Market Strengthens as Demand for Space Grows
- Activity is on the rise throughout the Greenville, South Carolina office market, which ended the third quarter of 2015 with greater occupancy and higher rental rates.
- Tenants are showing interest in larger spaces, benefiting the suburban submarkets.
- Office-using employment is on the rise, positively correlating with increasing demand for space and declining vacancy.
- The remainder of 2015 is poised for continued improvement.
The Greenville, SC office market is strengthening as a growing number of tenants show interest in larger blocks of space. As the economy continues its recovery, businesses are implementing their strategic plans for 2016 and preparing for solid growth. The result is a growing demand for large blocks of space, many in excess of 25,000 square feet. Additionally, tenants are choosing to upgrade their space by either renovating or moving up into Class A facilities. The market will continue to tighten as large blocks get absorbed. Smaller Class A and B spaces will also become increasingly difficult to find, leaving less desirable Class B and C space vacant.
The third quarter of 2015 ended with an overall vacancy rate of 15.9%, down from 16.3% the previous quarter and 19.1% two years ago. Leasing activity was evenly distributed among the Central Business District (CBD) and suburban submarkets throughout the quarter, collectively absorbing approximately 35,500 square feet of office space. Class A and B vacancy rates for the market were down to 12.1% and 21.8%, respectively, at the end of the third quarter.
Asking rental rates are on the rise, averaging $18.37 per square foot for the market at the end of the third quarter, increasing 9.2% since the third quarter of 2013. Class A and B asking rental rates averaged $21.05 and $17.00 per square foot, respectively. Rental rates at office parks Independence Corporate Park, Patewood and Brookfield jumped to $20.50 per square foot.
The market is beginning to see build-to-suit construction and may see speculative construction in the next 12 to 18 months. One build-to-suit currently underway is being developed for CH2M, a global, Fortune 500 engineering firm, which will occupy the new 70,000 square-foot facility on Verdae Boulevard in Greenville County. CH2M is relocating from its existing operations in Spartanburg. Holder Properties is performing the development on behalf of Verdae.
Downtown construction projects include Erwin Penland 360, RiverPlace Phase 3 and Falls Park Place. Construction is underway on Erwin Penland 360, a new, 6-story, 125,000 square-foot, Class A office building in the CBD. Erwin Penland plans to occupy 48,000 square feet, and several leases have been signed for additional space in the building including Cherry Bekaert. Construction continues at One Research Drive at the Clemson University International Center for Automotive Research (CU-ICAR) with only 40,000 square feet remaining to be leased.
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