Limited Options for Space and Rising Rents Create a Landlord-Favored Marke
- Strong demand for quality, large blocks of office space in the Greenville market is driving occupancy and rental rates to levels higher than those of the past.
- Downtown construction remains visible with several buildings close to completion.
- Investors are expressing interest in the market as high occupancy, rental rates and moderate capitalization rates generate ideal investment conditions. Interest rates are low with the potential to drop lower by the end of the year.
Competition Tightens for Space In Greenville Markets
Demand in the market is healthy due to low vacancy, limited options for large contiguous space and high rental rates. Current conditions have created a landlord-favored market with tenants continuing to pay higher rates to locate in the Greenville market, creating competition between tenants to find suitable space at affordable rental rates. Vacancy for Class A office space at the end of Q2 is 16.6%, down from 17.3% in Q1 2016. The average asking rental rate for Class A office space throughout the market is $23.33 per square foot per year (PSF/YR), up from $20.66 (PSF/YR) a year ago.
Tenants are attracted to the Greenville market for more than business. Greenville is once again rated on Thrillist’s list of Best Small Cities for quality of life, upping the appeal for companies looking in the area. Completion of current and future construction of new quality office spaces downtown and in the suburbs will alleviate the stress on tenants, creating an even playing field between all the players in the market. Competition tightens in the market as similar tenants are competing for the same spaces. Tenants downtown are primarily in the business services sector while many tenants in the suburbs are in the manufacturing and engineering industries. These tenants are driving the demand for spaces in close proximity to their respective industrial clusters.
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