Pelham Road Heats Up
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Research & Forecast Report GREENVILLE, SC | RETAIL Q3 2016 Pelham Road Heats Up Bryana Mistretta Research Coordinator | South Carolina Key Takeaways > Pelham Road is revamped and expanding. Market Indicators Q3 2016 Q4 2016* Relative to prior period > Grocers continue to reposition in the Upstate market. VACANCY Pelham Road Taking Off NET ABSORPTION Pelham Road, a retail corridor currently being revamped and CONSTRUCTION expanding, was traveled by an average 19,500 cars a day in 2015. Pelham Road runs perpendicular to Interstate 85, which runs north RENTAL RATE** to Charlotte and south to Atlanta. The one-mile corridor stretching Note: Construction is the change in Under Construction. from Boiling Springs Road to I-85 is surrounded by popular *Projected residential neighborhoods with immediate access to many of the **Rental rates for current quarter are for CBD. Rent forecast is for metro-wide rents. region’s major employers. Synnex (1,400 employees), Michelin’s North American Headquarters (430 employees), Bausch & Lomb (640 employees), ScanSource (600 employees) and the Greenville Health System are located on Pelham Road. BMW is three exits to the north of the corridor towards Spartanburg and General Electric Summary Statistics is two exits to the south. Q3 2016 Regional Office Market Market CBD Suburban It is estimated that 80,300 people live within a ten-minute drive of Vacancy Rate 9.3% 1.9% 9.4% the densest retail area of Pelham Road. According to ESRI, in 2021, the population living within the same area will be 87,600, 9.1% Change From Q2 2016 (basis points) 40 110 40 growth. There are 33,500 households with an average household Absorption income of $86,500 in the trade area. ESRI projects the number (Thousand Square Feet) 64.3 1.9 62.4 of households will increase to 36,500 and the average household income will increase by 9.2% to $94,400 by 2021. Asking Rents Per Square Foot Per Year The Pelham Road corridor recently saw the redevelopment of the Shop Space $12.11 $13.00 $12.11 Earth Fare-anchored Pelham 85 shopping center, which is now expanding by 44,000 square feet. Additionally, construction has Change From Q3 2015 2.6% - 2.6% begun at the new Shoppes at Pelham. The development will be Junior Anchor Space $11.17 - $11.17 anchored by a 49,000-square-foot Lowes Foods and include 17,000 square feet of shop space. These two developments will expand Change From Q3 2015 10.8% - 10.8% the retail bookend of the Pelham Road corridor, which currently has Anchor Space $6.39 - $6.39 just three grocer-anchored shopping centers, all of which are at Change From Q3 2015 15.8% - 15.8% full occupancy. Demand is strong in the corridor and will be met by these new speculative retail spaces and raising asking rental rates to a range between $29 and $30 NNN PSF/YR. Grocers Repositioning in Market Recent data from ESRI estimates the population of the Greenville in Anderson was vacated. Ingles took a different approach by Consolidated Metropolitan Statistical Area (CMSA) to be 1.2 million relocating into larger footprint stores as far from Walmart as people and to reach 1.3 million people by 2021. The expected possible. Joining the value-oriented market, the specialty retailer growth is a 5.5% increase or 37 new residents per day moving to Aldi has added new stores and Lidl has acquired land and is the area over the next five years. The boom in residential population grading for construction in Greenville and Spartanburg. in the region is the key factor playing a role in attracting new grocers to the market. The bifurcation of the market has allowed chains serving the high end and specialty markets to expand. Niche grocers Harris Teeter Over the last decade, the grocery market has evolved into and Lowes Food have entered the market, while Fresh Market, two distinct tiers. In the late 1990s, the grocery market in the Trader Joe’s, Earth Fare and Whole Foods have expanded. Publix Greenville/Spartanburg market was dominated by Bi-Lo, Ingles, has continued to selectively expand its footprint in the region as Winn-Dixie and Publix. At the same time, Walmart was entering opportunities have been available. Nearly all these chains have the grocery market with its Supercenter format. Today, Publix, chosen to build new locations in the established retail corridors. Lowes Food and Harris Teeter are actively competing for the upper end of the grocer market. New value-oriented stores like Walmart Eight new grocery stores have opened in the market since January Neighborhood Market, Aldi and Lidl have entered the market of 2015. In the third quarter, a 58,000-square-foot Lowes Food and are expanding rapidly, causing the dominate chain, Bi-Lo, to delivered at the Riverside Crossing shopping center in the Greer consolidate substantially, Ingles to reposition, Winn-Dixie to exit and submarket, a Lowes Food is under construction at the new Village Food Lion to largely retreat from the region. Market East shopping center on the corner of Woodruff Road and Sunnydale Drive, a third Lowes Food is under construction at Walmart Neighborhood Market has entered the market aggressively, the intersection of Pelham Road and Boiling Springs Road and a opening seven stores since 2010 in the Upstate. These new stores, 53,000-square-foot Harris Teeter is under construction at Lewis combined with the company’s existing footprint of Supercenters, Plaza on Augusta Road, all set to deliver in 2017. Additionally, a has created tremendous pressure on Bi-Lo, Ingles and Food Lion. 58,000-square-foot Harris Teeter proposed at the Northpointe Bi-Lo, previously headquartered in Greenville, vacated several development near downtown Greenville is planned to deliver in of their locations this quarter. The former Bi-Lo at 3033 Wade 2018. Expansion of grocers in the Upstate market is expected to Hampton Boulevard sold, and the location at 3233 Mall Road continue unabated. New Upstate Grocers Since 2015 1 Walmart Neighborhood Market 11! §¦¨26 2 Aldi 3 Harris Teeter | Proposed §¦¨585 4 Harris Teeter | Under Construction Spartanburg 5 Aldi ! !1 12 ! 6 Walmart Neighborhood Market 10 §¦¨85 !2 7 Lowes Foods | Under Construction 3! !9 8 The Fresh Market ! 4 ! 8 9 Lowes Foods | Under Construction !5 7 §¦¨85 §¦¨385 §¦¨26 10 Lowes Foods ! 6 11 Aldi Greenville 185 §¦¨ 12 Walmart Neighborhood Market 2 South Carolina Research & Forecast Report | Q3 2016 | Greenville Retail | Colliers International Market Conditions Downtown/ West End The growing residential population in the suburbs of the Upstate New mixed-use developments and redevelopments of historic has created stronger demand amongst retailers to locate in the buildings are increasingly popular in Greenville, attracting many major retail corridors. Overall, the market vacancy rate at the new tenants. The West End has seen the majority of these end of the third quarter was 9.3% compared to 9.6% at the end projects including Hampton Station and Markley Station which will of the previous quarter. The average asking rental rate for shop add 90,000 square feet and 43,000 square feet of retail space, space was $12.11 NNN per square foot per year (PSF/YR) a slight respectively. Most of the available space in Hampton Station has increase from $12.06 NNN PSF/YR last quarter. already been claimed by companies like Birds Fly South Ale Project, White Duck Taco Shop, Dapper Ink, Lucky Penny Creative and Noble Woodruff Road Dog Pet Hotel. Markley station is 50% occupied by three companies that have not yet been announced. The Woodruff Road corridor, the four-mile section of Woodruff Road between Roper Mountain Road to SC-14, ended the third The asking rental rate for shop space in grocer anchored shopping quarter with a vacancy rate of 2.6% overall. The vacancy rate for centers was $13.00 PSF/YR this quarter. The asking rental rate shop space was 1.3% and the average asking rental rate was $33.31 for shop space on Greenville’s Main Street/ West End is much NNN PSF/YR. Orangetheory Fitness, an international franchise, will higher, usually falling between $25 and $35 PSF/YR. The number open the first Upstate location in a 3,500-square-foot space in the of restaurants on Main Street is growing, adding to the attraction Garlington Station shopping center at 1143 Woodruff Road. of downtown Greenville to employers, residents and tourists. This quarter, seven new restaurants have announced or opened Haywood Road in the submarket’s eclectic food scene, Jianna, an Italian cuisine restaurant concept by Table 301 Restaurant Group, Menkoi Ramen The Haywood Road submarket is the area immediately around House, Caviar and Bananas, Cantina 76, Toast Café, Terrace Café Haywood Mall, stretching from Pelham Road to Laurens Road. and Crepe du Jour Café & Wine. Although a strong retail corridor, it saw little activity this quarter. There was a slight change in the vacancy rate from 11.2% last quarter to 11.0% at the end of this quarter. The average asking rental rate was recorded as $14.34 NNN PSF/YR. Market Average Asking Rental Rate | Shop Space Greer Q3 2015 $11.81 Greer is a two-mile stretch of Wade Hampton Boulevard from Q2 2016 $12.06 Brookwood Drive to Artillery Road. The average asking rental rate for shop space in Greer has remained steady at $17.13 NNN PSF/ YR this year, but is up from $13.13 NNN PSF/YR a year ago. Eggs Q3 2016 $12.11 Up Grill, a breakfast franchise that started on Pawleys Island, signed a lease for 3,500 square feet in the Greer Plaza at 805 W Wade Hampton Boulevard this quarter.