The retail market in Columbia, South Carolina, experienced a slight decline in occupancy from year-end 2007 to mid-year 2008. As the overall health of the national economy remains in question, it is difficult to discern whether this downturn is due to a contraction in the economy, or if it is a delayed closing of underperforming stores. With the rampant growth that the retail market experienced over the past several years, many national retailers are now catching their breath and looking at areas in which consolidation may be needed.
Total market occupancy decreased by 69,652 square feet from year-end 2007 to mid-year 2008. The market occupancy rate stood at 90.14% at mid-year 2008, which represents a very robust and healthy retail market despite this decline. In addition to a decline in occupancy, rental rates across the market decreased from an average of $15.14 per square foot at year-end 2007 to $15.03 per square foot at mid-year 2008. More notable is the decrease in rental rates for small shop rents over this same six month period, which dropped from $19.97 per square foot at year-end 2007 to $17.54 per square foot at mid-year 2008. It can be argued that in a time of economic uncertainty smaller retailers have more difficulty in paying rents, thus as the supply of small-shop space increases rental rates tend to decline.
Even with a downturn in occupancy, retail employment over the first two quarters of 2008 remained stable. Total jobs in the retail trade sector remained completely flat from January 2008 to June 2008; wholesale trade experienced a decrease of 2.5%, and food and beverage stores experienced a 1.7% growth in employment during this same period.
Although the market experienced an across-the-board decline in occupancy, there are some submarkets which achieved positive growth during the first half of 2008. The Harbison submarket, which has historically been the most established suburban submarket, absorbed 34,426 square feet bringing occupancy up to 93.90% at mid-year 2008. The most notable development in the Harbison submarket is the addition of a new Wal-Mart in the Ballentine area, which was under construction at mid-year 2008. This development continues to stretch the Harbison retail corridor northwest along I-26. The Ballentine area should experience additional growth as Wal-Mart creates a retail destination, causing other retailers to locate in this area due to an increased traffic flow.
The Lexington submarket experienced absorption totaling 18,036 square feet during the first six months of the year, which brought occupancy to 93.34% at mid-year 2008. Along Highway 378 unanchored strip space continued to develop as limited parcels become available. The Redbank area of Lexington has also continued to expand as a Lowe’s is under construction in this area.
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