New Retail Construction Continues to Heat Up the Columbia Market

Colliers International, South Carolina – Research & Forecast Report, Columbia – Retail Q1 2015

 

Key Takeaways

• Construction is on the rise throughout the market.
• Vacancy rate holding steady despite significant activity.
• Rental rates for shop space are trending upwards.
• Downtown’s Vista entertainment district welcomes new restaurants.

To download the complete report: Q1 2015 Columbia Retail Market Report.

 

Market Conditions

Columbia, South Carolina continues to transform into a retail destination with new retailers and restaurants entering the market as construction activity picks up.  Driving downtown or along any major retail corridor, signs of construction are evident.  Downtown residential projects are leading redevelopments along Gervais Street in the Vista and attracting new restaurants to the entertainment district.  The suburban submarkets are also seeing increased activity with the construction of new retail centers.  Despite the heightened interest in the market, the vacancy rate showed little change throughout the first quarter of 2015, declining 10 basis points to 8.2% over year-end 2014.  Rental rates are trending upwards throughout the market and will increase further as new retail space delivers to the market.  Asking rental rates for shop space averaged $12.94 NNN at the end of the first quarter of 2015, up from $12.73 NNN at year-end 2014.  Asking rental rates for anchor and junior anchor space averaged $7.51 NNN and $7.65 NNN, respectively, at the end of the first quarter of 2015.

As expected with a growing retail market and improving economy, the Columbia, SC MSA experienced increased sales during the 2014 holiday season, which continued into 2015.  According to the South Carolina Department of Revenue, gross retail sales for the Columbia, SC MSA totaled $2.4 billion in December 2014, 7.6% higher than December 2013 sales and 14.1% higher than December 2011 sales.  January 2015 sales volume was reportedly 3.2% higher than January 2014.  Lexington and Richland counties experienced the greatest sales activity with combined sales of $1.6B in January 2015.

 

Congaree Vista Welcomes New Life in Old Spaces

Construction is underway on almost every other block along Gervais Street in the Vista.  New hotels, restaurants and bars are among the area’s future tenants.  Columbia’s growing population coupled with the University of South Carolina’s expansion towards the Congaree River is driving a growing demand for retailers locating downtown.  The unique restaurants and increasingly vibrant downtown is also attracting residents from the suburbs to dine and shop downtown.

• Downtown’s newest hotel, The Hyatt Place Hotel at 823 Gervais Street, welcomed its first guests early in 2015.  AT&T occupies the street-level retail space at the hotel.
• Old Chicago Pizza and Taproom opened to diners at the Adluh Flour Mill redevelopment.
• Kaminsky’s is now open at 930 Gervais Street.  The dessert cafe is also located in downtown Charleston.
• Panera Bread plans to open at the former Bluestein’s Wholesale Dry Goods site, which is under construction along Gervais Street.
• The former City Market building is undergoing redevelopment and will soon be home to Newk’s and Grill Marks.  Both restaurants will be new to the Columbia market and are expected to open by year-end 2015.
• Another renovation project will soon be underway across the street from the former City Market building.  Developer Arnold Companies plans to redesign the complex, which is currently home to Tsunami, Rocket Man, Wet Willies and Jillian’s.  The project, to be called West End Alley, has attracted Tin Lizzy’s Cantina and City Bar and Fondue, which plan to open this summer.
• Plans for the Aloft Hotel received approval.  The 108-room hotel will be located at Lincoln and Lady Streets.

 

Suburban Retail Developments

The suburban submarkets are also partaking in new construction and redevelopment projects.

• Activity at Killian’s Crossing in the Northeast submarket is gaining momentum with an announcement of Kroger, 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.
• Landmark Shopping Center, located at I-77 and Garners Ferry Road, will be getting a major face-lift.  The shopping center is undergoing renovations and will be home to Ross Dress for Less and Burkes Outlet in the fall.  The retailers will be backfilling vacant space.  Burkes Outlet will occupy approximately 23,000 square feet and Ross Dress for Less will occupy approximately 27,000 square feet.
• A new retail center is under construction at Forest Drive and Percival Road.  Columbia Development is developing the project, which will include Panera Bread, Petco and Tijuana Flats, according to a site plan on the developer’s website.  The location would be the first in Columbia for Tijuana Flats, which recently opened its first South Carolina locations in Greenville.
• Guitar Center is now open to customers at the former Staples and Hudson Smokehouse site in the Harbison/St. Andrews submarket.  The center, along Park Terrace Drive, is anchored by Academy Sports and will also be home to Sports Clips and Salsarita’s.
• 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.

 

Recent Announcements

• Bevello, Raleigh-based clothing boutique, recently opened at Trenholm Plaza.  The retailer is located next to J. Crew and Anthropologie, backfilling the remaining former Books a Million space.
• BJ’s Wholesale Club may be coming to Northeast Columbia.  The store, to be located at 1117 Sparkleberry Lane Ext., would be the first in South Carolina.  The site is currently home to a vacant manufacturing facility, but plans would involve the demolition of the facility and construction of a new building.
• Radio Shack is going out of business and closing several Columbia stores.  The stores include those located at Bush River Village, Columbiana Centre, Forest Drive, Garners Ferry Road, The Market Place at Harden, Parkland Plaza and along Two Notch Road.  The stores range from 2,100 to 4,100 square feet.

 

Around the State

Retail development is on the rise throughout South Carolina with grocery stores and sporting goods retailers anchoring larger developments.  As employment and population growth continue, the state will attract national tenants to the market.  Mixed-use developments are gaining popularity in both the suburbs and downtown submarkets.

 

Charleston, South Carolina

Charleston’s retail market continues to be influenced by a growing tourism and residential population.

• Charleston ranked third on TripAdvisor’s 2015 Travelers’ Choice awards for top destinations in the United States.
• Earth Fare is currently under construction in Summerville and will anchor Horizon Square, a 63,000 square-foot shopping center, which will also house Petco.
• Summerville Towne Center, a planned 230,000 square-foot center in Summerville, will be anchored by Hobby Lobby and Aldi.

 

Greenville, South Carolina

Declining vacancy rates, increasing rental rates and a growing population are motivating the redevelopment of existing sites and development of new centers in high-traffic areas.

• A significant redevelopment is planned for the Greenville News site.  Greenville’s vibrant, growing downtown has earned the attention of Dallas-based Trammell Crow Corporation, who is teaming up with local Centennial American Properties on the redevelopment to be called Camperdown.  Plans include an upscale hotel, office buildings, approximately 44,000 square feet of retail and restaurant space, a dine-in theatre and a parking garage.  Construction is expected to begin in 2015 and complete in 2017.
• Lowes Foods plans to enter the Upstate with its first Greenville store open in the spring of 2016.

 

For more statewide commercial real estate news check out our market reports at: www.colliers.com/southcarolina/insights

 

To download the complete report: Q1 2015 Columbia Retail Market Report.