Flight to Quality.
The Columbia, South Carolina, retail market saw a decrease in vacancy rates during the second half of the year from 9.45% at mid-year to 8.68% at year-end 2011. Asking rates for anchor and junior anchor space increased, while rates for shop space decreased from $13.08 per square foot at year-end 2010 to $12.06 per square foot at year-end 2011.
Many big-boxes left dark by national closures such as Linens N’ Things, Circuit City and Goody’s provided a unique opportunity for retailers to pursue a flight to quality at what could be considered a value price, while some big-box vacancies in less-than-stellar locations have since been repurposed for alternative non-retail uses. This activity has resulted in vacancy rates of less than 10% in all major markets across the state.
As noted at mid-year 2011, vacancies in retail corridors created by the previous economic downturn allowed large users to relocate to space that would previously have been outside of their economic reach. The flight to quality was the first trend to emerge following the economic downturn, and remains the most important factor in a retailer’s decision to open a new store or relocate to an existing center. The lack of new product coming online has made it difficult for some retailers to find the “perfect location”, and as a result some retailers have chosen not to enter the South Carolina market until new development occurs.
The most significant activity in 2011, 140,000 square feet of large vacant space being absorbed, occurred during the first six months of the year due to both the adaptive reuse of big boxes and the previously mentioned absorption of big box space in prime retail corridors. As an example, in Northeast Columbia, Richland County purchased Decker Mall for conversion to an administration annex.
A large quantity of retail activity occurred along Harbison Boulevard in 2011, as Harbison is the largest retail corridor in Columbia and predominant entry point for new retailers into the Columbia market. At year-end, there was a new retail center under construction near St. Andrews Road that will include a Jimmy John’s and Mattress Firm. A new development was also under construction at the intersection of Harbison Boulevard and Park Terrace Drive that will be home to a DSW Shoe Store, T.J. Maxx HomeGoods, ULTA, Firestone, Staples and McDonald’s.
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