Charleston Retail Market

The Charleston market experienced another solid year of growth in 2007 with 418,814 square feet of retail space being added primarily to the North Charleston and Mount Pleasant submarkets. Even with this expansion of retail space, occupancy increased, all be it marginally, from 87.81 percent at year-end 2006 to 88.86 precent at year-end 2007. Trends and Forecast • Retail property growth has been a derivative of the increasing levels in diversity of job sectors and quality of jobs that the Charleston MSA has been able to attract over the last 5 years. • Retail development has reflected this diversity and has been growing in multiple sectors such as value, grocery-anchored and lifestyle as well as luxury retailers. • The new tax change that was implemented in 2007 has pushed a significant burden on both non-personal residential as well as commercial properties. As commercial projects are sold, tax rates are increasing by as much as 30 to 40 percent, which in turn is being passed directly onto tenants. Considering the rising costs of fuel for American consumers and the secondary rise of price of consumer goods as a result, retail development will evolve into becoming more convenience focused than ever before. This may translate into a greater quantity of more convienence-oriented neighborhood centers located close to or inside major residential nodes and a more diverse tenant lineup located in those centers. As reflected more severely in the national development pipeline, retail growth for 2008 has slowed, but not dramatically. The sector of highest activity in this period should further establish itself in the areas of value retail and grocery-anchored centers. Areas of highest concentration regarding this growth should be Summerville, Goose Creek and Mount Pleasant. Peninsula The Peninsula Charleston submarket continues to be the heartbeat of the city. Upper King Street has transformed from a blighted area not on the radar screen of credit retailers to become a hub of restaurants, home décor retailers, design firms and upcoming hotels. Most recently, the “Midtown” project has cleared city permitting approvals and is moving forward with a project that calls for both hospitality and retail components. Additionally, the Mendel Rivers building, located on Meeting Street just north of Calhoun Street, has been acquired by Dewberry Capital with the intent of redeveloping the 2.2-acre site, which also contains an approximately 150,000-square-foot office building fronting Marion Square. When completed, this project has the potential to further revitalize an area that has received considerable attention from city planners. The trend of more national upscale retailers landing on King Street has continued with the recent addition of Apple and Louis Vuitton, which will open in summer 2008. Other recent openings include BCBG/MaxAzria and Aldo Shoes alongside existing stores such as St. John, Gucci and Saks Fifth Avenue. West Ashley The opening of Best Buy late in 2006 in the former Toys “R” Us space as well an office/retail development at the intersection of Highway 7 and Orleans Road, fronting Citadel Mall, created a flurry of new activity in this trade area. A new Wal-Mart Supecenter at Glenn McConnell Parkway and Bees Ferry Road also opened and will spawn future activity that could gradually move the heart of West Ashley’s retail market further westward from Citadel Mall. At Citadel Mall, JC Penney will open a new store in the former Parisian store that closed in March 2007, and PetsMart’s just opened a new addition at the entrance. In late 2007, Sembler opened West Ashley Place, a Publix-anchored center with 19,000 square feet of shop space and one outparcel. Kimco has finalized plans to redevelop St. Andrews Shopping Center with the addition of Harris Teeter, junior anchors and additional shop space. North Charleston North Charleston remains the epicenter of national power and big box tenants for the Charleston MSA. That reputation grew as the Centre Point project was delivered at the intersection of I-26 and I-526. Anchored by a 352,000-square-foot Tanger Outlet Center and featuring a multi-phase power center, outparcels, restaurants, hotels and unanchored strips in addition to Wal-Mart Supercenter and Sam’s Club, this development has certainly become a destination for shoppers, diners, convention visitors and hotel guests. Currently in planning is Shoppes at Centre Pointe Phase II, which will incorporate additional junior anchors as well as shop space and outparcels. The area bound by I-26, I-526, Montague Avenue and International Boulevard has become a second “node” within this submarket. East Cooper The opening of the new 8-lane Ravenel Bridge has further enhanced Charleston’s most upscale suburban market. From a retail perspective, East Cooper grew more than any submarket due to the Market at Oakland, anchored by Wal-Mart Supercenter and Kohl’s. Additionally, Carolina Park, a mixed-use project and home of the new Wando High School to the north, has released residential lots soon to be followed by substantial quantities of retail. In an effort to reduce the traffic burden on Highway 17, Hungryneck Boulevard will be extended. The Highway 17 expansion to 6 lanes between I-526 and the IOP connector has been completed. Summerville The Summerville submarket, once a small bedroom community of Charleston, has recently come onto the radar screen of regional and national retailers. Summerville continues to attract national tenants, and it appears that the next major growth area for retail space will take place at the intersection of Berlin G. Myers Parkway and Highway 78, with 3 of the 4 corners there having active projects under way. To the south, the Dorchester Road corridor continues to grow in terms of residential communities as well as retail with an upcoming Lowes and grocery-anchored project being developed by Hendon Properties at the entrance to Westcott Plantation. Additionally, the forthcoming “The Ponds” project located at Highway 17A will feature up to 1,950 residential units as well as a commercial component. The Knightsville area continues to experience growth both in the residential and retail sectors with the addition of Paradise Development’s new Publix-anchored center as well as a new CVS/pharmacy and a Walgreens at the intersection of Old Orangeburg Road and Central Avenue. Berkeley County In Goose Creek, major new residential projects along Highway 176, Highway 17A and Highway 52 have been announced that have the potential to be “towns in themselves.” The Parks at Berkeley and similar neighboring developments will bring a quantity of new rooftops to this area that is larger than any other Charleston submarket. This year, Google, Inc., will open a $600 million data center that will further enhance the area’s employment base. A considerable number of grocery-anchored centers have been announced in Berkeley County, including a Super BILO at Tanner Plantation, Harris Teeter at Carnes Crossroads and a Publix on Highway 176. In Moncks Corner, repositioning based on the opening of TailRace Crossing, a Wal Mart SuperCenter anchored project, continues to take place regarding this once more rural submarket. As expected, many retailers continue to cluster around this new epicenter. For all your real estate needs please visit http://www.sallyandj.com/