Retail

Upstate, SC 4Q16 Retail Market Report

2016 ended with a bang for Upstate, SC retail market. Vacancy rates hit an all-time low of 5.0% (down from 6% the previous year). This low vacancy rate has contributed to rental rates reaching their highest average since 2009. While the average for the entire market is now $10.36/SF, we now have published rates for premium retail locations above $30/SF. New retail construction is still well below our historical average of 1,000,000 SF. In 2016, just over 350,000 SF was delivered to the market. Entertainment, food, and fitness drove many of the retail deals in 2016. Several new grocery stores and grocery-anchored centers opened this year. Several more are under construction or in the planning stage. Lowes Foods has 3 stores planned for our market and Harris Teeter has 2 announced stores planned. Publix announced a relocation to a new center in Simpsonville. Wal-Mart Neighborhood Market added 8 stores in the last 2 years. With Greenville becoming well known for its restaurant scene, there are over 30 new restaurants planned for 2017. Some of these new restaurants will be unique to Greenville, but many are coming from other well-known food destinations such as Asheville and Charleston. As a balance to all the restaurant activity, the number of new fitness-oriented businesses is at an all-time high and probably close to the saturation point. Sales volume of retail properties was up in 2016 vs. 2015. Total volume was over $200 million. The average price per SF ($152/ SF) was up over last year, but still well below national average. Cap rates averaged 8.2% in 2016 which is up over 2015 (7.8%). The largest sale of the year was The Shops at Greenridge, which sold for $137 million ($289/SF) at a 5.75% cap rate. Our forecast for 2017 is for our market to remain healthy with some exciting new developments in the works. Ted Lyerly NAIEF Retail Broker

Retail Sector in 4Q16 Number of Buildings

9,913

Market Size (SF)

85,884,540 SF

Overall Vacant Space (SF)

4,195,310 SF

Overall Vacancy (%)

4.9%

Direct Vacancy (SF)

3,895,817 SF

Sublease Vacancy (SF)

298,493 SF

Net Absorption

171,787 SF

Average Asking Rental Rate ($/SF/Yr)

$10.26

Source: CoStar Property as of 1/16/17

Upstate Economy in 4Q16* Total Population+

983,857

Total Households

359,007

+

Median Household Income

$45,115

Total Labor Force^

475,631

+

Unemployed^

17,097

Unemployment Rate^

Greenville County: 3.4% Spartanburg County: 3.8% Anderson County: 3.6%

*Includes data for Greenville, Spartanburg, and Anderson counties +US Census Bureau, 2010 Census & 2015 estimates ^scworks.org: May 2016 data

Overall Vacancy Rates (%) 6.0% 5.5% 5.0% 4.5% 3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

Average Asking Rental Rates $10.30 $10.20 $10.10 $10.00 $9.90 $9.80 $9.70 $9.60 3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

Trends for 4Q16 NET ABSORPTION

VACANCY RATE

CONSTRUCTION

ASKING RATES

Q4 2016

Upstate, SC Market Report Retail Submarket Overview

Below is a sampling from CoStar of the major retail submarkets in the Upstate as of 10/14/16. For data on additional counties or to view corridor mapping, please send a request to marketing@naief. com.

Submarket

# of Buildings

Total RBA (SF) Vacant (%)

Total Net Absorption Total Avg. Rate (SF)

Greenville County Augusta Road

244

1,651,904

7.9

(22,130)

$14.38

Laurens, Haywood, & Congaree

429

7,695,413

2.7

932

$11.83

Downtown Greenville

104

900,713

6.0

6,320

$24.88

Woodruff Road/Butler Road

364

4,539,469

3.4

41,483

$14.71

Pelham Road

151

1,504,076

7.3

7,608

$13.87

Simpsonville

398

3,620,251

2.8

(3,136)

$14.21

Wade Hampton/Greer

578

4,746,900

5.6

48,218

$11.72

All Submarkets

3,871

35,805,164

4.5

44,910

$12.72

East Side/Downtown

522

5,091,549

7.3

(20,414)

$10.05

West Side

449

6,135,375

4.6

76,331

$8.75

Boiling Springs/Highway 9

573

3,738,081

4.7

(37,627)

$9.22

All Submarkets

2,979

23,470,934

5.4

52,315

$8.47

Highway 81 & Clemson Blvd

382

5,554,322

2.4

7,034

$12.54

Pickens

760

6,776,945

5.9

4,175

$10.04

All Submarkets

1,571

13,666,807

4.4

(5,934)

$8.24

Spartanburg County

Anderson County

Average Rental Rate Vacancy Rate

Vacancy & Rent (Past 9 Quarters)

Vacancy Rate Percentage

Millions (SF)

Deliveries

Absorption & Deliveries (Past 9 Quarters)

Price in Dollars per Unit

Net Absorption

Graphs Source: CoStar Property

Q4 2016

Upstate, SC Market Report Retail News

New to the Market in 4Q16 Simpsonville

The Chicken Chopper

Downtown Greenville

Willy Taco

Pelham Road/Greer

Wyndham Garden Greenville Airport

Spartanburg

Lemongrass Kitchen

Sampling of Top Transactions in 4Q16 *NAI Earle Furman Transaction

Sales 821 South Batesville Road Greer RBA: 8,624 Sale Price: $3,305,500 Sale Date: 12/16/16

Sweetbriar Commons* Greenville RBA: 11,000 Sale Price: $1,553,672 Sale Date:11/1016

2400 North Pleasantburg Drive Greenville RBA: 3,600 Sale Price: $700,000 Sale Date: 11/2/16

2306 Reidville Road Spartanburg RBA: 5,904 Sale Price: $2,000,000 Sale Date:12/7/16

1071 Fernwood Glendale Rd* Spartanburg SF: 7,636 Tenant: Guacamole Mexican Grill

2111 North Pleasantburg Dr Greenville SF: 9,200 Tenant: All About Flooring

7709 Highway 76 Pendleton SF: 8,000 Tenant: Oriley Auto Parts

Leases 5 Market Point Drive Greenville SF: 9,300 Tenant: HITRIUM Greenville

Q4 2016

Upstate, SC 4Q16 Retail News

Article from 4Q16 Excerpts from Gateway to Greenville By David Dykes| Upstate Business Journal | October 20, 2016 The view from Reedy River Falls is about to change. Wyche P.A., the law firm that overlooks the river, has agreed to sell its East Camperdown Way property to Orlando, Fla.-based The Kessler Collection, and a new hotel, the Grand Bohemian Greenville, will take its place. This is not just any hotel. Inspired by the look and feel of a national park lodge, Greenville’s Grand Bohemian will add to Kessler’s 11 boutique hotels and restaurants, including Grand Bohemian hotels in Charleston and Asheville. And with an art gallery, spa, 4,000-square-foot ballroom, meeting space and a restaurant and bar overlooking the river, it’s designed to be a destination in and of itself. Hotel officials say they will break ground in the fall of 2017. But as impressive as Kessler hopes the 160room Grand Bohemian Greenville will be, the new hotel is a further sign that properties along the eastern side banks of the Reedy and along Falls and Broad streets are about to potentially experience a transformation about as significant as the one that gave birth to RiverPlace. Although the name for this new area is subject to change, it is being referred to as the East Gateway District. “The Kessler Collection is thrilled to be entering the vibrant city of Greenville for the brand’s next Grand Bohemian hotel,” said Richard C. Kessler, chairman and chief executive officer. “The location is uniquely dramatic, situated along a beautiful waterfall and park in the urban core. We are very eager to begin construction and plans are well underway. There will be no other hotel in the state of South Carolina with such a tranquil ambiance created by natural beauty.” The firm of Sottile & Sottile in Savannah, Ga., is the design architect for the Greenville Grand Bohemian. One of the firm’s principals is Christian Sottile, dean of the Savannah College of Art and Design’s School of Building Arts. Sottile said he has become “extremely familiar” with Greenville over the 18 months his firm has worked on the local project with the Kessler team.

“We’ve been to Greenville a number of times to study the site and understand what really is a very unique context there in Falls Park,” he said. “The opportunity here with the redevelopment of this site is to create an eastern gateway to Falls Park.” Kessler officials said the Grand Bohemian will be an integral part of the area’s transformation into the East Gateway District, in collaboration with developer Centennial American Properties and the City of Greenville. Centennial is redeveloping the Camperdown site, the current home of The Greenville News. The site will feature a hotel, retail, office and multi-family. Centennial has proposed another building at 55 E. Camperdown Way along the banks of the Reedy. The new office and retail development is situated on property that includes the Bowater parking garage and the former Bowater building that now houses the Nexsen Pruet law firm, MGC Law, Colliers International real estate firm and others. Wakefield, Beasley and Associates of Alpharetta, Ga., architect for the project, has applied for a certificate of appropriateness from the city’s Design Review Board. The board is considering the project. Meanwhile, The News will move to 32 E. Broad St. Furthermore, the currently underconstruction Cancer Survivors Park, the coming redevelopment of County Square and the present-day home of the Governor’s School for the Arts and Humanities also signal the expansion of downtown beyond Main Street. For Centennial American President Brody Glenn, the Camperdown project could play a role increasing the area’s vitality. “One of the things that we felt was extremely important is trying to create a connection from Main Street into the [Falls] park,” Glenn told Design Review Board officials recently. That connection, Glenn hopes, will create a quadrant of Greenville throughout Main Street and the Reedy River to “start to create some energy on that side.” Centennial began

developing the News site about two years ago. “We’re so lucky to have the park that we have,” he said. “We also have a good bit of land in that area that can be redeveloped and help our city grow and become more vibrant.” Wyche officials said they will announce plans for the firm’s new location once details are certain. The firm is committed to its new home being another catalyst for positive growth in the community, the officials said. It has offices in Greenville and Columbia. The intersection of enhancing Greenville’s physical environment and artistic community presented a rare opportunity that Wyche knew would further Greenville’s growing reputation as an international destination, officials with the law firm said. “Wyche has been approached many times over the years by developers interested in our home at the base of the Reedy River Falls,” said Ted Gentry, chair of Wyche’s executive committee. “We have rarely been tempted, but we thought Kessler’s approach was special. Kessler shared our love and vision for this very special place. We are convinced that Kessler will do justice to one of the most beautiful natural settings in any city.” In the eyes of Greenville Mayor Knox White, that opportunity was made possible largely because one group believed in the city long before many others — Wyche. White says, “The Wyche firm has been integral in many of the most visionary projects in Greenville’s history. It’s no surprise that Wyche is also central to this exciting development.” Falls Park, located in downtown Greenville’s Historic West End, is considered by local officials and residents as one of Greenville’s most-significant attributes. The park to many residents and visitors is an oasis within the city, a place where people gather to work and play. It lends itself to a variety of activities for people of all ages and interests.

Q4 2016

Upstate, SC Market Report NAI Earle Furman Retail Division

Gaston Albergotti

Chris Harrison

Broker [email protected]

Ted Lyerly, CCIM

Broker [email protected]

Bill Sims

Broker [email protected]

Graham Mullikin

Broker [email protected]

Jake Van Gieson Broker [email protected]

Broker [email protected]

Jimmy Wright

Principal and Broker [email protected]

About Us Brokerage Services

Solid Foundation. Proven Results. Founded by J. Earle Furman in 1986, NAI Earle Furman is celebrating its 30th year as a leading full-service commercial real estate brokerage firm in the Upstate of South Carolina specializing in the office, industrial, investment and retail sectors. NAI Earle Furman offers a wide range of services including sales, leasing, development, site selection, consulting and property management. A partnership with NAI Global allows NAI Earle Furman to access a network of worldwide real estate connections and offer international commercial real estate services to Upstate clients, while retaining local personality and knowledge.

• • • • • •

Tenant Representation Landlord Representation Market Analysis Financial Analysis Site Selection Lease Versus Own Analysis

• Due Diligence Consulting • Lease Review and Renewal Services • Tax Deferred Exchanges • Development • Land Acquisition and Disposition

The firm has 80 team members and completed nearly 600 transactions in 2015. The Property Management team manages 5.5 million square feet of commercial space in North and South Carolina.

Reports Prepared by: Wendy Carlton Marketing Associate | [email protected] Ted Lyerly Broker and Shareholder | [email protected]

The NAI Earle Furman team The shareholders of NAI Earle Furman

Contact Us: 101 E Washington Street  Suite 400 Greenville, South Carolina  29601 864 232 9040 naiearlefurman.com