SOUTHEAST SNAPSHOT, AUGUST 2004

Greenville/Spartanburg Multifamily Market

The apartment market in the Greenville, South Carolina, metropolitan statistical area (MSA) — also known as the Upstate — is poised for improvement, according to Charles Dalton, president of Real Data, a real estate research firm based in Charlotte, North Carolina. A number of major economic announcements have been made in the last year. Development activity is moderate, demand is improving and rising mortgage rates should mitigate competition from homeownership.

BMW Manufacturing has unveiled plans for a $17 million development and testing facility at its Greer, South Carolina, campus in addition to its already announced research center at Clemson’s Automotive Research Park in Greenville. Greer’s proximity to BMW’s facilities and its relatively low vacancy rate have sparked several potential apartment development projects. Rogers Harmon Development/ Trinity Group, STM Acquisitions and Benchmark Development Group are proposing a total of 466 new apartment units in Greer.

Apartment supply in the Anderson, South Carolina, submarket has grown by more than 20 percent in the past 2 years, pushing vacancy rates above 14 percent. Two significant economic announcements should help fuel demand for this new supply. Walgreens will build a $150 million distribution center in Anderson; the center will employ 450 people. Reliable Automatic Sprinkler Company is planning a 350-employee manufacturing plant in Pickens Industrial Park in Pickens County.

The west Spartanburg submarket, like Anderson, has seen its apartment supply increase by nearly 20 percent in the last year. Consequently, occupancy rates in west Spartanburg have fallen to 83 percent even though demand has been positive. In Greenville, the northeast submarket is faring the best with occupancies approaching 90 percent.

Although apartment vacancy rates for the Greenville MSA remain high at 12.4 percent, according to the June 2004 Apartment Index published by Real Data, demand in the past 12 months reached its highest level in 5 years. Dalton notes, “Demand for multifamily living in the Upstate has suffered in recent years as a result of lost manufacturing jobs and competition from single-family homes. With mortgage rates likely to rise and limited new apartment development, occupancy rates should slowly improve.”

Currently, there are only two new apartment communities under construction, which should enable demand to outpace new supply in the near term. Rock Creek is under construction in Greenville and Haven at Boiling Springs is expected to open in Spartanburg this fall. Johnson Development is building Haven at Boiling Springs and PRS Companies is constructing Rock Creek.

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