Columbia Market on the Road to Becoming a Retail Destination

Colliers International | South Carolina Q4-2014 Columbia Retail Market Report

KEY TAKEAWAYS

• Overall market vacancy rate is trending downwards.  Average asking rental rates for anchor and junior anchor space increased, but average asking rental rates for shop space declined slightly.
• New development and redevelopments are gaining momentum along desirable retail corridors.
• Growth continues for Downtown Columbia’s Congaree Vista.
• New retailers enter the market.

To download the complete report click the link: Q4:2014 Columbia Retail Market Report.

CURRENT CONDITIONS

Announcements of new retailers, restaurants, hotels, and residential developments in Columbia, SC flooded headlines throughout 2014.  The significant year ended with an overall vacancy rate of 8.0% for the Columbia, SC retail market, down from the third quarter 2014 vacancy rate of 8.4% and year-end 2013 rate of 8.8%.  The vacancy rate is on a downward trend as a result of retailers expanding their footprints, and new retailers and fitness centers backfilling vacant big box space.  Much of the absorbed space has been of higher quality retail space along prime retail corridors with high traffic counts and visibility.  The resulting available shop space yielded an average asking rental rate of $12.81 NNN at year-end 2014, slightly lower than $13.01 NNN at the end of the third quarter of 2014.  Asking rental rates for shop space are expected to increase as on new developments complete construction and deliver new supply to the market.  Average asking rental rates for anchor and junior anchor space were up to $7.45 NNN and $9.16 NNN, respectively, at year-end 2014 from the third quarter 2014 averages of $7.39 NNN and $7.53 NNN, respectively.

The Forest Acres, Harbison/St. Andrews, and Northeast Columbia submarkets are home to the most popular and dense retail corridors in the suburban submarkets.  The submarkets hold consistently low vacancy rates and continued to improve, ending 2014 with vacancy rates of 0.4%, 7.5% and 7.9%, respectively, all declining from year-end 2013.  The corridors have been entry points for new retailers to the market.  J. Crew and Anthropologie opened their first Columbia locations at Trenholm Plaza along Forest Drive backfilling space that was vacated by Books-a-Million.  Nordstrom Rack opened its first Columbia location along Harbison Boulevard backfilling a former Barnes and Noble space.  Academy Sports opened its first Columbia location at the Village at Sandhill in the Northeast submarket.  A second location later opened in the Harbison/St. Andrews submarket.  The presence of such retailers raises the quality of shopping in Columbia and retains shoppers who formerly resorted to shopping online or at nearby Charlotte.

Downtown Columbia is undergoing substantial improvements and transformations.  Main Street, Five Points and the Congaree Vista all welcomed new restaurants and retailers in 2014 and will welcome more in 2015.  The University of South Carolina’s growth coupled with new student housing and residential mixed-use developments have the potential to support further retail development.  A growing downtown population will require more entertainment, dining, shopping and fitness options.  Over the past year, Main Street has welcomed Pitas and Bourbon, the Vista has welcomed Hickory Tavern and Black Bean Co., and Five Points welcomed Sizzle Bacon Eatery.

 

UNDER CONSTRUCTION

With limited existing supply, new big box anchored retail centers are being developed throughout major submarkets in the market.

 

• Activity at Killian’s Crossing in the Northeast submarket is gaining momentum with an announcement from its first major tenant. Kroger plans to begin construction in the spring on a grocery store that will include a jewelry counter, a clothing section and medical services.  The development, at the intersection of Clemson Road and Farrow Road, will offer multifamily and single family residential units, and hotel space, along with retail space and outparcels.  Construction completed on McDonald’s, which is now open to customers.
• Academy Sports, which opened earlier this year in the Harbison/St. Andrews submarket, anchors a redevelopment along Park Terrace Drive at the former Staples and Hudson Smokehouse site.  Guitar Center plans to enter the Columbia market and occupy space adjacent to Academy Sports.  The development, which is located behind Columbiana on Park, offers approximately 31,500 square feet of shop space in two buildings.  Sports Clips and Salsaritas plan to locate in the center.
• Construction is underway at Rosewood Crossing, the former K-Mart redevelopment at the intersection of Fort Jackson Boulevard and Garners Ferry Road, across from Cross Hill Market in the downtown submarket.  The center is being redeveloped into 98,000 square feet of retail space to house national tenants Marshalls, Michaels and PetSmart.  Upon completion, the center is likely to draw further activity to the up and coming retail corridor, which is already home to Cross Hill Market, a Whole Foods anchored center, and a Target anchored center, Shoppes at Woodhill.  A steady population, affluent neighborhoods and close proximity to the University of South Carolina provide a promising environment for retailers.

 

RECENT ANNOUNCEMENTS

Fourth quarter announcements include new restaurants, relocations and expansions.

 

• Old Chicago Pizza and Tap Room will soon open at the Adluh Flour Mill redevelopment.
• Panera Bread is planning to open at the site of Bluestein’s Wholesale Dry Goods along Gervais Street.
• Parkland Plaza in the Cayce/West Columbia submarket recently welcomed two new tenants.  Catch and Release consignment relocated from 3905 Fernandina Road and occupied 6,000 square feet at the center.  Monterrey Mexican Restaurant leased 1,895 square feet and relocated from across the street. The restaurant’s former space is being redeveloped into a new 230-unit apartment complex, which will likely bring greater traffic to the center and attract more tenants.
• Construction began on Spirit Communications Park, the city-owned baseball stadium at the Columbia Commons redevelopment.  The redevelopment is located along 181 acres at the former state mental hospital campus.  The project is expected to draw major retailers to the market.
• Plato’s Closet opened its first Northeast Columbia location at Sparkleberry Square, located at the intersection of Two Notch Road and Sparkleberry Lane.
• El Mariachi, a specialty Mexican grocer, leased 15,375 square feet of retail space at Decker Plaza in the Northeast submarket.

 

2014 YEAR IN REVIEW

New retailers entered the market, existing retailers expanded their footprints and health and fitness clubs grew their presence.

 

• Destination XL opened its first Columbia store at 1005 Bower Parkway in the Harbison/St. Andrews submarket.
• Chicken Salad Chick opened its second Columbia location along Harbison Boulevard.  The fast-casual restaurant’s first Columbia location was in Lexington.
• The Village at Sandhill welcomed new tenants.  Value City Furniture leased approximately 25,000 square feet of space at Forum I and opened during the second quarter.  Palmetto Moon welcomed customers at its first Columbia, SC store during the second quarter, leasing 4,300 square feet of space at the Village at Sandhill.
• Bikram Yoga opened its second location at Columbiana Station on Bower Parkway in the Harbison/St. Andrews submarket.  The studio’s first location remains open on Forest Drive.
• Planet Fitness expanded its footprint and opened a third gym in the Northeast submarket.  The 22,722 square foot gym is located at the intersection of Two Notch Road and Polo Road and occupies former grocery space that had been vacant for several years.  The gym is also located along Bush River Road and Garners Ferry Road.
• Jamie Scott Fitness introduced its SWEAT fitness concept, an innovative cycling studio, in Downtown Columbia.  The 1,928 square foot studio is at 1125 Lady Street in The Palms mixed-use redevelopment.  Scott also opened another fitness studio at Crosshill Market behind Whole Foods.
• Pure Barre opened a second Columbia location in Columbiana Station on Bower Parkway.  The studio’s first location is in Five Points.
• Construction is underway on the Clarion Hotel along Gervais Street in Downtown Columbia.  The hotel is being converted into a Hilton Garden Inn and Home 2 Suites, which will provide 230 guest rooms.
• Construction is nearing completion on The Hyatt Place Hotel at 823 Gervais Street and is expected to open to guests early in 2015.
• Aloft hotel is coming to the Vista at the corner of Lady and Lincoln streets.  The planned 5-story hotel will include 108 rooms, a bar called WXYZ and ground-floor retail space.

 

2014 SALES

Sales activity was healthy throughout the year as investors took advantage of tight market conditions and low interest rates.

 

• Approximately 7,400 square feet of retail space in Five Points was sold.  The space, 942 and 946 Harden Street, is located on a unique block of Five Points that is ripe for growth and development.
• Decker Village, a 58,000 square foot Food Lion-anchored shopping center, was acquired by Ziff Properties for $2.6 million late in the year.
• Columbia Place Mall, a one million square foot retail mall off Parklane Road in the Northeast submarket was acquired by Moonbeam Capital Investments.  The Las Vegas-based firm specializes in turning around distressed retail properties.  Mall tenants include Columbia’s only Macy’s and Burlington Coat Factory.
• The Target Center, an approximately 200,000 square foot shopping center along Two Notch Road in the Northeast submarket, was sold for $11.3 million.  The center is home to major tenants Target, Dick’s Sporting Goods, Michael’s and Kirkland’s.
• The Crossings Shopping Center, former Food Lion anchored center, at 2110 Clemson Road was sold for $3,175,000.  The 41,232 square foot shopping center is located in the Northeast submarket.
• Westland Square, a 62,735 square foot shopping center in the Cayce/West Columbia submarket, was acquired for $3.8 million.  Virginia-based Wheeler Real Estate Investment Trust purchased the center as part of a $15.8 million transaction involving 5 retail centers in South Carolina totaling 261,869 square feet.
• A 13,500 square foot retail strip center along Bush River Road was sold for $725,000.  The fully leased center is home to tenants Sprint and Blimpie.

 

GROCERY WARS

• KJ’s Market, an IGA brand grocer, opened its doors to customers at 543 St. Andrews Road, the former home of Food Lion, which closed in 2013.  The 40,000 square foot grocery store offers organic produce, a floral department, a new line of deli meats and a service desk.
• BI-LO Holdings closed Reid’s in Cayce, one of four locations that closed in South Carolina.  BI-LO, which recently acquired Delhaize America consisting of Sweetbay, Harveys and Reids supermarket chains decided to close the stores due to their close proximity to BI-LO stores.
• Piggly Wiggly in the Northeast and Cayce/West Columbia submarkets closed.  Last year, the grocer closed its doors at its Forest Drive and Lexington stores, which were reopened as BI-LO.  The grocer sold 22 stores to BI-LO and Harris Teeter.
• Kroger may be coming to Downtown Columbia.  Atlanta-based Bright-Meyers plans to redevelop the Capital City Stadium on Assembly Street and recruit Kroger as its anchor tenant.  Work on the project is expected to begin by mid-2015.

 

IN THE MONTHS AHEAD

2015 is likely to bring further growth and improvement to the Columbia, SC market.   Lower vacancy rates and higher rental rates are expected.  New construction and redevelopments will continue as available space runs low throughout the market.  Older shopping centers with vacant big box space will likely be repurposed into mixed-use developments.  Downtown residential growth has the potential to attract new retailers to the area, specifically to the Congaree Vista.

 

AROUND THE STATE

South Carolina’s growing population and economy continue to draw new retailers to the market while providing a healthy business environment for the growth of existing retailers.

 

CHARLESTON, SOUTH CAROLINA 

• Gander Mountain, outdoor gear and apparel retail shop, opened their first South Carolina store in North Charleston.  The store will be located in a redeveloped 40,000 square foot space at the Promenade at Northwoods.
• Earth Fare is currently under construction in Summerville and will anchor Horizon Square, a planned 63,000 square foot shopping center, which will also house Petco.
• Summerville Towne Centre, a planned 230,000 square foot center for Summerville, will be anchored by Hobby Lobby and Aldi.
• Earlier this year, The Corner at Wescott delivered in the Summerville submarket.  The center is anchored by Harris Teeter and co-anchored by Marshalls.

 

GREENVILLE, SOUTH CAROLINA 

• Gabriel Brothers and Conn’s have backfilled vacant big box spaces at The Gallery located at 583 Haywood Road that were formerly occupied by Steve and Barry’s and Babies “R” Us.
• Garlington Station at 1143 Woodruff Road is being redeveloped into a 23,197 square foot center adjacent to the Shops at Greenridge.  An outparcel development is nearing completion and is 100% preleased to Tijuana Flats and Stanton Optical.  Across the street from the center is 25 Garlington, a planned 5,565 square foot center with space preleased to Chicken Salad Chick.
• Construction completed at Magnolia Park during the fourth quarter of the year.  The redevelopment of the former Greenville Mall has been an entry point for several retailers to South Carolina.

 

FOR MORE STATEWIDE COMMERCIAL REAL ESTATE NEWS CHECK OUT OUR MARKET REPORTS HERE.

 

To download the complete report click the link: Q4:2014 Columbia Retail Market Report.