An Upstate Quarterly Commercial Real Estate Market Update
From the Ground Up: A Guiding Hand for New Industrial Development Adam Padgett’s client came to him with a problem. In 2017, the Spartanburg-based entrepreneur purchased 25 acres of prime real estate adjacent to Interstate 85 at a great price. Now, the time had come to develop it, but he had no idea how to start the process.
Page 4 - Company News
The Beginnings of Something Big While much has been made of Upstate South Carolina’s
business boom in recent years, the story goes back much further. Construction of I-85 began in 1956, and while completing the new road would take nearly 8 years, Spartanburg Mayor Robert L. Stoddard reported in 1963 that an incredible $50,000,000 had already been invested in new businesses along the route. And the growth was just getting started. Page 5 - Q2 2022 Market Report
Acquiring Prime Land
Purchasing commercial land is more complicated than many first-time buyers anticipate. Padgett, an Executive Vice President at Lee & Associates Greenville-Spartanburg explains, “to identify a site, do your due diligence, acquire the land, at best is a six month process. Most of it is nine to twelve months.” For Adam, taking on a project with land already in hand
Pages 6-7 - All Eyes on Spartanburg
offered a number of intriguing possibilities. But this was still
Adam Padgett, SIOR, Executive Vice President / Principal
a multi-year commitment to guide his client through the
leaves land open for expansion if the occupying tenant
that the highway was helping to transform the region,
return on investment.
an existing facility, rather than having to move operations
the route from Atlanta to Raleigh-Durham, NC would soon
time consuming and expensive process of maximizing their
The partnership faced a big decision early. “We were
offered four times what he bought it for,” Padgett said. “I told him absolutely no.”
Knowing the Current Market
Advising his client to turn down a healthy pay day wasn’t a decision Padgett took lightly. But being in the market
every day, he knew there was a bigger opportunity if they developed the land.
Originally envisioned as a five-building site, Adam
grows. The ability to expand operations by adding onto
entirely or buy out a fellow tenant holds obvious benefits. Meanwhile, the additional space can be used for extra
Solving Unforeseen Problems
But this adjustment was about more than just reducing
about to get more complicated. The fire sprinkler system
project costs. Padgett’s experience gave him the insight necessary to make the change. “I’ve worked on several projects with a company searching for something like
this. So, I knew there was a market for it. And we were
very limited in all the Upstate where we could build this type of building.”
The “Boom Belt”
their targeted return. At his recommendation, they revised
creation. By the 1980s, additional work was required.
the plans and new architectural drawings were created for two large buildings, including one with a unique feature. Named Big Red Gate, the design of this initial building
be “the preferred mega-corridor for business”.
parking or outdoor storage.
discovered that the elevated price per square foot for
constructing several smaller buildings significantly cut into
citing a prediction from accounting firm Ernst & Young that
If Padgett couldn’t find an 8-inch pipe, the project was
design required a specific size pipe to function correctly, and without it, massive water tanks would have to be
stored onsite. But the water district the land was in didn’t offer the size he needed. Undaunted, Adam found what he needed down the road. He was able to move water
districts, tap into the pipe he needed, and circumvent the problem.
The construction of I-85 led to a massive surge in job
That was far from the only challenge, but Adam’s expertise
The nation began to take notice, with a September 1993
additional parking, which is always in short supply at
issue of Business Week magazine declaring the land
surrounding I-85 to be a “Boom Belt”. The authors stated
has helped guide the project throughout. He added
manufacturing plants, and even worked with the architect to shift one building’s location to ensure an access road
offers enough space for trucks turning into a parking lot.
No Signs of Slowing Down
With $2.5 billion invested across the Upstate region in 2021 alone, the prediction of a “mega-corridor” has come true. Today, vehicles numbering in the tens of
thousands travel through South Carolina on I-85 every
day. So perhaps it should be unsurprising that the work
goes on. Road widenings are underway and a significant
interchange improvement project just began this summer. While work remains to be done, this much is clear. The
Big Red Gate Rendering
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Interstate that transformed the region’s economic outlook in the 1960s continues to be a driving force for new business today.
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Aerial view of customer property close to Exit 78 on interstate 85 (Chesnee exit)
Breaking Ground
Under Padgett’s guidance, the multi-year development project is now ready to break ground. His intricate knowledge of the details necessary to move the
project along at every phase, from permitting through construction, has been invaluable. And thanks to his
unusual level of care and attention to detail, the first
building is scheduled for completion in about a year. Already, there are several interested prospects and
promotional efforts continue. Adam’s close partnership with his client has proved indispensable, and soon, this
land will provide new space to businesses, continuing the growth that has come to define Upstate South Carolina.
“You get dealt these challenges and then you’ve got to go figure out the solution.”
Adam Padgett, SIOR, Executive Vice President / Principal
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COMPANY NEWS
Emma Thorpe Marketing Manager
Lee & Associates Greenville-Spartanburg is proud to welcome three exceptional professionals to our team.
Elledge Willis Brokerage Associate
Kami Turner
Property Management Admin & Bookeeper
In May of this year, the team at Lee & Associates was
Elledge Willis is a familiar face around the office at Lee &
Kami Turner joined the team at Lee & Associates in
as Marketing Manager. Emma comes with a strong
November 2020. In that time, his attention to detail and
In her position as Property Management Admin &
excited to welcome Emma Thorpe to her new position background, having graduated from Clemson with her BA in Marketing and afterwards worked as Marketing and Communications Coordinator for the Greenville Chamber of Commerce, in addition to other roles.
According to firm President Randall Bentley, SIOR,
CCIM, Emma has been a tremendous addition to the
team at Lee & Associates. “In her brief time with us, she
Associates, having served as Marketing Manager since enthusiasm for the job was widely appreciated by his
coworkers. In June of this year, the Anderson University graduate transitioned to a new role as a Brokerage
Associate. He is excited to pursue this new opportunity.
over one million square feet of industrial, office and retail commercial assets.
Marty Bentley, Vice President at Lee & Associates is
for Atlanta Fine Homes Sotheby’s International Realty.
role as part of the property management team at Lee
his new position, including a previous role in marketing
“We are excited to have Elledge on our brokerage
We’re excited for what the future holds.”
background in real estate marketing,” says Senior
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Bookkeeper, Kami will support the administration of
Elledge brings an extensive background in real estate to
has already taken on a number of responsibilities and handled them with professionalism and excellence.
May, coming from a background in sales and banking.
team. He brings a wealth of knowledge from his Associate Jordan Skellie.
excited for the experience Kami brings to her new
Property Services. “Kami comes to us with a wealth of knowledge and experience in sales, marketing and
detailed administrative and operational functions. Kami
will be working closely with our accounting department in meeting the financial needs of our property owners and tenant customers.”
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Industrial Market Overview Prepared by RANDALL BENTLEY, CCIM, SIOR, President
The Greenville/Spartanburg industrial market activity has continued to grow
significantly throughout both the 1st and 2nd QTR 2022. Slated as one of the
fastest growing areas in the US, the Carolinas have attained national attention
Q2 2022 MARKET MARKET INDICATORS
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
12 Mo. Net Absorption SF
1,462,297
1,722,649
4,327,579
2,926,652
986,376
Vacancy Rate
3.1%
3.5%
4.1%
5.6%
6.7%
Avg NNN Asking Rate PSF
$4.67
$5.36
$4.41
$4.15
$4.09
SF Under Contruction
18,885,184
15,306,474
10,316,835
6,205,970
2,952,660
Inventory SF
243,608,803
242,392,949
241,504,506
241,341,998
238,124,870
MARKET INDICATORS
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
12 Mo. Net Absorption SF
330,512
313,073
65,984
195,048
51,172
Vacancy Rate
3.86%
4.00%
4.30%
4.30%
4.50%
Avg NNN Asking Rate PSF
$13.76
$13.06
$12.74
$12.63
$12.15
SF Under Contruction
264,577
453,763
527,913
502,701
372,206
Inventory SF
92,058,216
91,858,256
91,766,609
91,741,775
91,771,081
Prepared by DARATH MACKIE, Associate Broker
MARKET INDICATORS
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
The Greenville/Spartanburg office market is experiencing increased
12 Mo. Net Absorption SF
972,689
545,533
218,216
(345,634)
(773,080)
Vacancy Rate
6.90%
7.00%
7.60%
8.50%
8.40%
Avg NNN Asking Rate PSF
$18.90
$18.38
$18.39
$17.96
$17.82
SF Under Contruction
736,575
1,051,457
1,096,797
1,142,057
738,243
Inventory SF
42,374,539
42,064,013
42,019,845
41,978,432
41,966,634
with significant growth patterns across all sectors. Industrial space is in high demand and inventory is low; however, over 18M SF of industrial space is
under construction. The GSP market’s ideal location continues to attract new industry with its interstate interface and short drive to Charlotte, Atlanta
and the Port of Charleston. The nearby Inland Port of Greer extends the Port of Charleston’s reach 212 miles inland to the GSP market which provides
convenient connection via interstate and railway to the rest of the nation.
Retail Market Overview
Prepared by ANDREW HARRILL, Associate Broker The Greenville/Spartanburg retail market was heavily impacted by the
pandemic during 2020 with the area posting negative absorption during that year. In 2021, every quarter posted positive absorption including
positive quarters in Q1 and Q2 of 2022. The average NNN asking rental
rate per square foot has increased from $13.06 in Q1 2022 to $13.76 in Q2 2022. The vacancy rate has decreased from 4.00% in Q1 2022 to 3.86% in Q2 2022. The area has shown strong performance with grocers, discount
retailers, and other retail services along with population increases lending to increased retail activity.
Office Market Overview demand for office investment opportunities that reflect a cap rate on
average of 7.5%. The average square footage of office space leased across all class types was 2,162 square feet. Average Class A office space leased
this quarter was 6,407 square feet, Class B was 1,665 square feet and Class C and below was 2,045 square feet. Vacancy rates for all class types saw
a slight decline to 6.9%. Average asking rental rates across all class types
continue to increase this quarter to an average of $18.90 per square foot from $18.38 square foot in Q1.
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amount of international attention in recent years due to its convenient access to Atlanta and Charlotte, as well as its advantageous combination of nearby airport, rail, interstate, and inland port access. Since its opening in November 2013, the SC Ports Authority Inland Port Greer has had a tremendous impact on the local economy. It extends the Port of Charleston 212 miles inland via rail, enabling the rapid movement of goods. Terminal Manager Will Angelich estimates the port has a $30 billion annual economic impact across the Upstate. “It’s grown beyond our wildest expectations,” WYFF recently quoted him as saying. And these benefits stretch well beyond the city of Spartanburg, enabling growth in communities across the entire county.
Unexpected Success Stories
All Eyes on Spartanburg County Everyone knows about the cars. When the first BMW rolled off the Spartanburg assembly line in September 1994, it marked a monumental shift for the region that had depended on textile mills to form the backbone of its economy. But that was just the beginning. “This is an exciting time for Spartanburg. Really, things are hitting on all cylinders,” says Matt Roos, Associate Broker at Lee & Associates Greenville-Spartanburg. Roos, who was Vice President of Investor Relations at OneSpartanburg before joining Lee & Associates, has
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been following the growth for several years and doesn’t see it slowing down. Despite a record setting $1.9 billion invested across Spartanburg County in 2021 by domestic and foreign companies, 2022 is on track to be an even bigger year.
Built for Success
With over 100,000,000 people now living within a 5-hour drive of Spartanburg, the nickname Hub City, originally earned for the prevalence of railroads in the area, is truer than ever. The region has garnered an increasing
The small city of Woodruff is one example. “Just a couple of years ago, people would not have believed the things that are happening in Woodruff right now and are planned for the future,” Roos says. “There was a lot of foresight into the planning and investment.” Once overshadowed by its larger neighbors, Woodruff is now growing rapidly and is projected to double its population in the next five years. In the Spartanburg Herald-Journal, City Manager Lee Bailey cited “commercial and industrial growth for jobs” as critical to unlocking the city’s full potential. Already, plans are underway to build an additional high school, and the city has seen success with a number of new business openings in its previously underdeveloped downtown area. Woodruff is far from alone in this new development. Other growth-oriented communities like Greer, Duncan and Roebuck, with easy access to I-85 and I-26, offer increasingly strong commercial real estate potential.
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Although Spartanburg County has experienced rapid growth in recent years, the cost of land is still below the national average, providing both residential
and commercial developers with strong investment
opportunities. Local leaders have planned carefully for this growth, expanding foundational utilities while workers
continue to pour into the region, eager to take advantage of new opportunities.
Education Fueling Opportunity As far back as the mill days, Spartanburg County
developed a national reputation for a strong workforce.
Today, long term residents and new transplants alike build on that legacy, with more well-paying jobs available than ever. Roos has seen the transition happen over the past
Matt Roos; Adam Padgett, SIOR; Jordan Skellie
years. “We started out as a textile region, and that shifted with BMW … and now we’re expanding into different realms of advanced manufacturing.” In addition to
numerous job opportunities, Spartanburg has also placed an emphasis on the continued professional development of its workforce.
The Spartanburg Academic Movement (SAM) started in 2008 as a project to help encourage more high school graduates to pursue a college degree, but has grown
to become a holistic educational program focused on ensuring educational equity. The movement gained
national attention in 2018, when it was featured in an
inspiring David Brooks’ article in the New York Times titled “A Really Good Thing Happening in America.” Brooks
wrote how “SAM embodies a new civic architecture, which has become known as the ‘collective impact’ approach. Americans feel distrustful toward most structures of
authority these days, but this is one they can have faith in.”
Thanks to the concerted efforts of the local community and a strong level of financial support, the future of
education is brighter than ever in Spartanburg County.
Strategic Collaboration
Sustainable growth doesn’t happen by accident. A
comprehensive plan has guided the rapid development, and much of the recent planning has been coordinated by OneSpartanburg, a collaborative organization
combining the efforts of the area’s business, economic and tourism interests. This unique partnership has paid huge dividends, developing cohesive strategies that consider all aspects of immediate and future growth. And Roos
says businesses have taken note. “In Spartanburg, there’s
The opportunity to take a leading role in the growth of its community has been uniquely rewarding for the team at Lee & Associates Greenville-Spartanburg. “We relax, we work, and we play in Spartanburg,” Matt says. “We see the development happening right before our eyes.” So, when Germany-based MEVA Formwork Systems called to discuss relocating from Charlotte, the local experts were eager to help. Jordan Skellie, Senior Associate/Principal at Lee & Associates located a 56,000 square-foot building on a six-acre property that met all MEVA’s requirements. He even represented MEVA in the purchase of the building, taking the original lease structure and converting it into an outright purchase of the property in a way that benefitted both parties. Skellie sums up what makes his job special, “We’re delighted to have played a role in bringing this kind of organization to the Upstate.”
A Bright Future Ahead
Spartanburg’s journey to redefine itself after the decline of the textile industry has not been easy. But today, thanks to its centralized location, technical labor force, and the quality of life in its pockets of growing communities within the county, Spartanburg remains one of the nation’s hot spots for commercial real estate investment. And Lee & Associates is uniquely positioned right in the middle of it all, Roos says. “Through our Spartanburg team, we are able to connect our clients with the resources necessary to flourish. With my relationships with over 1200 community partners and our team’s unparalleled market knowledge, we’re ready to serve you.”
an exceptional level of collaboration. That’s very, very
intentional. And so, you hear that over and over again:
how easy it is to come into our market and how easy it is to thrive in our market.”
Associate broker Matt Roos discusses some of Spartanburg County’s key attributes in this short video. Scan to watch.
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