The Charleston, South Carolina, retail market experienced another solid year of growth in 2007 with the addition of 418,814 square feet of retail space, primarily in the North Charleston and Mt. Pleasant markets. Even with this expansion of retail space, occupancy increased, albeit only slightly, from 87.81% at year-end 2006 to 88.86% at year-end 2007.
Retail property growth has been a derivative of the increasing levels of diversity in job sectors and quality of jobs that the Charleston MSA continuously attracted over the previous five years. Retail development has reflected this diversity and has been growing in multiple sectors such as value, grocery-anchored, lifestyle and luxury retailers.
The new tax change that was implemented in 2007 has pushed a significant burden on both nonpersonal residential and commercial properties. As commercial projects are sold, tax rates are increasing by as much as 30% to 40%, which in turn is being passed directly onto tenants. Total rent expenditures are therefore increasing, resulting in tenants being more cost conscious and shopping for affordable space.
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 into a hub of restaurants, home décor retailers, design firms and 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 Capitol with the intent of redeveloping the 2.2-acre site and the approximately 150,000-square-foot office building fronting Marion Square.
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