The Charleston, South Carolina retail market remained strong over the first half of 2007, with steady growth both on the peninsula and in the suburbs. The retail market has now surpassed 15.3 million square feet, including enclosed malls, and stood at 88.58% occupied as of mid-year 2007. Rental rates escalated mildly from year-end 2006, which reflects continued demand as well as rising land and development costs.
Over 2006, the market experienced increases in acquisition volume and price per square foot; 2007 has thus far been more of the same. Regarding cap rates, the Charleston MSA continued to experience a downward push and the market continued to be quite robust especially among the REIT and institutional investors. Several recent retail investment transactions helped to keep this trend in place including the late 2006 acquisition of Mt. Pleasant Towne Center by Miller Capitol.
There are many factors that contributed to the momentum that Charleston continued to experience over the first six months of 2007. As mentioned in earlier reports, Charleston’s recognition as an international travel destination has put the MSA in a spotlight situation for development, acquisition and inbound migration. In 2006, Charleston was voted number four in the world’s best North American Cities behind New York, San Francisco and Chicago by Travel & Leisure Magazine.
According to a recent economic report by Wachovia, statewide population growth surged in 2006 partly due to migration from other regions of the country. Total population grew by 74,316, which can be partially attributed to rising home prices, insurance costs and property taxes in other states. The largest increases in population have occurred along the coast, with Horry County adding more than 40,000 residents since 2000. Dorchester County (included in the Charleston MSA) had the largest percentage change in population, which grew by 26% since 2000.
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