The Columbia, South Carolina retail market improved in 2003, despite a weak local economy that lost over 10,000 jobs according to the Bureau of Labor Statistics. The Colliers Keenan Retail Market Review surveys anchored neighborhood shopping centers, which totals 8,741,986 square feet in the Columbia, South Carolina MSA. Overall, occupancies improved to 89.8% at year-end 2003, up from 87.9% a year ago. The submarket experiencing the largest increase in occupancy is Cayce/ West Columbia, which increased from 78.8% at year-end 2002 to 82.3% at year-end 2003.
The average rental rate for “in line” retail space in the Columbia area increased to $11.77 per square foot during 2003, up from $11.04 per square foot at year-end 2002. The average cost for pro-rated real estate taxes, property insurance and common area maintenance pass-through expenses for tenants has stabilized, after increasing dramatically by 15% during the first half of 2003 and now averages $2.20 per square foot. Property taxes accounted for the majority of the increase in average pass-through expenses for the properties surveyed.
Fundamentals for Columbia’s enclosed malls strengthened considerably in 2003. At year-end 2003, the occupancy rate was 92.6%, up from 90.7% one year ago. Occupancies rose in spite of Richland Fashion Mall losing one of its anchor tenants. The average rental rate for enclosed malls has remained unchanged during 2003, at $24.65 per square foot. Pro-rated passthrough expenses for tenants declined to $11.82 per square foot. Average sales per square foot remain very strong at Columbia area enclosed malls, increasing from $280.00 per square foot at year-end 2002 to $287.21 per square foot at the end of 2003 due to strong consumer shopping.
The forecast for the Columbia MSA is for continued strengthening over the coming 12 months. A recovering national economy should fuel consumer confidence in 2004 and retail spending should increase, both of which should push retail occupancies higher. As vacant “in line” retail spaces are leased, national retailers will turn towards new construction. Thus, new development will follow residential growth, which indicates the Northeast Columbia, Lexington, and Harbison/St. Andrews markets as the most likely targets for national retailers looking to expand in the Columbia area. A smaller supply of available land in these growth corridors will challenge many developers and retailers to look carefully at all available opportunities. Other submarkets will continue to perform well over the next 12 months also.
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