Market Trends

The Greater Charleston, South Carolina retail market enjoyed healthy activity in 2004, primarily due to power centers and the continued influx of regional retailers. Two trends at work in the market were the development of free-standing, big box retail buildings and a clustering of smaller strip centers around power centers and Wal-Mart Super Centers. This market activity resulted in increased inventory in all sub-markets and, with little exception, positive absorption. Average market rental rates dropped by $.31 to $14.22 per square foot annually, impacted by big box retail leasing activity. Average pass-through costs increased by $.08 to $3.89, reflecting greater real estate taxes, insurance rates and increased labor costs for maintenance contractors. While market growth occurred in all sub-markets, much of the new development was located in the West Ashley, North Charleston and East Cooper sub-markets.

Peninsula Charleston

Peninsula Charleston sub-market growth was limited, but much of the ground work was accomplished for retail development north of the Central Business District in the Neck area. The Magnolia project in the Neck area is a 400-plus acre, mixed-use planned development that will include big box facilities that are currently prohibited in the CBD. This development, as well as others, will more than double the size of the Peninsula Charleston sub-market when brought on time. The other side of this sub-market includes the boutique corridors of King and Market streets. With product being limited in supply, the desire of national retailers to be located in downtown Charleston continued to support relatively high rental rates in the boutique corridors. The demand for space by national retailers like Brooks Brothers, Joseph A. Banks and Urban Outfitters, and their ability to pay the higher rental rates, have caused many local retailers to leave these corridors.

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