Vacancy Rates Decline as the Market Sees Improvement
The Greenville, South Carolina office market witnessed an increase in leasing activity in 2012 resulting in a third quarter direct vacancy rate of 13.93%, 427 basis points lower than a year ago. With the market absorbing 180,626 square feet since year-end 2011 and increased construction activity, continued growth is expected through the rest of the year and into 2013.
Central Business District Submarket
The Central Business District (CBD) submarket ended the third quarter with a direct vacancy rate of 9.87%. Class A office space is becoming limited having a direct vacancy rate of just 5.99%. Class B and C third quarter vacancy rates were 15.40% and 16.70%, respectively. With Class A space becoming less available, the “flight to quality” trends of the past several years are waning. This should provide owners of higher quality Class B properties opportunity in the coming year. Less desirable Class B and Class C properties will continue to struggle unless owners are willing to dedicate the necessary resources to improve those properties.
Recent lease transactions in the CBD include an 18,000 square foot lease signed by Sempura U.S. Gas & Power at 201 Riverplace. Also, Windstream Communications signed a 40,000 square foot lease in the Landmark Building located at 301 North Main Street.
Construction continues on Phases I and II of ONE, a 395,000 SF Class A mixed use project which will bring a unique office and retail experience to the CBD. Containing nearly 50,000 square feet of retail space, the building will be home to national retailer Anthropologie and provide a new retail branch and headquarters for Certus Bank. Phase I is nearing completion and Phase II has a completion date of late 2013. While the delivery of ONE will improve the overall CBD submarket, some office buildings will be adversely affected in the process as tenant relocation to ONE leaves vacancies in other buildings.
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