Poised for Growth.
The Charleston, South Carolina, retail market showed substantial improvement in market performance during 2011, particularly from a vacancy perspective. The 2011 year-end market vacancy rate was 9.17% compared to 11.80% at year-end 2010. Asking rates for anchor and junior anchor space increased during 2011, while rates for shop space decreased from $15.35 per square foot at year-end 2010 to $15.07 per square foot at year-end 2011.
The Charleston economy continued to recover due in part to the economic development activity in 2010. Boeing Corporation opened their 1.2 million-square-foot interiors facility in North Charleston while Southwest Airlines had significant impact to the visitor count in the Charleston market as a result of increased tourism.
As noted at mid-year 2011, vacancies in retail corridors created by the previous economic downturn allowed large users to relocate to space that would previously have been outside of their economic reach. The flight to quality was the first trend to emerge following the economic downturn, and remains the most important factor in a retailer’s decision to open a new store or relocate to an existing center. The lack of new product coming online has made it difficult for some retailers to find the “perfect location”, and as a result some retailers have chosen not to enter the South Carolina market until new development occurs.
The downtown submarket with its central geographic position continued to be the heartbeat of Charleston’s retail activity. Typified by an urban retail experience, many buildings feature office or residential components situated above retail users. Lower King Street, south of Calhoun Street, continued to experience a surge in activity among national and regional retailers in addition to restaurants, such as the nationally acclaimed Husk restaurant, primarily due to higher levels of foot traffic created by tourism and the College of Charleston. This area remained the most significant example of mixed-use real estate on the peninsula, populated by Apple, Pottery Barn, BCBG Max Azria, Louis Vuitton, Gucci, J. Crew, Banana Republic, Urban Outfitters, Forever 21 and CosBar.
Upper King Street, north of Calhoun Street, experienced a similar surge in activity with several new restaurants, such as O-Ku, The MacIntosh and Halls Chophouse. A new mixed-use project termed “Midtown”, located on King Street at Spring Street and projected to come online in late 2012, will be anchored by a yet-to-be-named hotel in addition to retail shops, apartments and offices. This development will continue to attract new retailers as the Charleston Peninsula draws attention as an international destination.
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