Rental Rates Reach Record-High Levels as Retailers Grow
- Retailer interest remains strong, supporting new construction throughout the market.
- Declining vacancy and increasing development costs are driving rental rates to historically-high levels.
- Demand for retail space exceeds existing inventory.
- Residential growth and recent job announcements are driving suburban growth while tourism remains beneficial for downtown retailers.
- Gross retail sales are up over the previous year in Charleston and Dorchester counties.
A growing residential population, improving economy, favorable demographics and tourism are supporting significant growth throughout the Charleston, South Carolina retail market. The second quarter of 2015 ended with a vacancy rate of 5.1% for the market, down from 5.5% the previous quarter. Absorption has been limited in recent quarters given the few options for space. Retailers want to locate along prime retail corridors with high-traffic and visibility. As space at these desirable locations becomes increasingly difficult to find, many retailers are backfilling vacant space or signing leases for new centers, which remain under construction. New construction coupled with increasing land and development costs are yielding higher rental rates than those seen in the past.
As of mid-year 2015, asking rental rates for shop space in the suburbs averaged $18.40 NNN, increasing from $18.21 NNN the previous quarter and $16.35 NNN one year ago. King Street tenants are seeing rental rates higher than ever with asking rental rates averaging between $45 NNN and $75 NNN. Shop space along Upper King remains the most affordable averaging $45.00 NNN. Middle King, the highly occupied and popular stretch of shop space, averages $75.00 NNN. Space along Lower King averaged $55.00 NNN.
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