Retail Market Experiences the Greatest Development Activity in Years
- The Greenville/Spartanburg, South Carolina retail market continues to tighten with strong demand, declining vacancy, and escalating rental rates.
- Construction activity is strong throughout the market and is at its highest level in recent years.
- Grocers and fast-casual restaurant chains are among popular retailers.
- New retailers are entering the market and existing retailers are growing their presence.
Strong Demand Yields Tight Market in 2015
Favorable demographics, a growing population, and a strengthening tourism industry are collectively driving the Greenville/Spartanburg, South Carolina retail market. The market’s vacancy rate continues to decline steadily despite strong construction activity and new product being added to the inventory. New developments are successfully attracting retailers and pre-leasing quickly with many delivering fully leased. At year-end 2015, the market vacancy rate was down to 11.8%, a number that does not accurately depict true market conditions as a majority of the existing vacant space resides in older, less desirable shopping centers. One year ago, the total vacancy rate for the market was 12.1%. The vacancy rate in the highly demanded Woodruff Road submarket was down to just 2.9% at year-end with less than 40,000 square feet of shop space remaining available for lease. Retailers are competing for quality space, and consequently, many are preleasing space in new developments at rental rates never-before-seen in the market.
Rental rates are climbing due to increased competition for space and rising construction costs for new and redeveloped space. At the end of the fourth quarter of 2015, asking rental rates for shop space averaged $12.09 NNN for the market. The Woodruff Road submarket, home to Magnolia Park, reported the greatest rental rates for shop space with asking rental rates averaging $34.57 NNN at year-end 2015. Overall, rental rates for the market are up from $11.31 NNN at year-end 2014. Downtown retailers are seeing rental rates for shop space reach the mid-to-high $30s.
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