UBJ Square Feet
Commercial Real Estate Still Strong Quarterly reports show momentum in all sectors By Sherry Jackson | staff | sjackson@communityjournals.com
Quarterly commercial real estate market reports just released show that industrial, office and retail sectors are still strong, with the main emphasis still in Greenville’s central business district.
RETAIL
According to NAI Earle Furman’s report, the retail market had vacancies decrease to their lowest level since early 2012. Lee and Associates reported an overall vacancy rate decrease of 6.7 percent. Net absorption increased to 189,183 square feet and many new projects were announced in the second quarter of 2013. Several projects at Magnolia Park on Woodruff Road (including Yard House, Golfsmith and Dave and Busters) were unveiled, and construction got underway on the 100,000 square foot Cabela’s, which will be the largest new re-
NAI EARLE FURMAN OFFICE MARKET REPORT
Q3 2013 OFFICE SECTOR Number of Buildings: 4,217 Market Size (SF): 36,836,886 Overall Vacant Space (SF): 2,970,424 Overall Vacancy (%): 8.1% Direct Vacancy (SF): 1,036 Net Absorption: 164,122 Average Asking Rental Rate ($/SF/YR): $13.61
tailer for the Greenville market when it opens next year, according to the NAI Earle Furman report. In downtown Greenville, Brooks Brothers and Kilwins opened, bringing vacancy in the downtown area to less than 6 percent. The Aloft hotel was also announced. NAI Earle Furman also reports the completion of several new large leases, including Sky Zone, an indoor trampoline park that backfilled 45,500 square feet of the old Sports Authority space on Laurens Road, and Big Lots, back-filling part of the old Walmart space at Rockville Center in Easley at 40,000 square feet. Lee and Associates also reported that the average quoted asking rental rates are down over previous quarter levels. Rates ended this quarter at $9.28 per square foot, a 2.2 percent decrease from second quarter 2013.
OFFICE
The office market is still going strong in Greenville, showing a continued increase in momentum with small and medium sized spaces filled in Greenville’s central business district and several larger transactions in the suburban market. NAI Earle Furman reported overall vacancy and net absorption decreased, while asking rents were flat for the third quarter of 2013. Lee and Associates and Collier’s International both reported a vacancy rate of 19.44 percent, 92 basis points higher than the previous quarter and two percentage points higher than a year ago. Despite the increased availability of office space in the market, the overall average rental rate remained steady for the market at $16.36 per square
28 Upstate business journal November 1, 2013
LEE AND ASSOCIATES – AT A GLANCE Market Industrial Flex Office Retail
Vacancy Rate Net Absorption
8.8% 18.3% 8.0% 6.7%
foot per year, according to Colliers. NAI Earle Furman reported that Class A and Class B office spaces between 2,000 and 4,000 square feet remain in vogue with users in the CBD. Spaces in this range are limited and rental rates are beginning to rise. Pockets of quality office space remain available in Class A properties above the 4,000 square feet thresholds that have been slower to lease up. NAI Earle Furman considered the quarter’s most notable office transaction to be the sale of Liberty Towers at 55 and 75 Beattie Place, two Class A buildings that sold to a New York private equity group. The transaction marks the first arm’s length/non-distressed investment sale in the last few years and promises to inject new life into those assets, the report said. Meanwhile, the Wells Fargo Center development located at 15 S. Main Street lost a major multi-floor tenant to the Liberty Towers in the previous quarter. The building owners are in the process of completing a renovation to many of the floors in the building. The NAI Earle Furman report also shows that the Greenville suburban market is reflecting a desire for tenants to move up the spectrum towards higher quality office spaces; however, a large amount of vacant space still remains. Rental rates remain flat on average across all classes, even though virtually no new space has been added to the suburban market in the past five years. Some notable lease transactions include the relocation of a 12,000 square foot technology company from Easley to Greenville, as well as a new 10,000 square foot lease by Charter Communications at 401 Brookfield office park.
319,732 SF 50,148 SF 164,122 SF 189,183 SF
Rental Rates
$3.17/SF $6.75/SF $13.79/SF $9.28/SF
Colliers is also reporting that Greenville’s CBD is experiencing the most attention, ending the quarter with a vacancy rate of 18.68 percent and a positive net absorption of just over 50,000 square feet. The delivery of ONE Greenville North Tower contributed to the CBD’s positive net absorption, Colliers said. Although the new class A office building added pre-leased office space to the market’s inventory, the vacancy rate was 227 basis points higher than the second quarter vacancy rate. Average rental rates in the CBD increased to $18.88 per square foot per year. Other projects announced in the second quarter 2013 that will have an impact on office space include Rivers Edge, an eight-story apartment complex that will have groundfloor commercial space, and The Beach Company’s two projects in the works for Greenville’s CBD. Other third quarter news from Colliers include a 10,800 square foot lease BMW signed at 22 S. Main Street and St. Jude Medical Inc.’s 3,200 square feet lease at the Liberty Building, 135 S. Main Street. The two leases will occupy spaces that are being vacated due to tenant relocation. Additionally, McCallum Sweeny Consulting signed a lease for approximately 5,100 square feet of office space at 15 S. Main Street, the Wells Fargo Building. The firm will be relocating from 550 S. Main Street during the fourth quarter of the year.
INDUSTRIAL
The Industrial sector also saw a positive net absorption of 319,732 square feet in the third quarter, according to Lee and Associates. >>