Retail Market Overview
Retail space in Greenville, South Carolina remained strong throughout 2005, posting a year-end occupancy of 92.38%. This is a slight increase from 90.25% at year-end 2004 and up substantially from 88.04% at year-end 2003. With the employment base in this sector growing by 1.3% from December 2004 to December 2005, retail trade is increasing in importance to the local economy. There was an increase in the market size by 800.000 square feet in 2005.
In May, the Holliingsworth Funds Inc. announced a long-range development project of 1,100 acres within the Greenville city limits. The first phase will include parks and residential areas. Future plans include hotels, corporate offices, professional services and retail space. The development is being marketed as a live, work and relax community similar to Daniel Island in Charleston, South Carolina. Upon build out, it is expected to change the face of retail activity in downtown Greenville.
As the retail market continues to expand, developers will face difficulties in finding attractive sites for future projects. With 1.8 million square feet of new space coming online in the past two years, the availability of land is becoming scarce and the same growth rate experienced in the past is not expected in 2006.
The retail sector already shows signs of slowing as interest rates have picked up, cap rates have flattened and construction costs have skyrocketed. This, combined with volatile energy prices and a slowing of new housing construction, signals not only a slow down in retail growth, but probable decreases in consumer spending as well. Although fundamentals will remain strong in 2006, we don’t expect the market to continue at the pace of the last three years. Any impacts on the local economy will be negligible. Occupancies will be steady, and due to rising landlord costs and an already tight market, rents will rise.
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