In what has been a year of surprises in the national economy, the Columbia, South Carolina, retail market remained comparatively stable during the twelve-month period ending December 31, 2008. Although the total amount of occupied space within the market increased by 30,312 square feet over the course of the year due to the addition of the Wal-Mart Supercenter on Killian Road, the market experienced 207,507 square feet of big-box closures. The opening of the Wal-Mart counteracted any negative absorption that the market would have experienced, and total market occupancy remained strong at 90.94%. This occupancy level would be considered healthy amidst any economic conditions; at year-end 2007, prior to the economic meltdown, the national average for retail occupancy was 92.5%.
Although occupancy remained almost unchanged during 2008, the market experienced a $0.99-per-square-foot increase in average rental rates from year-end 2007 to year-end 2008, ending the year at $16.13 per square foot. The average rental rate for small-shop space decreased over this period by $0.45, to $19.52 per square foot. The convergence between low- and high-rental rates achieved in the market demonstrates evidence of a market decline and a renegotiation of terms by smaller tenants due to recessionary pressure in 2008.
The big-box closures experienced over the course of 2008 resulted in a decrease in employment in the retail sector of the Columbia economy. From November 2007 to November 2008, total employment in retail trade declined by 3.9% (1,600 jobs), and the food service industry downsized by 3.10% (800 jobs). Cutbacks in these sectors subsequently resulted in a decrease in employment within the wholesale trade sector by 2.90% (500 jobs).
The submarkets most impacted by the economic downturn are the Harbison Boulevard/St. Andrews area, which stands as Columbia’s most-established retail market, and Cayce/West Columbia. The Harbison retail submarket experienced 109,577 square feet of negative absorption during 2008, largely due to the closing of several big-box tenants such as Goody’s, Ashley Home Furniture and the Piggly Wiggly on Lake Murray Boulevard. The retail market in Cayce/West Columbia lost 43,613 square feet of occupied space due to the closing of Ace Hardware and American Home Furnishings.
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