- Retail activity was steady through the early months of 2014 which ended with a high occupancy rate of 92.9%.
- Focus on Downtown Charleston results in record high occupancy rates.
- Rental rates soar for King Street shop space.
- Corner at Wescott Shopping Center in the Summerville submarket delivered.
- Redevelopments underway on Upper King Street in Downtown Charleston.
2014 is looking bright for the Charleston, South Carolina retail market despite a slight increase in the market vacancy rate to 7.14% at the end of the first quarter of 2014 from the year-end 2013 rate of 6.98%. The increase is a result of several big box closings throughout the suburban submarkets. The largest closure was K-Mart closing its doors at Johnnie Dodds Boulevard and Bowman Road earlier this year adding approximately 87,000 square feet of available anchor space to the market. The recently vacated roughly 131,000 square foot shopping center provides a redevelopment opportunity for the highly occupied East Cooper submarket.
Summerville continues to be the tightest suburban submarket with the lowest vacancy rate, 4.18%, and highest average asking rental rate for shop space, $21.72 NNN. The Corner at Wescott, a new shopping center in Summerville, delivered early in 2014 and is anchored by Harris Teeter and co-anchored by Marshalls. Marshalls relocated from The Promenade at Northwoods in North Charleston.
While the suburban submarkets are performing well and attracting new retailers to the area, the main focus was on Downtown Charleston, specifically King Street. The consistently high occupancy along the well-known shopping and entertainment street resulted in a shift towards Upper King Street that began last year. Midtown, the cornerstone of Upper King, broke ground during the fourth quarter of 2013. The Regent Partners development will consist of approximately 16,000 square feet of retail space, a dual-branded Hyatt House and Hyatt Place hotel, and a seven-story parking garage. The project, located at King and Spring Streets, is anticipated to complete in 2015.
Average rental rates are on an upward trend throughout the Charleston market. The limited availability of Downtown retail space places an upward pressure on average asking rental rates which have soared to $44.00 NNN on King Street. Tenants are seeing rates as high as $60.00 NNN on King Street. The combined suburban submarkets had an average asking rental rate of $17.24 NNN with the highest rates in Summerville and East Cooper at $21.72 NNN and $20.60 NNN, respectively. While average rental rates are substantially lower in the suburban submarkets, some tenants are seeing rental rates as high as the mid $30s in Summerville and mid $40s in East Cooper.
- Michael Kors is opening a second Charleston store along King Street. The retailer, which already has a store at North Charleston’s Tanger Outlets, will locate in the former BCBG Max Azria space at 263 King Street.
- Grand Bohemian Hotel Charleston is under construction at 55 Wentworth Street in Downtown Charleston. The four story boutique hotel will consist of 50 guest rooms, an art gallery, meeting space, a wine blending and tasting room, and a rooftop restaurant.
- Southern First is to open a second Lowcountry branch in Mount Pleasant. The 3,600 square foot branch will be at the corner of Shelmore and Johnnie Dodds Boulevard.
- The Islander, a Holy City Hospitality venture, opened at the former site of Queen Anne’s Revenge restaurant. The restaurant will serve cocktails, seafood and sushi, and include indoor and outdoor bars with extended patio space.
- Bass Pro Shops Outdoor World recently announced plans to open an approximately 140,000 square foot store at the planned intersection of Interstate 26 and Northside Drive. The store will be the primary anchor of a 2 million square foot mixed-use development. The store will feature the company’s well known Uncle Buck’s Fishbowl and Grill, a nautical-themed bowling alley and restaurant. Bass Pro Shops Outdoor World, already located in Myrtle Beach, South Carolina, is expanding its Southeastern footprint and recently announced plans for a Spartanburg, South Carolina store. Both South Carolina stores are scheduled to open in 2015.
IN THE MONTHS AHEAD
The remainder of 2014 and 2015 should prove successful for the Charleston retail market as redevelopment and development projects deliver. As occupancy rates and rental rates continue to climb, demand for further development and additional retail space is likely to increase. High rental rates will provide motivation for developers in the areas as the rates will support high construction costs. Recently vacated big boxes and outdated shopping centers will offer redevelopment opportunities throughout the market. Tourism will continue to drive new retailers to the market as Charleston remains an international travel destination.
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.
- Nordstrom Rack is entering the Columbia market and opening its second South Carolina store. The retailer will backfill 34,000 square feet of space recently vacated by Barnes and Noble at Harbison Court along the Harbison Boulevard retail corridor. Harbison Court is home to co-tenants Ross Dress for Less, Pier 1 Imports, Golfsmith and Anna’s Linens. The Columbia location and recently announced Greenville store are set to open in the fall of 2014.
- Destination XL opened its first Columbia location at 1005 Bower Parkway. The clothing store, which caters to the fashion needs of men who wear extra large or larger, is also located in North Charleston..
The Upstate of South Carolina is attracting outdoor retailers such as Cabela’s and Bass Pro Shops, which are expanding their Southeast footprint.
- Cabela’s held its grand opening ceremony and is open to customers at Magnolia Park. Park, a 550,000 square foot retail center, is now 95% committed and should be complete by the end of 2014. Magnolia Park has been an entry point for several retailers to the South Carolina market. Nordstrom Rack, Toby Keith’s I Love This Bar and Grill, Dave and Buster’s, Yard House, Cheddars, Firebirds and Bad Daddy’s Burger Bar have all chosen Magnolia Park for their first South Carolina location.
- In addition to a North Charleston store, Bass Pro Shops recently announced plans to enter the Spartanburg, SC market. Both the North Charleston and Spartanburg locations will feature Uncle Buck’s Fishbowl and Grill. The Spartanburg County store will be the company’s third South Carolina location and is to be located between Greenville and Spartanburg on Interstate 85 at Highway 101. The store will be over 120,000 square feet and be the primary anchor for a 75-acre mixed use development to include retail, hotels, and restaurants.
#COLLIERS INTERNATIONAL | SOUTH CAROLINA
Q1-2014 #CHARLESTON #RETAIL MARKET #REPORT
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John Orr, CCIM
Vice President | Charleston
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