The Greenville office market consists of 5.9 million square feet of multi-tenant office buildings situated in the Central Business District (CBD) and the Suburban market. During the first six months of 2002 the Greenville Office Market softened considerably, primarily in the suburbs. Overall market occupancy levels decreased from 82.6% at year-end 2001 to 78.8% on June 30, 2002. Net absorption was a negative 99,000 square feet for the first half of 2002 as several companies downsized, new sub-lease space came on the market and new construction was delivered to the suburban market, all of which contributed to the decreased occupancy rate. Leasing activity was down as several large tenants in the market put expansion plans on hold until a clear course for the economy can be determined. All of these factors resulted in downward pressure on rental rates, especially in the suburban market.
264,000 SF of direct vacant space came on the market as well as an additional 76,500 SF of sublease space was added to the market during this period. When sublease space is added to the direct vacant space, the overall Greenville market. This means that there is 1,667,000 SF of office space on the market in both sub-lease and direct vacant space from landlords. Our survey shows the suburban market is significantly weaker than the CBD market.
Central Business District
The CBD occupancy rate was 85.1% on June 30, 2002, a light decline from 85.7% at year-end 2001. This was caused by negative net absorption of 24,500 SF and a 41,000 SF office building being vacated. Sublease space increased as a 30,000 SF block of space was put in the sublease market. When sublease space is added to direct vacant space, the availability rate in the CBD is 18.5%.
Two new major high-rise office buildings are under construction in the CBD with delivery scheduled for the fourth quarter of 2002. Developer Phil Hughes' 75,000 square foot building at the intersection of Spring Street and McBee Avenue will have National Bank of South Carolina and Suitt Construction as tenants with only 9,000 square feet available for lease. The 108,000 square foot, six-story building located at 200 East Board will be occupied by Elliot Davis LLP, with three other local tenants and will have approximately 30,000 square feet of excess space for lease. Starmount, a Greensboro, NC based developer, was unable to acquire the pre-leasing necessary to begin construction on the old Memorial Auditorium site. The Greenville City Council denied Starmount's request for an extension on the contract and the old Auditorium site is back on the market.
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