YE 2012: Charleston Retail Market Report

February 7, 2013

Charleston, SC Tourism continues to play an important role in the Charleston retail market as the city is voted as The #1 City in the World for the second time by Conde Nast Traveler.

CHARLESTON, SC
February 7, 2013

Colliers Year End Retail Market Report

KEY TAKEAWAYS

Tourism continues to play an important role in the Charleston retail market as the city is voted as The #1 City in the World for the second time by Conde Nast Traveler.
King Street continues to see the highest lease rates due to the retail sales volume. In addition, King Street’s new acclaim as a Top 10 Retail Shopping Street in the nation continues to attract national retail tenants and cater to the tourist retail market.
Suburban vacancy rates declined to 8.22% at year-end 2012 from 9.18% a year ago. The decrease in vacancy in the overall market can be attributed to the increase in local retailers opening shops due to the availability of financing.
Boeing’s multiplier effect throughout the state ripples down to Charleston retail.
Developers are prepared to develop new product based on current vacancy rates.
Average suburban asking lease rates remained steady at $15.46 PSF NNN due to big box spaces leasing at lower rates.
National and international attention from the media over the past couple years puts Charleston center stage with other global retail markets.

2012 MARKET RECAP
The Charleston retail market showed positive growth in 2012. Charleston saw an influx of national retailers entering and expanding within the market as a result of job and population growth within the area. Notable national retailers new to Charleston in 2012 include Kate Spade, Hobby Lobby, Garden Ridge, Michael Kors, Colonial Candle and Anthropologie.

Announcements of Boeing’s continued success and expansion, Charleston’s consistent international and national rankings by notable publications, and the region’s favorable climate and lifestyle draw people for jobs and tourists alike to the area; and thus retail follows. These
positive economic conditions strengthened the retail market in 2012 and will set the stage for a favorable outlook for the Charleston retail market in the future.

Boeing’s success has had a multiplier effect statewide, especially the local retail market. The economic impact of Boeing in Charleston is upwards of 5,000 jobs, translating to that many more consumers supporting the Charleston retail market. We expect Boeing to continue to strengthen retail as the company has recently purchased an office campus and announced
plans to buy additional land to support their expansion.

Charleston’s increased national and international attention in the media from recent recognitions and rankings, exposed Charleston to the global retail market. This exposure catapulted Charleston on stage with New York, Los Angeles, London and Paris as retail destinations. As a result, several national retailers including Anthropologie, Michael Kors, Hobby Lobby and Garden Ridge took notice and opened stores in 2012. Predictably, tourism continued to play an important role in the Charleston retail market. For the second year in a row, Charleston was noted as Top U.S. City by Conde Nast Traveler.

Drawn by the southern hospitality, historic charm, beaches, foodie-culture, high street retail shopping and beautiful weather, people have been flocking to the Lowcountry, falling in love with Charleston, and choosing not to leave. The Charleston Quicksand Effect is quantifiable through the significant improvements in the 2012 residential market being reduced to only a slim three months supply of housing, sparking new planned residential developments. With the influx of new residents forcing new housing developments, the retail tenants are right behind them flooding into Charleston. More people, more houses, more retail.

DOWNTOWN CHARLESTON

Williams-Sonoma is relocating to another location on King Street. Rumors that the national clothing retailer, H&M, will take it’s place.
New storefronts in 2012 along Middle and Lower King Street include: Kate Spade, Carolina on King, Cynthia Rowley, Harleston Shoes.
We will see a trend in growth in Lower King Street as this section of King loses its high-end antique shops for trendy boutique, home décor, accessories shops and market café’s.
Notable new local restaurants to Upper King include: Stars, The Rarebit, The Grocery and The Ordinary.
Upper King’s local flavor and branding will continue to attract the smaller restaurant owner and retailer to north of Calhoun Street.
In 2012, three hotel and multi-family projects commenced construction in Downtown that will continue to strengthen and support the King Street retail market.
Available space on Middle King Street is rare. The scarcity of space in these few blocks forces retail prospects and growth to Upper and Lower King Street.
Middle King Street touts the top of the market rates at $60 PSF Net for a retail storefront on the high traffic street.

SUBURBAN CHARLESTON

East Cooper and Summerville saw some of the greatest improvements in occupancy in both shop and anchored retail space.
The Summerville submarket reported the lowest vacancy rate compared to all the submarkets at 2.93% at year-end. Summerville’s affordability and growth of residential housing contributed to the decline in vacancy.
New retail developments to come online in 2013 include the Harris Teeter and Marshalls anchored corners of Wescott and Horizon Square.
North Charleston saw increased vacancy rates in the historically dominant Northwoods Mall retail node as the population continued to shift toward the Summerville and Berkeley submarkets.
East Cooper’s lack of big box space and vacancy rates of 6.29%, lead to the ground up development of a 55,000 SF Hobby Lobby store.
Tanger Outlet Mall continues to be a favorable shopping destination as evidenced by new construction.

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