Office deal activity remains constant, sublease space increases
Key Takeaways
- Large blocks of office space becoming available created negative absorption and overshadowed the 37 office sales transactions and 58 leases executed during the third quarter of 2020.
- No new construction was delivered to the Greenville-Spartanburg submarkets during the third quarter of 2020.
Deal velocity is steady
The Greenville-Spartanburg office market has many options for tenants to choose from due to new space becoming available. Sublease space availabilities have increased to 152,573 square feet this quarter to go along with approximately 1.79 million square feet of direct vacancies throughout the market. Most of these vacancies have been caused by downsizing or closures due to the pandemic. Despite negative absorption surpassing the positive activity due to large blocks of space becoming available, there are still many deals being executed throughout the market. According to CoStar, there were 37 office sales transactions and 58 leases executed during the third quarter of 2020. Most of the executed leases were for office space ranging from 1,500 square feet to 5,000 square feet; therefore the large blocks of office space becoming available overshadowed the deal activity creating negative absorption. Office sale transactions are popular because interest rates are at an all time low, and companies like the idea of being able to control their own space with minimal contact with others. Deal velocity is expected to increase through year-end as more employers and employees reopen and businesses move to accommodate their post-pandemic needs. In addition, Greenville-Spartanburg offices may also find increased activity from tenants within larger markets looking to relocate to a smaller market with less population density.
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