Greenville Office Tenants Face Rising Costs and Limited Options for Space
- Robust interest in the Greenville, SC office market is contributing to low vacancy rates and limited quality options for large blocks of contiguous space.
- Rising rental rates and construction costs are resulting in record-high occupancy costs for office tenants throughout the market.
- Downtown construction activity is booming and visible, as several projects are well underway.
- The market will continue to strengthen through 2016 with high occupancy, premium rental rates and favorable cap rates, attracting out-of-market investors.
Low Vacancy Rate Leaves Few Quality Options
Healthy demand for space throughout the Greenville, SC office market is contributing to declining vacancy rates, leaving users with limited options for quality space. At the end of the first quarter of 2016, the total vacancy rate for the market was down to 17.4% from 17.8% the previous quarter and 17.9% one year ago. Space continues to be absorbed throughout the market, and larger blocks of contiguous, Class A space, larger than 20,000 square feet are difficult to find. As a result, tenants are finding themselves competing for space, and oftentimes, remaining in the space they currently occupy.
Greenville’s Central Business District (CBD) has shown great improvement and has strengthened over recent years. The submarket’s total vacancy rate was down to 14.7% at the end of the first quarter of 2016, down from 15.3% one year ago and 17.2% two years ago. Class A and B space is in highest demand, as tenants seek high quality space with attractive amenities for employees. The vacancy rates for Class A and B CBD office space were 16.1% and 10.8%, respectively, at the end of the first quarter.
The ONE development in Greenville’s CBD is successfully attracting tenants and quickly backfilling the former CertusBank space. Just recently, Endeavor announced plans to locate at the development and occupy 20,000 square feet. Endeavor, led by Joe Erwin, will be the largest co-working space in Greenville and will cater to the creative services industry. The news follows WYNIT Distribution’s announcement late in 2015 to relocate its headquarters from New York to the ONE development, occupying 57,000 square feet.
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