Market analysts call for strong 2018, with some exceptions

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Commercial real estate professionals in the Upstate expect a strong 2018 for the office, retail and industrial markets, even with a few hurdles that need jumped along the way — hurdles that include parking needs and a shortage of skilled labor.

Office Market

Market experts at Cushman and Wakefield said that in the fourth quarter of 2017, the Greenville suburban market “had the biggest change in occupancy with 250,000 square feet of office space going back on the market once the Fluor Quad campus sale closed.”

In addition, Patewood, Park 37 and Harbinger are all under new ownership and are undergoing renovation along with Independence Corporate Park. As a result, suburban asking rates should stay solid or even become more competitive as the new, upgraded availabilities come to the market, according to Cushman and Wakefield’s fourth quarter 2017 office market report, which also said that with engineering firms consolidating and moving, there will be even more suburban availability in 2018.

In Greenville’s Central Business District, the 159,000-square-foot Wells Fargo building at 15 S. Main St. is 11,000-square-feet short of full occupancy. JR Automation took 11,000 square feet at 22 S. Main St. The site of the former Greenville Memorial Auditorium was sold for $3 million to a hotelier with plans to develop a mixed-use project on the 1.83-acre parcel.

Asking rates in the Central Business District are holding because of available amenities, restaurants and events bringing more tenants downtown.

Parking remains one of the major issues for employers in the downtown area, and that has a direct impact on office vacancy rates, according to a report by Avison Young.

“In order to retain tenants, landlords must either offer parking on-site or negotiate space allocation from the city of Greenville,” the report said.

The city of Greenville is in the process of revamping its master plan. A new master plan and continued rent growth are expected to encourage more investors to enter the market, according to Avison Young’s 2017 fourth quarter market report.

“As a result, Greenville’s demand for office space may increase as high paying jobs move to the area,” the report said. At the same time, more deliveries will become available in 2018, making the market more competitive for landlords. This will create the opportunity for shrewd tenants to shop the market and occupy buildings with competitive rates.

Retail Market

There are several key trends to be observed in the Upstate area throughout 2018, according to Avison Young. Spartanburg and other suburban markets are expected to experience steady growth. Recently, a 500-acre mixed used project was announced outside of downtown Spartanburg. Food hall concepts are making their way into downtown Greenville, as restauranteurs are seeking opportunities in redeveloping in established neighborhoods surrounding the city of Greenville.

The 2017 fourth quarter report from Cushman and Wakefield shows a lack of qualified workers becoming a big concern for the small business owner in 2018. The shortage has prompted many small business owners to raise compensation, leading to the second highest raise in history since March 2000, according to the National Federation of Independent Business.

Garrick Brown, Cushman and Wakefield vice president of Retail Research for the Americas, said “if the rally in sales we saw during the holiday season doesn’t continue in the first and second quarters, we will most likely see key retailers filing for bankruptcy.”

Industrial market

A lack of qualified workers also is a concern for manufacturing, the Avison Young report said.

“While manufacturing is a key driver to job and wage growth, concerns exist over the availability of advanced-manufacturing labor,” the report said. To meet the demand for skilled labor, Clemson University, Greenville Technical College and Greenville County schools are developing a curriculum in conjunction with manufacturers such as BMW.

Announcements of capital expenditures by manufactures continue. Among these are PSA Airlines, GE Aviation, Bosch, Arthrex Inc. and Metromont. These investments are creating a demand for additional warehousing and influencing spec developments. Avison Young said Spartanburg County has the most square footage under construction in the Upstate.

Cushman and Wakefield outlines two observations in its quarterly report — the price has doubled for readily developable industrial land sites since the start of 2014; and the market will need to address utility infrastructure including water, sewer and natural gas to continue progress for industrial demand as we are running out of large tracts that have all utilities.