CONSTRUCTION THREAD: ONE Greenville (Main @ Washington)

[gman430]

Glass is going in on phase II building.

Oh and keep your head down and rear end up when it comes to phase III. The building is slated for the white parking garage and will be angled towards the Greenville Summit building. Hughes is in negotiations to buy the parking lot next to the garage for part of phase III as well. A hotel is possible but not a guarantee. Apparently this is supposed to be a pretty big deal for the area. I don't have a timeline for an announcement or construction. I don't know what the height of the building will be or who could be possible tenants either.

[ausrutherford]

Glass is going in on phase II building.

Oh and keep your head down and rear end up when it comes to phase III. The building is slated for the white parking garage and will be angled towards the Greenville Summit building. Hughes is in negotiations to buy the parking lot next to the garage for part of phase III as well. A hotel is possible but not a guarantee. Apparently this is supposed to be a pretty big deal for the area. I don't have a timeline for an announcement or construction. I don't know what the height of the building will be or who could be possible tenants either.

 

Wouldnt that be head up? After all from what we have heard its suppose to be the tallest building in the state.

[mallguy]

The parking lot that First Presbyterian uses on Sundays, and that's next to the Bank of America building?

 

Good- that's a prime spot for redevelopment.  Hopefully it'll allow the Greenville Summit building to get a fresh look.  It and the Poinsett Hotel were used as low-income/elderly housing in the 1980s when both hotels were closed, but seeing how the Poinsett has been re-done, hopefully someone will restore the Greenville Summit building as some type of nice residential one day.

[gman430]

Phase I building is now officially open. A temporary sidewalk has been poured between the building and Main Street so office workers can access it.

[clt29301]

Wouldnt that be head up? After all from what we have heard its suppose to be the tallest building in the state.

 

There have been a lot of positive absorption rates in Greenville but, there is also a lot of space on the market, over 115k at Liberty, over 65k at BofA Plaza, The Bowater Building, etc......can the market support another 300k feet of office space with high rents?  

[gman430]

There have been a lot of positive absorption rates in Greenville but, there is also a lot of space on the market, over 115k at Liberty, over 65k at BofA Plaza, The Bowater Building, etc......can the market support another 300k feet of office space with high rents?

Apparently so seeing how the two building complex is almost fully leased. Only thing left available is one 20,000 square foot floor plate in the phase II building on the ninth floor.

Edited January 20, 2013 by gman430

[clt29301]

Apparently so seeing how the two building complex is almost fully leased. Only thing left available is one 20,000 square foot floor plate in the phase II building on the ninth floor.

I think it should be looked at a little deeper than that for a couple of reasons.  First, many of the tenants in One are relocating from other downtown properties, that will put large blocks of space on the market.  CBRE said "With several large tenants in the midst of relocating from oneproperty to another, large vacancies in the market will be appearing, which is expected to create significant swings in vacancy by the end of 2013."  The only tenant moving to One that is not vacating space is Certus, which has a less than certain future once the investors decide to sell. Still can't see why a bank is putting operation functions downtown when space in the suburbs makes more sense, Walter Davis must be a good salesman to the investors or he got a great deal.  Second, downtown rents for Class A space average 19.8 per SF, a highrise exceeding 25 stories will need to command higher rates unless the height is gained through an office/hotel project.  Third is financing.  Hughes has a lot of contacts but, the area is not looked upon as a top southeastern market that will attract a lot of capital.  Certus is not large enouogh to finance a project on this scale without adjusting some capital ratios (they would not want to risk a Tier 1 capital ratio on one project, perhaps TD will take on a risky project.  Are there available tax credits to help fund this project? 

 

Not trying to start a fight, I have seen enough of that on City Data (a reason I have never joined).  But, I would not want to build a tall structure just for height if it means emptying out other buildings downtown.

[GvilleSC]

Hughes knows what he is doing, I'm convinced. He will build it if it makes sense, and wait if it doesn't. I am not too worried about that. I don't think anyone is building something "just for height" anyway. I mean all we know about this phase III development is all rumor and speculation.

Edited January 20, 2013 by GvilleSC

[gman430]

With an unemployment rate of 6.6% in November 2012, Greenville remains appealing to young professionals looking to launch their careers. This provides an opportunity for companies to expand into the Greenville market which in turn will help the office market by lowering vacancy rates. 2013 is anticipated to bring improvements to the office market, but big changes are not expected to appear until the second half of 2013 as economic recovery advances. The completion of ONE Greenville will have mixed effects on the market. Rental rates for Class A CBD office space will continue to climb as vacancy rates decrease and quality space becomes limited. The suburban submarkets are expected to remain healthy and stable throughout 2013.

Source under "In the months ahead" on the second page: http://www.colliers.com/~/media/Files/MarketResearch/UnitedStates/MARKETS/Greenville/2012Q4GreenvilleOfficeReport.ashx I expect the class A vacancy rate to go up during the first six months of 2013 and begin to drop after that as newly available space gets filled by new and expanding downtown tenants. This is already being seen with companies like Sempra.

Edited January 20, 2013 by gman430

[ausrutherford]

There have been a lot of positive absorption rates in Greenville but, there is also a lot of space on the market, over 115k at Liberty, over 65k at BofA Plaza, The Bowater Building, etc......can the market support another 300k feet of office space with high rents?  

 

I think this has more to do with relocatation to newer buildings. Those need some remodeling.

Edited January 20, 2013 by ausrutherford

[scgubers]

I think it should be looked at a little deeper than that for a couple of reasons.  First, many of the tenants in One are relocating from other downtown properties, that will put large blocks of space on the market.  CBRE said "With several large tenants in the midst of relocating from oneproperty to another, large vacancies in the market will be appearing, which is expected to create significant swings in vacancy by the end of 2013."  The only tenant moving to One that is not vacating space is Certus, which has a less than certain future once the investors decide to sell. Still can't see why a bank is putting operation functions downtown when space in the suburbs makes more sense, Walter Davis must be a good salesman to the investors or he got a great deal.  Second, downtown rents for Class A space average 19.8 per SF, a highrise exceeding 25 stories will need to command higher rates unless the height is gained through an office/hotel project.  Third is financing.  Hughes has a lot of contacts but, the area is not looked upon as a top southeastern market that will attract a lot of capital.  Certus is not large enouogh to finance a project on this scale without adjusting some capital ratios (they would not want to risk a Tier 1 capital ratio on one project, perhaps TD will take on a risky project.  Are there available tax credits to help fund this project? 

 

Not trying to start a fight, I have seen enough of that on City Data (a reason I have never joined).  But, I would not want to build a tall structure just for height if it means emptying out other buildings downtown.

 

I'm going to tackle this one point at a time because there is a lot wrong with you've said. Though some is correct as well 

 

Point 1: Certus has a less than certain future. 

           That's terribly incorrect. Certus is one of the best run banks in the region and both the CEO's have said they are not looking to sell. 

 

Point 2: I can't see why a bank is putting operation functions downtown. 

           There is something to be said about being located in the city center. Certus would not have the type of brand image or recognition if their main           operations were in Greer. 

 

Point 3: Market rates would be too high. 

            A valid concern but I think Hughes proved that wrong with nearly filling both towers before completion.  

 

Point 4: Greenville cannot attract a large amount of financing. 

            Also valid but as you can see Hughes was able to find financing for the first two towers as the nation was coming out of a recession. I see no reason why that would not be the case again. Also, as Greenville's reputation is growing so is its ability to attract capital.  

 

The third tower would not cannibalize the occupancy rates of other buildings because as Greenville grows it will continue to attract outside companies. If Greenville was in fact shrinking in size and not attracting first rate corporations then I would agree with you about the third tower "emptying out" other buildings. Also the third tower will be more than just office space, it should also include a hotel which will aid in financing as well as balancing the rental rates. I completely understand your concerns but I feel that the third tower, if built, will only help Greenville. Especially as vacated offices will have to update their buildings to compete with ONE. 

Edited January 20, 2013 by scgubers

[GvilleSC]

What happens with Windstream's old space will impact the market. Hopefully retail will be carved out of at least one floor, but it would be nice to see even more than just that. Time will tell.

[ausrutherford]

I was not even aware Phase III was to include business floors. All it has sounded like since we started hearing about it was hotel, condos/apartments, and retail, but no business floors.

[clt29301]

I'm going to tackle this one point at a time because there is a lot wrong with you've said. Though some is correct as well    Point 1: Certus has a less than certain future.             That's terribly incorrect. Certus is one of the best run banks in the region and both the CEO's have said they are not looking to sell.    Point 2: I can't see why a bank is putting operation functions downtown.             There is something to be said about being located in the city center. Certus would not have the type of brand image or recognition if their main           operations were in Greer.    Point 3: Market rates would be too high.              A valid concern but I think Hughes proved that wrong with nearly filling both towers before completion.     Point 4: Greenville cannot attract a large amount of financing.              Also valid but as you can see Hughes was able to find financing for the first two towers as the nation was coming out of a recession. I see no reason why that would not be the case again. Also, as Greenville's reputation is growing so is its ability to attract capital.     The third tower would not cannibalize the occupancy rates of other buildings because as Greenville grows it will continue to attract outside companies. If Greenville was in fact shrinking in size and not attracting first rate corporations then I would agree with you about the third tower "emptying out" other buildings. Also the third tower will be more than just office space, it should also include a hotel which will aid in financing as well as balancing the rental rates. I completely understand your concerns but I feel that the third tower, if built, will only help Greenville. Especially as vacated offices will have to update their buildings to compete with ONE. 

Like I said, I don't want this to turn into a great fight like you will see on CD but, I am not wrong on some points. Certus is like a number of startup banks that were put together with troubled assets from failed institutions. The firm can either go public with an IPO or sell to a large regional like PNC once the bad assets are cleaned up. Regardless of what the CEO says, this bank is run by investors who are more interested in a return than they are with Greenville, ask Bi Lo. If the price is right, they will sell. As for market rents, not sure what the tenants actually paid for the space. But, with a tower in the 30 story range, what would be required to be SC's tallest, construction costs are more as supplying utilities to the higher floors is more challenging. Thus, higher rents to make the returns acceptable. Not sure Greenville will attract a tenant to pay $25 or more per sq foot. For a 30 story tower, you need more than a law form or a small regional HQ like Sempra with 40 employees. You will need a 200 person office at least, EP comes to mind if the Boston folks will foot the bill. As for financing, One is built primarily because of tax credits. Adding 300k sq feet of office to a class A market of 2m will cannibalize other buildings, it already is. Unless there is a large tenant that will move into Greenville and wait for space, attracting existing Greenville companies to a new tower will happen. Greenville simply is not growing fast enough to overcome adding 10% of the market's class A space in one building. Personally, I don't care how large the building becomes, I want to see it fit into the existing space.

[ausrutherford]

As I said, I dont believe Phase III is suppose to have business floors. It looks like Hughes wants retail, housing, and a hotel. Im sure if they found a business that wants floor space, they will add floors to what they want, but that doesnt seem to be the case now.

[mallguy]

For the Windstream building: isn't that the former JC Penney building?  It was converted into office space for Fluor Daniel (I recall being dragged through offices there, and seeing the department store paint still on the walls)...couldn't it be converted back into retail space?

 

Greenville needs to focus on getting a large space-consuming corporate office tenant downtown. If you put Fluor Daniel, TD Bank and Michelin downtown rather than on their own campuses, they'd add a significant amount of demand and would definitely impact the skyline unless they decided to build low-level buildings. 

[ausrutherford]

For the Windstream building: isn't that the former JC Penney building? It was converted into office space for Fluor Daniel (I recall being dragged through offices there, and seeing the department store paint still on the walls)...couldn't it be converted back into retail space?

Greenville needs to focus on getting a large space-consuming corporate office tenant downtown. If you put Fluor Daniel, TD Bank and Michelin downtown rather than on their own campuses, they'd add a significant amount of demand and would definitely impact the skyline unless they decided to build low-level buildings.

Problem with that is Fluor, Michelin and TD all have enough room on their current locations. Fluor has more land than what's used. So I don't see any of them moving downtown. You would have to recruit another business to move an HQ here.

[ausrutherford]

One business I think that should move downtown is JHM Hotels. Seems like for a business their size, they should have a bigger HQ.

[GvilleSC]

They've been taking apart the crane all day. 

[btoy]

New companies is great, but so i seeing local companies grow.  Sometimes when they grow they can be facilitated in their current locations so that have to move so this canibilization you speak of some times is necessary.  On that note I think Resurgant Capital is ditching their 60k SF at the Wells Fargo building for 85K at one of the Liberty Towers.

 

As for the former Windstream Building I am about positive we will see it redeveloped with ground level retail.

[goodbye]

A new tallest office building in SC would not need to contain 30 floors. A tower with 20 floors could make an equivalent impact on the skyline if the floors are tall enough.

[ausrutherford]

A new tallest office building in SC would not need to contain 30 floors. A tower with 20 floors could make an equivalent impact on the skyline if the floors are tall enough.

 

True, but wouldnt you like to see 30 anyway? 

[GvilleSC]

This is from today. Crane gone. Bank of America tower no longer sits by itself. The view from Coffee Street:

 

[gman430]

[GvilleSC]

Wow, I love the interior! 

 

I'm still overly excited about the Piazza. I can't wait for more apparent progress to be visible with it...