Significant Activity is Visible as New Centers Complete Construction and Retailers Open
- National retailers continue to show significant interest and demand for space in the market.
- An improving economy, job creation and residential growth are motivating retail development.
- Construction activity is in full swing after being absent from the market for several years. The first significant developments are complete.
- Rental rates are on the rise, setting new record-highs.
- Sales prices soar.
- Charleston maintains accolades.
- King Street continues to thrive off tourism industry.
Retailers Show Significant Interest in the Market
Retail is booming throughout the Charleston, South Carolina market as the region’s economy continues to improve, job creation persists and population growth and tourism remain strong. Grocers, discount retailers and fast-casual restaurants are among the popular suburban retailers while up-scale dining and shopping retailers dominate downtown. Options for retail space are limited and retailers are expressing a sense of urgency, choosing locations and signing leases at a faster pace than the past.
Strong activity has been apparent in the market throughout the last year with announcements of new retail openings. Substantial development is finally visible as construction completes on newly developed and redeveloped centers with retailers opening their doors to customers. The vacancy rate, which remained flat throughout recent quarters, is finally declining as new centers come online with little to no vacant space. The third quarter of 2015 ended with a vacancy rate of 5.1% for the overall market, down from 5.6% at mid-year 2015. Occupancy is at an all-time high and retailers are competing for limited quality options. Increased competition for space and rising construction costs are contributing to record-setting rental rates. Asking rental rates for junior anchor and shop space in the suburban submarkets averaged $9.13 PSF NNN and $19.04 PSF NNN, respectively, at the end of the third quarter of 2015. Newly delivered shop space is receiving lease rates over $35 PSF NNN and new junior anchor space is receiving over $15 PSF NNN. Rental rates for shop space along King Street remain high and continue to increase motivating inflated sales prices.
The 1,883 square-foot property at 289 King Street recently sold for $2.3 million, or approximately $1,221 per square foot. The property closed less than 45 days after being listed for sale indicating a healthy investment sales environment supported by limited vacancy, strong demand, and escalating rental rates.
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