There is little sign of improvement in Greenville’s 13-million-square-foot community-neighborhood shopping center market, despite no new supply since the end of 2008. In the second quarter 26,000 square feet of negative net absorption pushed the vacancy rate up 20 basis points to 14.0%, a new high for the cycle. The rate had eased back to 13.9% by August. The average asking rent was unchanged in the second quarter at $11.76 psf, while the average effective rent edged up 0.1% to $10.00 psf. The year-over-year gains were 0.7% and 0.8%, respectively. An additional increase of 0.1% for the asking followed in August. The effective rate, however, was unchanged.
Reis does not expect any new community-neighborhood center supply to be added through 2016, but the vacancy rate is forecast to decrease slowly. It is expected to rise to 14.1% at year-end 2012 before falling to 11.5% at year-end 2016. Despite high vacancy, rents are forecast to rise by around 1.0% this year, slightly more than in 2011. Gains will be limited to the 1.0% to 2.0% range through 2016, according to the forecast.
All the space under construction is outside the community-neighborhood shopping center segment of the retail market. Projects under construction are led by the 676,000-square-foot Magnolia Park Town Center regional center in the South submarket of Greenville. The 530,000-square-foot Easley Town Center regional center is under construction in Easley. And in Greenville, 50,000 square feet of retail broke ground in September 2011 at the Project One mixed-use project downtown.
“For the more metro areas such as Greenville and Spartanburg, retail remains very healthy and is moving in a very positive direction,” according to Lee & Associates. “It may be the smaller, rural areas that are feeling late effects of the economic conditions with ‘mom and pop’ business finally forced to downsize or close.”