Freeman

The suburban office market in Greenville, South Carolina, softened in 2002, and this trend has continued into 2003. “Greenville has a large concentration of engineering firms in the area and they continue to put sublease space on the market as the recession lingers on,” says Brent Freeman of Colliers Keenan Goldsmith. “This trend, combined with the dot-com/telecom burnout and the general recession, has resulted in record vacancies in the suburbs.”

Another trend in the overall Greenville market is that tenants are moving within the market but no new tenants are entering the market. As suburban rates have decreased, many firms are finding they can relocate to suburban Class A space at Class B and C prices. Landlords are offering rental concessions for large tenants in the suburbs. These concessions are taking the form of decreased rates, free rent, increased tenant improvement allowances and payment of moving costs.

Some examples of tenants moving within the Greenville market include significant leasing that occurred at Liberty Property Trust’s Independence Point at the intersection of Interstates 85 and 385 in the suburbs. Hunt Dupree & Rhine took 18,600 square feet and Tetra Data leased 8,000 square feet. IDC Engineering leased 19,600 square feet at Highwoods Properties’ Patewood Plaza, located just off of I-385. In the central business district, Gallivan, White and Boyd PA signed a lease for 31,000 square feet in Liberty Property Trust’s One Liberty Square; the law firm moved from office space it owned.

A bright spot in Greenville is the CBD. Revitalization plans begun 20 years ago are now gaining momentum, and firms are starting to move from suburban locations to the CBD. Elliott Davis, a regional accounting firm, and Suitt Construction Company recently moved from outdated suburban buildings into new high-rise offices in the CBD. These two new buildings, the Elliott Davis Building and the National Bank of South Carolina Building, were delivered during 2002, and both were mostly pre-leased. Several other suburban tenants are rumored to be looking to relocate to the CBD. As the Greenville CBD continues to be a desirable place to work, residential and retail development is starting to become significant.

The park around the historic area of the Reedy River in the CBD is expected to be complete in 2004. A local developer controls a large tract on the Reedy River near the park and he will start a significant mixed-use development when tenants can be secured. Also, Foster, Saad & Company has just placed the old Memorial Auditorium site under contract at the entrance to the CBD next to the 18,000-seat Bi-Lo Coliseum.

The merger of Wachovia and First Union is having an impact on the CBD. Both have large offices in the CBD and during 2002 they decided to consolidate their operations into the Wachovia Building, with the owner agreeing to a redevelopment. This put 50,000 square feet of sublease space on the market in One Liberty Square in early 2003. The Wachovia Building will undergo a $20 million redevelopment with retail and residential space added to the 152,000 square feet of existing office space.

In the suburbs, The Crescent Center at the Point is the redevelopment of an old production plant into office/distribution space at the intersection of I-85 and Woodruff Road. For more information, please see the sidebar below.

According to Freeman, the Greenville office market is a tenant’s market. Class A CBD asking rates range from $17.50 to $20 per square foot, full service. Suburban Class A asking rates range from $16.50 to $18.50, full service.

“With record amounts of space on the market in the suburbs, downward pressure on net effective rents will continue as landlords compete over the few tenants in the market,” Freeman notes. “The speed of the economic recovery will determine how quickly the suburban space will be absorbed. No new development will occur in the suburbs until the excess space is absorbed.”

The CBD is poised for continued development and redevelopment due to its increasing desirability as a place to live, work and play. The city of Greenville continues to add amenities that attract people and businesses to downtown. The CBD should continue to be desirable and the CBD office market should improve dramatically if the economy turns around.

 

CRESCENT CENTER BRINGS OFFICE, DISTRIBUTION & FLEX SPACE TO GREENVILLE AREA The Crescent Center St. James Capital and Navarro Real Estate are redeveloping the former Fiber Industries facility, located at the Point Corporate Park, a new 122-acre master-planned corporate community at the intersection of I-85 and Woodruff Road in Greenville. When complete, The Crescent Center will offer more than 850,000 square feet of Class A office, flex and distribution space and provide up to 300,000 square feet of contiguous space, which is currently lacking in the Greenville area. Phase I, which will be completed in August, includes 150,000 square feet of flex office space and 300,000 square feet of distribution/warehouse space. Construction of Phase II will begin in the fall. Harper Corporation is serving as general contractor, Pazdan-Smith Group is the architect, Navarro Real Estate is handling the leasing and Smith Chapel Holdings LLC is the owner. The building is currently being renovated to reflect cutting-edge architecture and design in order to attract companies with larger office space, higher density requirements and rising demands for Internet-based services. Call centers, high-tech, telecom, logistics, procurement and R&D corporate facilities will find the flexibility and efficiency of the building and infrastructure to be beneficial. Upon completion, wide bandwidth and multiple sources of telecommunications and extraordinary power availability will be available within the property to ensure that the telecommunication needs of the new economy businesses are satisfied. Other features include large truck courts, deep bay depths, 22- to 28-foot ceilings and ample parking. - Julie Fritz

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