Positive office momentum slows as COVID-19 looms
- During the first quarter of 2020, the Greenville-Spartanburg market saw vacancy decrease, rental rates increase, and positive absorption. However, COVID-19 is now disrupting the market activity and while most deals seem to be progressing, a major slowdown is likely as new deal flow is currently limited. Time will tell how the virus outbreak impacts the long-term market activity.
- Office investment sales were strong during the first quarter of 2020; however, due to uncertainty caused by the Coronavirus the absence of office investment in the coming quarters will significantly impact the office market for the rest of the year.
Favorable conditions for investors
Commercial real estate investments are made with the goal of earning a high rate of return on an investment property. The return on investment is expected to come through rental income, the future resale of the property, or both. In addition, capitalization rates (“cap rates”) are a decisive purchasing factor, because it is an indicator of the rate of return projected to be generated on the investment. Conditions within the Greenville-Spartanburg market are favorable for investors to capitalize on properties that have an opportunity make capital improvements, to lease-up, drive rental rates up, etc. to increase the net operating income. Cap rates within the Greenville-Spartanburg market average 7%-8%, and while anything over 10% is generally thought to be a higher-risk investment, it could actually yield a greater profit. Below are value-add investment properties currently available in the Greenville-Spartanburg market.
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