By John Jeter

Opportunity, opportunity, opportunity.

appears to be the hot new commercial real estate catchphrase these days, especially with a new-money rush into the Central Business Districts of Greenville and Columbia. In both cities, vacancies are falling and lease rates are rising along with interest from a fast-growing pool of investors.

“People start going with the best product in the most vibrant markets,” Ron Anderson, vice president of administration at Colliers International, says of investors snatching up office towers in Greenville and under-developed mixed-use blocks in Columbia. “They really started pouring into Greenville and Columbia—in Columbia a little bit earlier, in the last 18 months.”

Echoing a 2016 Colliers report—“Rising asking rental rates and occupancy rates in the Greenville market are expected to promote further investment sale activity from out-of-market investors over the coming quarters”—the Columbia-based Anderson adds:

“We’re starting to see a lot of national investors who are coming into these markets. They’ve gotten the cream off the top of the milk in the bigger markets, and they’re working toward the smaller markets.”

Earle Furman, chairman of the Greenville real estate company that bears his name, agrees. “That’s primarily due to lack of product elsewhere. Big money is very comfortable in big cities, and so they’re having to reach further. When the returns get so low in the big cities, they have to look elsewhere because they have the money to spend, and here, it’s hard to find a $50 million project.”

But for these two tertiary markets, though the largest in South Carolina, investment dollars are creeping upward. And not just from carpetbaggers seeking to cash in.

In Greenville, CapRocq, a real estate partnership headquartered in Little Rock, Ark., purchased the Wells Fargo Center at on South Main Street for $33.3 million last December. That same month, Lingerfelt Commonwealth Partners, based in Virginia, purchased the two Liberty Square towers, whose Class A offices at Beattie Place sold for an unspecified amount; county tax records show the price at nearly $60 million. RealOp Investments, a Greenville player, purchased the Bank of America tower at 101 N. Main St. in November for $22.4 million. (And these are just a few of the biggest deals in downtown Greenville.)

RealOp operates in Columbia, too. In January, the real estate private equity firm announced its fifth acquisition, the Stephenson Center office park at 720 Gracern Road, just across the river from the CBD, for $7.5 million. (Again, that’s just one of several deals in and around Columbia’s downtown.)

“There has been a limited new supply for the property types we invest in, which include office, industrial, and retail,” says Kyle Putnam, RealOp principal and chief investment officer.

Vacancy rates and asking lease prices are remarkably similar in both markets’ CBDs. In Greenville, Class A office space vacancy rate was 10.6 percent in 2016’s final quarter, down nearly 5 percentage points from the previous year; Columbia’s was 11 percent. In Greenville, asking rates were $26.92 per square foot in 4Q 2016, up 7.7 percent from the previous year. Columbia’s CBD Class A office space fetched $21.06, up nearly 8 percent from the year before, according to Colliers International reports.

Over the next four years, one report says, “average asking rates are organically expected to increase between 12 percent and 20 percent.”

With forecasts like that, it’s no small surprise that more projects are in the pipeline in both cities.

In Greenville, the demolition of the Greenville News building, which was expected to begin in May, will mark the start of the Camperdown project at Broad and Main streets. Centennial American Properties, the Greenville developer that bought the four-acre site for about $13 million, plans a multi-use development that will include a 140-room hotel. The project’s total amount was unavailable.

That, along with others, including much-buzzed-about plans for the former Municipal Auditorium site, could temporarily distract from new Class A office construction, Furman says.

“I think we’ll see some more downtown buildings, but right now, the former Greenville News site will probably hold the additional buildings at bay for just a little while,” he says. “There’s no reason we cannot take more office space downtown.”

Upgrading towers in downtown Greenville and buying rundown blocks on the edge of Columbia’s CBD are also shared trends. Investors enhance products for higher returns, of course, but they help push rates upward elsewhere, too. Furman says that while lease rates climb in Greenville, renovations to such older properties as the Liberty and Wells Fargo towers will earn even more per square foot.

“Some of the new buildings have broken the glass ceiling and are now above $30” per square foot, he says, “and that has allowed older buildings to afford renovations, which can get them up into the low- to mid-$20 a foot.”

In Columbia, Campus+Main, a California real estate company specializing in underused sites near universities, is snapping up property in Five Points.

The firm, which started in 2016 and targets the likes of Stanford, Georgetown, and Princeton universities, has invested at least $4 million—and likely will triple that—in a collection of buildings at Harden and Pendleton streets. Partners Trevor Nelson and Gustavo Spoliansky, a onetime Hollywood producer, say their project is still in preliminary stages as the pair works to add at least three more contiguous properties to its current 14.

“I think it’s a really interesting market because you’ve got a lot of opportunity for people to come in here and reposition some of these buildings that have been vacant for many, many years and haven’t had the right attention or capital infused into them,” Nelson says.

Nelson says Campus+Main selected Columbia after he drove through town with an associate. “As soon as I saw it, it just clicked, it made sense.”

It makes sense in both cities for RealOp, too.

Says Putnam: “The low business and living costs, good climate, generous state and local tax incentives, and centralized location to other major markets in the Southeast will continue to attract businesses and people to both markets.”