The signs in the windows of Greenville’s downtown office buildings say it all.
Downtown Greenville has 3.8 million square feet of office space and, according to a market survey completed by CB Richard Ellis/ The Furman Co. at the end of June, more than one-fifth of that space is available for rent.
“That is a lot of vacant space,” said Nancy Whitworth, Greenville’s economic development director.
And it could get worse.
Two pending corporate acquisitions involving companies that are big downtown office space users – The South Financial Group by Toronto-based TD Bank and Nuvox by Arkansas-based Windstream’s acquisition of Nuvox – and the impact of “shadow space” are leaving big question marks on the commercial office space market, said Doug Webster, vice president for corporate services for The Furman Co.
Shadow space is space that is available for lease but is not listed on the market.
“The market can be summed up by one word – uncertainty,” he said.
It’s a problem that has gotten the attention of the city and two economic development groups: the Greater Greenville Chamber of Commerce and the Greenville Area Development Corporation.
“Downtown can’t be just an entertainment center,” Whitworth said. “We have to have businesses downtown as well. Having occupied office space downtown is important because it helps drive retail and restaurants.”
While Greenville’s economic development entities will continue to try to recruit corporate headquarters, call centers and other companies which require lots of office space into downtown, a new initiative focuses on attracting young technology-based companies that need the vibrancy of a downtown to attract necessary talent, said John Moore, the chamber’s vice president for economic development.
“One or two out of 10 of them may fill up a building some day,” he said. “But five will be out of business.”
While it will take more smaller companies locating downtown to fill up the space, the younger, smaller companies is where the opportunities are, said Kevin Landmesser, vice president for the Greenville Area Development Corp. “A lot of space the city has is a floor here, a floor there. It’s not a single building.”
The Next Innovation Center is home to the kind of companies Moore and Landmesser are talking about.
“Next is really about growing headquarters, growing impactful global headquarters,” Moore said. “We haven’t filled that pipeline of home-grown companies in recent years.”
He said 60 companies, half located in the Greenville city limits, hold patents to intellectual property and are in the early stages of building their businesses.
Moore said Zipit Wireless, a company that invented a wireless messenger device that allows teens and pre-teens to communicate with their friends without a computer, is an excellent example.
The company has 12 employees and is in an acceleration phase.
Oobe, Resurgent Capital and Erwin Penland Advertising are other examples, Landmesser said.
“We need a combination of home-grown companies and companies we recruit from out of the market,” he said. “We need that mix.”
Greenville will soon have an advantage in recruiting companies from the outside that has been missing so far.
Webster said Southwest Airlines’ entry into the market, expected by spring 2011, will help eliminate one obstacle the city faced when trying to recruit out-of-market companies downtown – the lack of inexpensive, convenient air travel from Greenville Spartanburg International Airport.
“I think that will be a very positive influence on companies from out of the market,” he said. “That’s really the key, the ability to attract companies from outside the area.”
Landmesser said recruiters will call on oversaturated office markets such as Washington, D.C., to see if they can convince any of the companies to relocate here. They’ll also be calling on companies in Chicago and New York, he said.
Webster said downtown Greenville usually has an 11 to 12 percent office vacancy rate.
“It’s going to be a challenge to fill downtown office space and I think it will be a challenge for a while,” he said.
Whitworth said the city will push for state economic development incentives for office-type companies.
“If it’s a 170-job office with jobs paying $30,000 to $40,000 a year, it would not qualify for state incentives,” she said.
Moore said economic development officials will also push for angel capital tax credits.
“There’s nothing at the state level to help us keep companies or to help start-ups,” Whitworth said.
The city is also working with downtown property owners to better market available office space, Whitworth said.