Let’s take a moment to review how each asset class is performing in Spartanburg, S.C. relative to overall US trends.
If you’re an owner looking to sell, an investor/user looking to purchase, or an individual interested in Spartanburg’s economy, I will break down the key trend to know for each asset classes’ performance in Spartanburg.
|OFFICE||Vacancy||Price Per Sq Ft (Buy)||Price Per Sq Ft (Lease)||Cap Rate|
Office in Spartanburg is fairing much better than national averages.
The vacancy rate is around 1/3rd of the national vacancy rate of 13.4%, and office affordability is much better in Spartanburg.
|INDUSTRIAL||Vacancy||Price Per Sq Ft (Buy)||Price Per Sq Ft (Lease)||Cap Rate|
Although the industrial vacancy rate in Spartanburg is significantly higher than the US averages, the higher vacancy rates are concentrated in the higher square footage industrial buildings.
The overall industrial vacancy rate in Spartanburg is 10.9%. Now, let’s break this down into big and small industrial buildings. In the 100,000 or more sq ft range, the industrial vacancy rate is 13.1% (compared to 2.9% vacancy last year this time). However, for industrial buildings less than 100,000 sq ft, the current vacancy rate is 4.8%.
The large spike in vacancy is due to a wave of new large industrial buildings that hit the market just as the economy began to cool.
Overall Spartanburg is a more affordable market than many other US cities for industrial real estate, and the small industrial market is still thriving.
|MULTI FAMILY||Vacancy||Price Per Unit||Rent Per Unit||Cap Rate|
Spartanburg has been met with a large quantity of new multi family units over the past few years. Inventory has grown from 10,666 units in 2019 to 15,198 units currently.
The vacancy rate in Spartanburg is over double the national average; new inventory is not absorbing quickly. Despite the high vacancy, cap rates are slightly below national averages.
|RETAIL||Vacancy||Price Per Sq Ft (Buy)||Price Per Sq Ft (Lease)||Cap Rate|
Retail in Spartanburg is doing quite well with a low vacancy of 3.1%. Retail is much more affordable in Spartanburg compared to the national average, and cap rates are higher.
Although a higher cap rate suggests higher risk, it also means higher return on the investment.
Overall, real estate in Spartanburg is less expensive than national averages, and cap rates trend higher (except for multi family).
Considering Spartanburg is the 12th fastest growing metro area according to US News and World Reports, there is opportunity for commercial real estate to continue to appreciate as more population growth drives demand for the different asset classes.
If you’d like to discuss this blog or anything related to commercial real estate, let’s connect!
VP, Commercial Real Estate