Record-setting activity brings new retailers and restaurants to Columbia

Research & Forecast Report
Q4-2015 Columbia, SC | RETAIL

Key Takeaways

• Columbia, South Carolina’s retail market continued to improve and grow through 2015 as retailers and developers invested in the market.
• Developers and retailers are turning to new construction and redevelopments to meet the significant demand for space.
• Rental rates are on the rise, specifically for junior anchor and shop space, which are in greatest demand.
• Total gross retail sales in the area is up over previous years.

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

 

Construction Activity is at its Highest Level in Years

Retailers are investing in the Columbia, South Carolina market, opening their first locations or expanding their presence within the market.   Strong interest in the area and demand for space are collectively contributing to declining vacancy rates and limited quality options for space.  Additionally, retailers are expressing a desire to locate at specific intersections or in certain retail corridors, placing additional stress on the existing inventory.

The vacancy rate was down to 8.5% at year-end 2015 from 8.7% the previous year.  The limited change in vacancy is misleading as many retailers are preleasing space in planned and newly constructed shopping centers.  Also, a majority of the retail space remaining vacant is located in older shopping centers.  As a result, the market witnessed a wave of new construction and redevelopment as developers sought to meet the growing demand for retail space.  Retailers are expanding at high velocity given the improving economy and increased consumer spending, driving the greatest level of construction seen in recent years.  Land costs along primary retail corridors are skyrocketing, and consequently many developers are renovating older, but well-located, retail space.  Development has been widespread throughout the market with almost every submarket seeing activity.

Downtown Developments 

• Construction is nearing completion on the City Market redevelopment in the Congaree Vista.  Newk’s Eatery recently opened their first Columbia location at the complex.  Grill Marks and The Wired Goat, both new to the market, are also open.  A brewery remains under construction and additional space is available for retail or office use.
• Another redevelopment, West End Alley, is under construction across the street at the 700 and 800 blocks of Gervais Street.  Tin Lizzy’s Cantina opened their first South Carolina restaurant at the complex.  City Bar and Fondue will be joining the new restaurant at the development.  Additional tenants include Wet Willie’s, Tsunami and Rocketman.
• Exterior renovations have been approved for the historic fire station building in the Vista near the recently completed University of South Carolina Alumni Center.  The building will offer up to 35,000 square feet of commercial space.
• Spirit Communications Park, a minor-league baseball stadium, and The First Base Building are under construction at BullStreet.  The First Base Building will be located at the first base line of the stadium and is expected to be delivered in April 2016.  The building offers approximately 26,203 square feet of retail and restaurant space in addition to 72,000 square feet of Class A office space.  Upon full build-out of the mixed-use development, there will be approximately 3.3 million square feet of commercial space and 3,500 residential units.
• Rosewood Crossing, the former K-Mart redevelopment at Fort Jackson Boulevard and Garners Ferry Road, completed earlier this year.  Marshalls, Michaels and Petsmart anchor the center.  Kay’s Jewelers, Kirkland’s, and others are also located at the center.  Unfortunately, the devastating, historic flood that hit South Carolina in October affected Rosewood Crossing and the retailers were required to temporarily close and repair damages caused by the flood.

Suburban Activity

• South Carolina’s first Kroger Marketplace is under construction at Killian’s Crossing.  The new Kroger Marketplace will offer bed and bath selections, baby goods, a jewelry counter, home fashion and more, in addition to its fresh foods.  The 125,000-square-foot store will also offer Kroger Fuel.  Other tenants at Killian’s Crossing include Chick-fil-A, Applebee’s, McDonald’s, and Panda Express.  The lifestyle center is located at I-77 and Killian Road and offers 400 acres of retail, residential, and commercial space.
• The Fresh Market will be opening a new grocery store at Two Notch Road and Fore Avenue, near the Village at Sandhill.  The 25,000-square-foot store will anchor a new 37,000-square-foot center to be called The Shoppes at Two Notch and is expected to be open Fall 2016.
• Landmark Square Shopping Center, located at I-77 and Garners Ferry Road, recently underwent a major facelift.  Ross Dress for Less and Burke’s Outlet are the shopping center’s newest tenants.  Goodwill, which is also located at the center, is expanding its store.
• A redevelopment also completed this year on Park Terrace Drive in the Harbison Boulevard retail corridor.  The redevelopment is anchored by Guitar Center and Academy Sports.  Blaze Fast-Fire’d Pizza is opening its first South Carolina restaurant at the center.  Additional retailers at the development include Salsarita’s, Sports Clips, and Title Boxing Club.
• A new retail center is complete at Forest Drive and Percival Road.  Tijuana Flats recently opened its first Columbia location at the development.  Other tenants include Panera Bread, Wing Stop, PetCo, and Mattress Firm.
• Cardinal Newman moved into its new school on Alpine Road, leaving its former Forest Drive site vacant and available for redevelopment.  The Beach Company plans to redevelop the site into 300 apartment units, shops and restaurant space, and a new parking garage.

 

 

Rental Rates Climb

Competition for space and rising construction costs are pushing up asking rental rates throughout the market.  Asking rental rates for shop space have shown the greatest hike, increasing to $14.65 NNN per square feet (PSF) at year-end 2015 from $12.73 NNN PSF one year ago.  Asking rental rates for anchor and junior anchor space averaged $7.37 NNN PSF and $7.88 NNN PSF, respectively, at the end of 2015, holding steady over the previous year.  Demand for anchor space has been declining during recent years as retailers re-evaluate their business plans and downsize their store footprints in an effort to minimize costs and provide a better consumer experience.  Big-boxes vacated by grocers or large discount retailers have provided redevelopment opportunities for developers to convert the space into junior anchor and shop space which is easier to lease.  The newly renovated space is then leased at higher rental rates, pushing up the market average.

Recent Retail Announcements

• Walmart Neighborhood Market plans to open its first Columbia store at 3533 Broad River Road on January 27.  Two other stores are under construction in the Cayce/West Columbia submarket.  The stores will be located at Knox Abbott and Charleston Highway and at the intersection of Old Barnwell and Emanuel church roads.
• Tandy Leather leased space in Parkland Plaza in the Cayce/West Columbia submarket.
• The owner of Columbia’s Gold Gym locations has rebranded the fitness centers into Müv Fitness.  All gyms in the area remain open and a new location will soon open at Westside Plaza on Augusta Road in Cayce.
• Midwood Smokehouse is open at the former American Roadside Burger restaurant space at the Whole Foods-anchored Cross Hill Market.
• Red Robin opened at Columbiana Centre off Harbison Boulevard.
• Publico Kitchen + Tap opened on Greene Street at the former Garibaldi space.
• Persona Wood Fired Pizzeria is open at Main and Gervais Streets.  The restaurant is the first location on the East Coast.

Gross Retail Sales

A strengthening economy, job creation and lower gas prices are motivating an increase in spending on retail goods and services.  Gross retail sales in Richland and Lexington counties accounted for 91.6% of total sales in the Columbia, SC MSA in October 2015 according to data from the South Carolina Department of Revenue.  Gross retail sales from January to October 2015 totaled $18.6 billion for the two counties, increasing 3.1% over the same period the previous year and 5.5% over the same period in 2013.

2015 Year in Review

Restaurant Openings

• Top Dawg Tavern opened their first South Carolina location at the Village at Sandhill.
• Panera Bread opened at the former Bluestein’s Wholesale Dry Goods site along Gervais Street.
• Kaminsky’s is open at 930 Gervais Street.  The dessert café is also located in downtown Charleston.
• Old Chicago Pizza and Taproom opened at the Adluh Flour Mill redevelopment.
• Starbucks opened a new concept café at the Sheraton on Main Street in downtown Columbia.
• Rise Gourmet Goods and Bakeshop opened along Harden Street.

Big Box Announcements

• Costco is making a much anticipated appearance in the market.  The new store is under construction at Piney Grove and Fernandina roads near Harbison Boulevard.
• Construction is underway on Sam’s Club new store to be located at Fashion Drive and Forum Drive at the Village at Sandhill.  The 136,000-square-foot warehouse superstore will be the company’s third Columbia location.

Hospitality News

• 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.
• A new 108-room Aloft hotel is under construction along Lady Street across from the new Hyatt Place hotel.
• The Clarion Hotel on Gervais Street is being converted into a dual-branded Hilton Garden Inn/Home2 Suites hotel.  Upon completion, the hotel will offer 230 guest rooms.

 

 

2016 Outlook

The strong momentum that began in 2014 is expected to continue through 2016.  National retailers will continue to be attracted to the region’s favorable demographics and growing population.  New construction activity will continue in order to meet the robust demand for space, but will become limited as the remaining quality land options are developed.  The redevelopment of older, vacant centers will continue to provide an opportunity for investors and attract retailers.  Asking rental rates will continue to climb as demand remains strong and construction costs escalate.

Around the State

Retail development is on the rise  in downtown and suburban submarkets throughout South Carolina.

Charleston, South Carolina

• Development activity continues to increase in Charleston.  A strong tourism industry drives downtown activity and a growing population is motivating suburban development.
• Earth Fare opened earlier this year at Summerville Marketplace Shopping Center.  Petco is also open at the center.  Other tenants include Dunkin’ Donuts, Mattress Pro, Crust Pizza, Tijuana Flats and Lee Nails.
• J Crew Mercantile will open its first South Carolina store at Bowman Place in Mount Pleasant, the former K-Mart redevelopment that is also home to Nordstrom Rack, Dick’s Sporting Goods, and DSW among other retailers.

Greenville, South Carolina

Significant interest in Greenville’s downtown mirrors the national trend of urban core development.  Developers and retailers are targeting a growing millennial population and are catering to their desire for a walkable, live, work and play environment.  Downtown Greenville developments consist of various mixed-use developments with residential, office, and retail components. Grocery-anchored shopping centers and smaller, fast-casual restaurant-anchored centers are driving development and growth in the suburban submarkets.

 

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