties becoming available can be attributed to the new record low vacancy of 11.7%.
The use of co-working space is becoming increasingly popular among corporate users. In the Greenville-Spartanburg market over 210,000 sq. ft. of office space could be classified as co-work space. The most recent example is the 20,000 sq. ft. of space by Endeavor Greenville in the Greenville CBD.
“It is possible that rise in co-working space can be partially attributed to tightening market conditions,” said CBRE Research Manager Brian Reed. “With vacancy at a record low and no speculative deliveries under construction, occupiers are finding few options.”
While there is little speculative development under construction, vacancy is expected to decline further in the coming quarters. The most significant speculative project in the planning stages is Camperdown, 150,000 sq. ft. of Class A space to be constructed at the corner of S. Main Street and Broad Street in downtown Greenville.
Industrial
With no major speculative deliveries and net absorption topping 1.6 million sq. ft. during the first quarter of 2016, vacancy dropped to a record low of 7.2% in the Greenville-Spartanburg Industrial market. A major driver of the industrial market activity in recent quarters has been industrial construction. Tightening availability and low interest rates are driving over 4 million sq. ft. of non-speculative development, which will keep absorption levels evaluated through the first half of 2017. Additionally, the 1.4 million sq. ft. of speculative development currently under construction is peaking the interest of out-of-market investors interested in seeing their long-term performance.
“While current speculative development speaks to the health of the market, the demonstrated success of new development in the present cycle could inspire a new round of speculations,” said Reed.
The following are highlights of each report.
Office
• Activity from over 210,000 sq. ft. of shared workspace in market drives vacancy to a new record low
• Asking rates reach new record high
• New development is mostly pre-leased, meaning vacancy is likely to drop further in the coming quarters
Industrial
• Absorption tops 1.6 million sq. ft. for the second straight quarter, driven by new construction
• New record low vacancy rate of 7.2% achieved, not likely to drop much further as new speculative product is delivered
• Over 6 million sq. ft. of space still under construction
• Charleston’s Volvo facility expected to have modest impact on the Upstate market in the next two years
For more information, visit our website for links to full reports. 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 (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
