Colliers Report: Columbia retail adapts and gains resiliency amid pandemic

November 2, 2020

Research & Forecast Report

Key Takeaways

  • Several of the Columbia Bi-Lo grocery stores will be converted to Food Lion and Lowe’s by next summer.
  • Quick service restaurant facilities are evolving to keep up with customer needs.
  • Despite a rising vacancy rate in the Columbia retail market, positive retail activity is occurring.

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Fast casual restaurants continue to adapt

Quick service restaurants were gaining sales momentum prior to COVID-19 due to speedy service, convenience and ongoing upgrades to food quality – beginning the trend from fast food to fast casual restaurants. Aesthetic changes and healthy option upgrades led to increased business velocity. Throughout the pandemic, adaptive quick service restaurants continue to thrive by adding curbside pick-up, call ahead ordering and delivery options. In addition, many are decreasing the indoor dining area square footage and adding extra drive-thrus or outdoor seating to provide an enhanced level of safety to diners. Furthermore, restaurant owners are looking to purchase existing buildings rather than constructing new restaurants due to rising construction prices and difficulty getting necessary construction materials. Suburban locations are popular for adding new stores so they are closer to residential areas where many people are still working remotely.

Market Overview

The Columbia shopping center market is comprised of approximately 13.47 million square feet of s

hop space. During the third quarter of 2020, core shops posted a positive absorption of 101,266 square feet; however, positive core absorption was offset by a negative non-core absorption of 187,342 square feet. Due to the overall negative quarterly absorption, the overall vacancy rate increased from 7.40% last quarter to 8.04% this quarter. Rental rates continue to fluctuate due to ongoing changes during the pandemic; the overall average rental rate in core shops was $17.32 per square foot, while in non-core shops, the average rental rate was $13.50 per square foot. However, there is still a lot of positive retail activity occurring throughout the Columbia market. Grocery stores have remained an essential business throughout the pandemic, all the while adjusting their operations to include curbside pick-up and home delivery to ensure safety and convenience for their customers. Throughout Columbia, several Bi-Lo grocery stores are being purchased by other successful grocery chains. Food Lion currently operates 14 thriving grocery stores throughout Columbia, and has now purchased 7 Bi-Lo stores with plans to convert them to Food Lion around April of 2021. In addition, Lowe’s Foods purchased two Bi-Lo stores and operations will continue through the conversion to Lowe’s by next summer.

Market Forecast

Despite the negative effects COVID-19 is causing throughout the nation, positive activity is still occurring within the Columbia retail market. Retail shops are adapting to survive and gross retail sales are rising month-over-month as consumers gain confidence with new safety implementations throughout all forms of retail shops and restaurants. High construction pricing and lack of raw materials are counterbalanced by owners purchasing and redeveloping existing stores. Suburban retail activity is expected to increase due to shop owners offering convenience to residential areas due to the ongoing trend of working from home. As consumer comfort level rises each quarter, retail activity is anticipated to bounce back.

A Note Regarding COVID-19 

As we publish this report, the U.S. and the world at large are facing a tremendous challenge, the scale of which is unprecedented in recent history. The spread of the novel Coronavirus (COVID-19) is significantly altering day-to-day life, impacting society, the economy and, by extension, commercial real estate.

The extent, length and severity of this pandemic is unknown and continues to evolve at a rapid pace. The scale of the impact and its timing varies between locations. To better understand trends and emerging adjustments, please subscribe to Colliers’ COVID-19 Knowledge Leader page for resources and recent updates.

For additional commercial real estate news, check out our market reports here.