Q2-2014 Greenville Office Market Report: Limited Activity in the First Half of 2014

Limited Activity in the First Half of 2014

GREENVILLE, SC

MARKET OVERVIEW

Leasing velocity was slow through the first half of 2014 for the Greenville, South Carolina office market which ended the second quarter of 2014 with an overall vacancy rate of 18.51%, down slightly from the first quarter vacancy rate of 18.61%.

The market’s class A space is in greater demand than class B and C space resulting in a vacancy rate of 14.44% for class A space, much lower than class B and C vacancy rates of 23.36% and 23.76%, respectively.  Asking rental rates averaged $17.78 for the market with class A and B space average, $20.35 and $15.68, respectively.

 

CENTRAL BUSINESS DISTRICT SUBMARKET

In recent quarters, the main focus in Greenville was on the Central Business District (CBD) which along with new office tenants welcomed new multifamily developments and retailers.  Several residential developments are in the works including the Beach Company’s South Ridge development, which is currently under construction.

The CBD ended the second quarter with a vacancy rate of 18.45%.  Class A and B office buildings make up most of the CBD’s inventory and had vacancy rates of 18.61% and 18.66%, respectively, at the end of the second quarter.  Asking rental rates averaged $20.43 for the CBD, up from $19.90 at the end of the first quarter, with class A and B asking rental rates averaging $21.26 and $18.60, respectively.

Ameris Bank leased 3,500 square feet at the Landmark Building, located at 301 North Main Street.  The new branch will be focused on commercial and mortgage banking.  The move follows a trend seen in other cities in which banks are locating on busy, highly occupied downtown streets to gain exposure and accessibility to customers.

 

SUBURBAN SUBMARKET

The suburban submarkets remained steady through the second quarter which ended with a total vacancy rate of 18.54%.  Leasing and sales velocity was low through the quarter following the sale of Patewood Office Park in the first quarter of the year to Garrison Investment Group.  The park, consisting of six class A office buildings totaling approximately 569,000 square feet, will add office space to the available inventory during the fourth quarter of the year when Fluor consolidates its offices vacating a total of approximately 122,000 square feet of class A space.  The space is anticipated to lease quickly given the quality and location of the office park.

Independence Corporate Park, consisting of 5 office buildings with a combined 211,000 square feet, is now the only office park in Greenville to be fully occupied after leasing approximately 3,072 square feet during the second quarter of 2014.

 

IN THE MONTHS AHEAD

The second half of 2014 looks promising and likely to bring declines in vacancy and increased rental rates despite a slow beginning to the year.  The market is seeing interest from tenants, but deals have been slow to close and major leases have not been signed.  The Central Business District is becoming increasingly vibrant with new restaurants and retailers providing a welcoming environment for companies and their employees.  The suburban submarket, which will have increased availability later this year will attract tenants through the high quality of space and ideal location.

 

 

 

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AROUND THE STATE

CHARLESTON, SC

The Charleston, SC office market’s consistently low vacancy rate and increasing rental rates are  motivating redevelopment projects throughout Charleston with the majority in the Central Business District (CBD).  Several redevelopments including the Cigar Factory, Courier Square and Midtown, will add office space to the CBD.

• The Cigar Factory, built in 1882 as a cotton mill, was recently acquired by a joint venture between Federal Capital Partners and Roi-Tan Investments LLC.  The 244,000 square foot building at 701 E. Bay Street, will be redeveloped into a mixed-use property with space for offices, retail, events, restaurants and parking.
• Charleston Midtown, which will feature approximately 37,000 square feet of office and retail space, is under construction and anticipated to deliver early in 2015.

 

COLUMBIA, SC

The suburban office submarkets in Columbia, SC are receiving heightened attention as the Central Business District (CBD) is running low on quality Class A office space. More office space is coming to the CBD as a new minor league baseball stadium, hotel and conference center are planned to open along Bull Street by 2016.  The redevelopment, known as Columbia Commons, will be located along 181 acres at the former state mental hospital campus and will be developed by Hughes Development.  The Babcock Building is slated to be converted into a hotel and conference center with more than 200 guest rooms and is projected to cost $50 million.  Residential construction on up to 3,500 units is was announced to begin this year and complete as early as August 2015. 

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