For 75 years, the Army Navy store in downtown Greenville had occupied 6,000 square feet on South Main Street. The company announced plans to move to Laurens Road in early 2021 after selling the location it had long occupied for a reported $ 1.34 million.

While the new owner clearly has plans for the space after paying the highest dollar for a prime downtown address, the sale technically leaves a void – one of many that the central business districts of Greenville and Spartanburg have in the wake of the coronavirus -Pandemic, which is increasing heavily, puncturing tolls on the stationary trade. But as the relocation of the Army-Navy store clearly shows, not all vacancies in retail are created equally.



Jimmy Wright (provided)

"This shop is empty now, but it has been bought and is being redeveloped. That shows up in the report as a vacancy, "said Jimmy Wright, agent at NAI Earle Furman, the largest commercial real estate agent in the upstate. "But this is a transition from an owner-operator who said I see the best value for me now in selling this building and moving in and letting someone else take that clay ball and remodel it."

According to a market report for the second quarter of 2021 by NAI Earle Furman, retail vacancies in Upstate continued to rise: They rose from 4.8 to 5.3 percent in downtown Greenville and from 5.8 to 6.5 percent in the Downtown and to the west of Spartanburg. This highlights, despite some positive numbers in industry and even in the office sector over the same period, the troubles retail businesses are facing as Covid-19 remains tenacious in the backcountry, nation and world.

Still, Wright would not classify the situation as alarming. "There will always be a vacancy; that's inherent, "he said. "When we draw real estate, we draw it with a built-in vacancy factor, and that's what banks look for, too. A typical vacancy factor in a multi-tenant building is between 3 and 5 percent. So these numbers are still within tolerance, although they may be at the upper end. "

Overcoming the "Amazon effect" of retail

Other factors also hampered the recovery of the hinterland retail trade. A shortage of low-wage workers – so evident in the hospitality industry – has forced many retailers in Upstate and elsewhere to adjust hours or postpone expansion plans. And rising construction costs due to inflation have made building new retail properties less feasible than it was before the pandemic.

"I don't know what the long-term effects of the current inflation period are," Wright said. "A number of factors play a role here: there is a labor shortage, there is a problem with the supply chain, then there are all these projects that have been idle for a while. So now these are being reinforced again, and the only thing that matters is that all of these circumstances apply at the same time. So I think it will be difficult to develop new retail stores in the short term because of the cost. "

The pandemic has also changed consumer buying habits, possibly in the long term. "The Amazon effect is real," said Wright, referring to the practice of online shopping instead of in-person shopping, a carry-over from blackout times in many areas. That has led retail business owners to think about how to reposition themselves for the future – and some retailers in Greenville and beyond are already starting to find out.

Wright points to the continued success of TJX, the parent company of brands like TJ Maxx, Marshall's, and Home Goods, whose customers tend to look in person for bargains they can't find online. "They have a good model and are successful at the moment," he added. "They are not completely dependent on the Internet and have found the model that is right for them. Others do the same because we are in this transition period. "

It's not uncommon right now for retail space to move from stores to personal service facilities like "financial services or beauty salons, whether it's an eyelash salon or a hair salon or something similar that you can't leave Amazon," said Geoff Beans, also a broker at NAI Earle Furman. "It's a service you pay for. The hospitality industry is part of it, but they have some detrimental problems especially during the labor shortage. "

During this transition period for retail in Upstate, Wright also expects a surge in service-minded boutiques like Monkee's of the West End, a women's clothing boutique in Greenville that has remained successful despite the rigors of the pandemic. Again, the idea is for companies to set themselves apart by offering something that customers can't get online.

"You're looking at retailers like the New York Butcher Shoppe, which has a food component but is also service-minded," Wright said of the Greenville-based company with three area locations. "You can go in there and ask for a tomahawk ribeye and you can get one and they'll tell you how to make it. They all have small differences that are designed to better serve the customer and have more interfaces with them. "

Job offers as a growth opportunity?

In its market report for the second quarter, NAI Earle Furman expected the upstate's retail wave to continue into the second half of the year. The negative absorption trend in the Greenville area – meaning more businesses are moving out than moving in – is expected to continue. "Although the state is working to reopen its economy, there is still a long way to go to full recovery," the report said.

Closing the work gap is a critical step towards normalcy, Beans said. "These are companies that need workers," he added. "Right now there are so many restaurants that aren't open for lunch – they can't factor in lunch because their sales aren't as high as they'd like and that prevents them from expanding. Fixing that is really a big deal at the moment. "

Still, the retail vacancies in Greenville and Spartanburg could offer more growth opportunities as setting up in these pre-built locations doesn't require the sky-high cost of new build. "At least in the short term, positions with open positions are better positioned," Wright said. "They know their current costs and can calculate their tariffs to gain a competitive advantage. A conversion could be cheaper than a new building. "

And Main Street, Greenville's retail face for many tourists and residents, remains healthy due to the city's robust growth. After all, the location of the former Army-Navy store will one day house something else. "At each stage of growth you will have some transition space," Wright said. "That's the underlying thing: we grow, and when you grow you have a transition.

source https://seapointrealtors.com/2021/08/07/commercial-real-estate-vacancies-reflect-transitional-state-of-greenville-retail-scene-greenville-real-estate-special-coverage/

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