Retail Development at Highest Level in Years
- The Columbia, SC retail market is booming with strong development activity throughout the market.
- The vacancy rate remains flat despite significant development activity. New projects are experiencing substantial pre-leasing success.
- Rental rates are on the rise, specifically for newer shop and junior anchor spaces which are in strong demand.
- Columbia’s culinary scene is growing.
- Discount retailers and fast-casual restaurants remain popular.
- Gross retail sales are up in Lexington County over the previous year.
Retail Market Keeps Heating Up
Retailers are expanding at a faster pace than recent years. Recovering economies, job creation and population growth are all contributing to greater demand for retail services. Retailers are responding by expanding their footprints, entering new markets and growing their presence in existing markets. Columbia, South Carolina is among the markets benefiting from enhanced market conditions. The area’s improved job market, population growth and favorable demographics are attracting retailers looking to grow.
The Columbia, SC retail market continued to strengthen through the third quarter of 2015, which ended with a total vacancy rate of 8.3%, down from 8.5% at mid-year 2015. The vacancy rate has remained flat over the past year despite robust new development activity throughout the market. Most new projects will likely deliver with very little to no vacant space.
Changing retailer preferences are motivating various construction projects throughout the market. As retailers survey areas for potential locations, they are expressing greater emphasis on visibility and high traffic count intersections. Vacancy is extremely limited at these prime locations and any vacant space is leasing at higher than average rental rates. As a result, developers are turning to new construction and redevelopment of older centers to meet the growing demand for space. Rising construction costs and increased competition among retailers are pushing up rental rates, which are reaching historically-high levels. Asking rental rates for shop space averaged $14.55 PSF NNN at the end of the third quarter of 2015, up from $13.07 PSF NNN one year ago. Some suburban landlords are receiving rental rates in the mid-thirties for quality shop space.
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