GSA Daily Staff Report
Published Feb. 8, 2010

Class A office space in Greenville rose to 22.2% in the central business district and 22.3% in the suburban market, according to a 2009 report recently released by Bentley Commercial LLC. In 2008, CBD and suburban office rates were 18.7% and 15.7%, respectively.

“While net absorption for 2009 was 8,676 square feet, the availability rate rose due to Carolina First putting 275,000 square feet of Class A space on the rental market instead of occupying the space,” the report said. “The average asking PSF (per square foot) rental rate remained steady at $14.75 PSF.”

The office market received news that was a mixed blessing when The South Financial Group Inc., parent company to Carolina First, announced it would not be moving its corporate headquarters, the report said. The company will occupy 50,000 square feet in the new corporate campus with back office operations and leave its corporate headquarters in downtown Greenville.

“This was good news for the CBD as keeping Carolina First headquarters in the CBD will help the ongoing development of Greenville’s vibrant downtown business community as well as taking 100,000 square feet of sublease space off the market in the CBD,” the office market report said. “The negative news is that there is now 225,000 square feet of vacant Class A space on the market for lease or sale in the suburbs.

Carolina First announced it would sell or lease the three buildings and the undeveloped land.

Greenville’s vacancy rate, not including sublease space, stood at 14.7% at year-end, slightly higher than the U.S. office market vacancy rate of 13.1% as reported by CoStar Group Inc.

The Greenville office market has avoided overbuilding that has plagued other markets and should be poised to take advantage of the recovery, the report said.

The CBD availability rate continued to rise hitting 17.1%, up from 13.6% in 2008. Average asking rates fell to $16.71 from $16.99 per square foot in 2008.

The suburban availability rate rose slightly to 16.2% from 15% in 2008. Average asking rates fell to $14.07 from $14.23 per square foot in 2008.

Greenville Hospital System’s $162 million sale/leaseback of 16 properties with Healthcare Trust of America and the $35 million sale of Independence Corporate Park, caused total office property sales in 2009 to show an increase compared to that of 2008 sales levels

According to Costar, cap rates for office properties have been higher in 2009, averaging 8.55% compared to 2008 where they averaged 8.34%.

“Some attribute this increase to tighter lending practices by banks, as they perceive more risk in the marketplace,” the report concluded.