Retail Market Experiences the Greatest Development Activity in Years
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Research & Forecast Report GREENVILLE, SC | RETAIL Q4 2015 Retail Market Experiences the Greatest Development Activity in Years Jessica Rahal Research Coordinator | South Carolina Market Indicators Key Takeaways Relative to prior period Q4 2015 Q1 2016* > The Greenville/Spartanburg, South Carolina retail market VACANCY continues to tighten with strong demand, declining vacancy, and escalating rental rates. NET ABSORPTION > Construction activity is strong throughout the market and is at its CONSTRUCTION highest level in recent years. RENTAL RATE > Grocers and fast-casual restaurant chains are among popular Note: Construction is the change in Under Construction. retailers. *Projected > New retailers are entering the market and existing retailers are growing their presence. Strong Demand Yields Tight Market in 2015 Average Asking Rental Rates (NNN) Favorable demographics, a growing population, and a strengthening Greenville/Spartanburg, SC Retail Market tourism industry are collectively driving the Greenville/Spartanburg, $12.09 South Carolina retail market. The market’s vacancy rate continues $11.31 to decline steadily despite strong construction activity and new product being added to the inventory. New developments are $9.07 $7.75 successfully attracting retailers and pre-leasing quickly with many delivering fully leased. At year-end 2015, the market vacancy $5.75 rate was down to 11.8%, a number that does not accurately depict $4.67 true market conditions as a majority of the existing vacant space resides in older, less desirable shopping centers. One year ago, the total vacancy rate for the market was 12.1%. The vacancy rate Anchor Jr Anchor Shop Space in the highly demanded Woodruff Road submarket was down to Q4-14 Q4-15 just 2.9% at year-end with less than 40,000 square feet of shop space remaining available for lease. Retailers are competing for quality space, and consequently, many are preleasing space in new developments at rental rates never-before-seen in the market. Rental rates are climbing due to increased competition for space and rising construction costs for new and redeveloped space. At the end of the fourth quarter of 2015, asking rental rates for shop space averaged $12.09 NNN for the market. The Woodruff Road > Sidewall Pizza Company will soon open a second location at 99 submarket, home to Magnolia Park, reported the greatest rental Cleveland Street. Their original location in Travelers Rest has rates for shop space with asking rental rates averaging $34.57 NNN quickly become a local favorite. at year-end 2015. Overall, rental rates for the market are up from > Roots Smokehouse recently opened its doors at The Village of $11.31 NNN at year-end 2014. Downtown retailers are seeing rental West Greenville. rates for shop space reach the mid-to-high $30s. > Two vacant warehouses on Welborn Street in Greenville’s West Side are being redeveloped into The Commons, a 40,000-square- Downtown Greenville is Booming foot food hall to include Feed & Seed and Community Tap, among Significant interest in Greenville’s downtown mirrors the national others. trend of urban core development. Developers and retailers > Bex Café & Juice Bar recently opened at 820 S. Main Street. are targeting a growing millennial population and are catering to their desire for a walkable, live, work and play environment. Hotel Development Heats Up Downtown Greenville developments consist of various mixed- use developments with residential, office, and retail components. A total of 1,087 hotel rooms are under construction or planned for Retailers leasing space in the submarket include grocers who downtown Greenville. Many of the hotel developments offer retail recognize a strong future demand, as well as restaurants and or restaurant space. breweries. Hotel development, which oftentimes offers retail or > Aloft Hotel recently opened on Laurens Street. The 144-room restaurant space, is also strong as the region’s tourism industry hotel was built atop the new city parking garage at the ONE grows. complex. A new bar, W XYZ, is open at the hotel. > Caviar and Bananas plans to open in May 2016 near the recently > An Embassy Suites is under construction at RiverPlace. The completed Aloft Hotel. The restaurant will serve breakfast, lunch, 7-story, 156-room hotel is expected to be open by mid-year 2016. dinner, weekend brunch, and will have a retail section. Ruth’s Chris Steak House will be occupying a 7,000-square-foot > Two Chefs Café & Market will be the anchor tenant at the restaurant space at the development. new Main + Stone mixed-use development. The restaurant > A dual-branded Residence Inn and SpringHill Suites is planned and market is relocating from Poinsett Plaza and will occupy for the corner of Washington and Spring streets. The 7-story, approximately 5,000 square feet at the complex. Main + Stone 240-room hotel will include 1,500 square feet of retail space and is being developed by the Beach Company and will offer 292 70 parking spaces. apartment units and 20,800 square feet of retail and commercial > A 117-room Home2 Suites is planned at North Main and Elford space. streets. > Toss Pizza Pub recently announced plans to join Biscuit Head at > A 130-room Hyatt Place hotel is planned at the corner of East the new South Ridge mixed-use development at Church Street Broad and Calvin streets. and University Ridge. South Ridge is a 350-unit multifamily complex being developed by The Beach Company. Toss Pizza > Homewood Suites is planning a 150-room hotel next to Fluor Pub will be occupying approximately 4,000 square feet and is Field. expected to open March 2016 upon completion of the complex. > A 150-room AC Hotel is planned across from the Peace Center. Downtown Greenville | Highlighted Development MIXED-USE DEVELOPMENTS 4 1 FALLS PARK PLACE: 6-story, mixed-use BEATTIE PL. development to be located on a vacant lot at Falls Park Drive and Main Street. The building will offer a - rooftop terrace and pool, as well as office, retail and 3 residential space. 1 CAMPERDOWN: A mixed-use development to N. ACADEMY ST. 2 include residential, retail and office components. 3 Plans also include a Marriott-branded AC Hotel. MAIN ST. 3 THE COMMONS: 40,000-square-foot food hall with office space. HOSPITALITY 5 S. CHURCH ST. 1 ALOFT HOTEL (open) 2 2 1 2 EMBASSY SUITES (under construction) 3 RESIDENCE INN/SPRINGHILL SUITES (planned) 4 HOME2 SUITES (planned) 5 HYATT PLACE (planned) 2 South Carolina Research & Forecast Report | Q4 2015 | Greenville Retail | Colliers International Suburban Activity Keeps Heating Up Greenville/Spartanburg, SC Retail Market Vacancy Rate Trends Grocery-anchored shopping centers and smaller, fast-casual restaurant-anchored centers are driving development and growth in 12.1% the suburban submarkets. Development is occurring throughout the suburbs, but the Haywood Road and Woodruff Road corridors are the main focal points. Magnolia Park, the redevelopment of the former Greenville Mall 11.9% on Woodruff Road, completed construction late in 2014. The development delivered near full occupancy with commitment from 11.8% major tenants Cabela’s, Dave & Busters, and Nordstrom Rack, among other national retailers. The outdoor shopping center continues to attract retailers and restaurants upon the proven success of others Q4-14 Q3-15 Q4-15 in the center. Tin Lizzy’s Cantina was among the most recent restaurants to announce plans to locate in the center. The Atlanta- Source: Colliers International based restaurant plans to occupy a new 5,000-square-foot space. The restaurant will be the second in South Carolina. The first location opened in Columbia in October 2015. Tucanos Brazilian Grill plans to open early February 2016 near the Regal Cinema movie theatre. Grimaldi’s recently opened their second South Carolina location at the center. Cabela’s at Magnolia Park The Magnolia Park redevelopment on Woodruff Road attracted some national tenants that were previously located on Haywood Road. Retailers Pier 1, Toys ‘R Us, and Babies ‘R Us relocated from Haywood Road leaving vacant space that has since been backfilled. Haywood Road has absorbed the vacant space and is seeing a re-emergence in tenant interest. The Cheesecake Factory is opening its first South Carolina restaurant at the Haywood Mall. The restaurant, which selects upscale malls for new locations, recognized Greenville’s strong demographics and has the potential to attract additional retailers and restaurants targeting similar demographics. Panera Bread is open at its new outparcel space at Haywood Mall. The restaurant relocated from its space within the mall. Haywood Road is also a new home to Tijuana Flats. Five Guys is relocating Source: CoStar from its Congaree Road location to the space adjacent to Tijuana Flats. Grocery Store Happenings Grocers are aggressively growing their footprints, expanding to new markets and strengthening their market share. Consumers are Grocers are Investing in the Upstate shopping for quality produce and welcoming more places to shop. > Harris Teeter is re-entering the market at high velocity. The grocer’s first location, a two-story, 53,000-square-foot store, is currently under construction at Lewis Plaza on Augusta Street. The grocer has already confirmed a second location. The grocer plans to anchor the proposed $60-million NorthPointe mixed-use development to be located on the corner of Stone Avenue, North Church Street and Wade Hampton Boulevard. The proposed development will include 285 multifamily units, 30,000 square feet of commercial space, and a six-story parking garage. Both grocery store locations will feature a wine bar and juice bar in addition to the grocer’s traditional, high quality grocery items. 3 South Carolina Research & Forecast Report | Q4 2015 | Greenville Retail | Colliers International > Lowes Foods is also aggressively expanding. The grocer > The Donut Experiment Greenville is open at 2123 Augusta Street.