Throughout 2006, the Charleston MSA continued to expand with a healthy, robust growth in the retail sector. Our survey indicates that the retail market in the Charleston, SC MSA is now approaching 15.25 Million square feet including enclosed malls. In keeping with this trend of expansion, occupancy rates (including enclosed malls), declined slightly to just under 90% from 90.5%, mainly due to delivery of new space. 2006 saw large increases in acquisition volume while price per square foot increased. Regarding retail investment, average cap rates in 2006 saw an overall decrease based on activity on the strip center category while mall and other categories saw an increase in cap rates. Rental rates continue to escalate as a function of demand as well as rising land and construction prices and impact fees levied by municipalities. Overall, retailers have been on a steady and consistent expansion in the Charleston MSA lured by consistent growth in population, employment and exposure throughout the region and country as a whole.
The Charleston, SC retail market has many factors currently driving its momentum. As mentioned in earlier reports, sustained and increasing recognition as an international travel destination has put the MSA in the spotlight type situation for development, acquisition and inbound migration. In 2006, Charleston was voted #4 in the world’s best North American Cities behind New York City, San Francisco and Chicago by Travel & Leisure Magazine. The lure of relocating to this historic coastal city has brought a large and consistent stream of new residents helping to drive up demand for housing as well as for retail space. Additionally, the charm and uniqueness of shopping in Charleston’s King Street corridor continue to enhance its reputation as a legitimate lifestyle shopping destination. Ambitious road projects are being planned and implemented throughout the area to accommodate growth. Currently the MSA contains approximately 570,000 people; however, at this time at least 138,000 new houses are planned, permitted or under construction in the Charleston MSA. These numbers only include the projects that have been announced publicly, so this is a conservative figure. According to The Post & Courier, “If population trends hold true, these houses would be home to about 269,000 people. That’s more people than live in Charleston, North Charleston, Summerville and Mount Pleasant combined.” For 2007, we expect the Mt. Pleasant submarket to experience the largest quantity of activity due to the current and ongoing development of multiple projects in the northern sector of that market.
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