Colliers Report: Greenville-Spartanburg retailers alter business operations due to the Coronavirus

Research & Forecast Report
Q1-2020 GREENVILLE-SPARTANBURG | RETAIL

 

Key Takeaways

  • During the COVID-19 temporary closures, many retailers used the time for deep cleaning and revamping business structures.
  • The onset of the Coronavirus will have immediate short term and long term impact affecting both the U.S. and Greenville-Spartanburg retail markets.
  • The Greenville-Spartanburg retail shops absorbed 112,410 square feet overall during the first quarter of 2020.

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Retailers will operate under a “new normal” due to COVID-19

At the end of the first quarter of 2020, the Coronavirus pandemic forced retailers to change the way they conduct business. Retail businesses were ordered to close their doors to onsite customers only allowing for carry-out or curbside service, unless deemed essential. While some retailers have asked for rent restructuring and governmental funding to offer monetary relief, others have used the temporary closings as a time for deep cleaning and revamping business structures. Retailers have: altered spacing between dining tables so they are further apart from each other upon reopening; added areas for inside pick-up kiosks affording less one-on-one interaction with employees and other customers; constructed partitions between employees and patrons to limit the spread of germs; installed no-touch automatic entry systems and added delivery services and/or drive-thrus to their shops. Other retailers have increased their online presence making it possible for customers to order and receive curbside delivery to their vehicles. All of these new structures are done with the hope that customers will feel comfortable returning to their shops and restaurants when the quarantine is lifted. Retailers will operate under a “new normal” upon reopening. Consumer attitudes during the lock-down have gravitated toward supporting local business owners within their community. Hopes are high that retailers will reopen to increased business thanks to anxious consumers ready to support them.

Market Overview

The Greenville-Spartanburg retail market is comprised of approximately 17.29 million square feet of retail space and absorbed 112,410 square feet overall during the first quarter of 2020. The positive core absorption was mostly concentrated within the Clemson Boulevard and Woodruff Road submarkets. The West Anderson submarket posted 53,989 square feet of absorption- leading the non-core submarkets to begin the year. There were 56,300 square feet of new retail space delivered to the market. Alamo Drafthouse Cinema, a 50,000-square-foot movie theater was completed at 1320 Garlington Road and there were several Dollar General stores added throughout the Greenville-Spartanburg submarkets. Due to the outbreak of the Coronavirus at the end of the first quarter, current properties that are under construction may experience some delays due to temporary business closures and delivery delays, but they are expected to eventually to completed. There are 459,830 square feet under construction throughout the Greenville-Spartanburg submarkets, 17,800 square feet will be located in core shops within the Camperdown development upon completion.
Due to positive absorption and the delivery of occupied new construction, the quarterly vacancy rate dropped from 10.33% during the fourth quarter of 2019 to 10.04% during the first quarter of 2020. Rental rates spanned from $4.00 per square foot in non-core retail shops to $24.18 per square foot in urban retail stores.

Market Forecast

The retail submarkets in Greenville-Spartanburg showed positive market activity during the first quarter of 2020. Construction projects are expected to be delayed because of temporary business closings and set-backs related to COVID-19; however, demand remains strong enough for construction to be completed. Retailers will be forced to continue to alter their business structures to adapt to quarantine restrictions. Retail rental rates are likely to drop somewhat in the next few quarters to accommodate for retail closures.
Consumer attitudes are geared toward supporting local businesses by continuing to order carry-out food and shopping via curbside pickup or delivery services. Market activity is expected to resume, and even possibly boom, when the quarantine regulations have been lifted. Many retailers will implement changes to the way business is conducted so consumers will feel safe when they are able to shop again. While there are predicted to be many changes occurring within the retail sector, the true effects of the Coronavirus will not be evident for several quarters.

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.