Q4 2014 | RETAIL COLUMBIA, SOUTH CAROLINA RESEARCH & FORECAST REPORT On the Road to Becoming a Retail Destination KEY TAKEAWAYS > Overall market vacancy rate is trending downwards. Average asking rental rates for anchor and junior anchor space increased, but average asking rental rates for shop space declined slightly. > New development and redevelopments are gaining momentum along desirable retail corridors. MARKET INDICATORS > Growth continues for Downtown Columbia’s Congaree Vista. Q4 2014 Forecast > New retailers enter the market. VACANCY CURRENT CONDITIONS NET ABSORPTION Announcements of new retailers, restaurants, hotels, and residential developments in Columbia, SC flooded headlines throughout 2014. The significant year ended with an overall vacancy rate of RENTAL RATES 8.0% for the Columbia, SC retail market, down from the third quarter 2014 vacancy rate of 8.4% CONSTRUCTION and year-end 2013 rate of 8.8%. The vacancy rate is on a downward trend as a result of retailers expanding their footprints, and new retailers and fitness centers backfilling vacant big box space. Much of the absorbed space has been of higher quality retail space along prime retail corridors with high traffic counts and visibility. The resulting available shop space yielded an average asking rental rate of $12.81 NNN at year-end 2014, slightly lower than $13.01 NNN at the end of 1 DOWNTOWN RESIDENTIAL UPDATE the third quarter of 2014. Asking rental rates for shop space are expected to increase as on new developments complete construction and deliver new supply to the market. Average asking rental Downtown Columbia has the rates for anchor and junior anchor space were up to $7.45 NNN and $9.16 NNN, respectively, at potential to gain an additional year-end 2014 from the third quarter 2014 averages of $7.39 NNN and $7.53 NNN, respectively. 4,200 residents in the next several years. Developments currently under 2 COLUMBIA, SC MSA | GROSS RETAIL SALES DATA construction can accommodate $2.2 B $2.1 B OCT 2014: $1,943,830,920.75 more than 1,300 individuals within $2.0 B $2.0 B $1.9 B $1.9 B $1.9 B $1.9 B $1.9 B $1.8 B $1.9 B the next year. The developments $1.7 B OCT 2011: $1,704,472,640.02 will offer approximately 36,000 14.0% INCREASE SINCE 2011 square feet of retail space. 1. Olympia Apartments is nearing Gross retail sales in Richland 3 completion and will offer 182 County totaled $917 million in one and two-bedroom units. October 2014 and accounted 2011 2012 2013 2014 for 47.2% of Columbia sales. 2. 650 Lincoln will accommodate August September October Lexington County accounted for 919 students. 45.3% of total Columbia sales with a gross retail sales volume 3. Greene Crossing will Source: South Carolina Department of Revenue of $881 million. accommodate 177 students. www.colliers.com/southcarolina RESEARCH & FORECAST REPORT | Q4 2014 | RETAIL | COLUMBIA Anchor Space Junior Anchor Space Shop Space Building Market Size Vacancy Rate Available Asking Rent Available Asking Rent Available Asking Rent Count Cayce/West Columbia 15 1,208,665 23.83% 155,547 $6.47 43,389 $8.09 89,068 $11.74 Downtown Columbia 5 304,475 2.23% - - - - 6,800 $16.00 Forest Acres/East Columbia 3 775,469 0.39% - - - - 3,000 $16.00 Harbison/St. Andrews 33 3,441,859 7.49% 41,435 $10.00 68,010 $7.96 148,475 $12.48 Lexington 14 1,569,510 1.90% - - - - 29,745 $12.41 North Columbia 6 389,774 16.32% 36,000 $8.00 - - 27,605 $9.00 Northeast Columbia 22 3,786,466 7.85% 122,799 $7.00 71,412 $7.35 103,080 $14.46 Southeast Columbia 8 1,011,605 5.06% - - 15,000 $22.00 36,150 $15.11 Market 106 12,487,823 7.99% 355,781 $7.45 197,811 $9.16 443,923 $12.81 The Forest Acres, Harbison/St. Andrews, and Northeast Columbia submarkets are home to the most popular and dense retail corridors in the suburban submarkets. The submarkets hold consistently low vacancy rates and continued to improve, ending 2014 with vacancy rates of 0.4%, 7.5% and 7.9%, respectively, all declining from year-end 2013. The corridors have been entry points for new retailers to the market. J. Crew and Anthropologie opened their first Columbia locations at Trenholm Plaza along Forest Drive backfilling space that was vacated by Books-a-Million. Nordstrom Rack opened its first Columbia location along Harbison Boulevard backfilling a former Barnes and Noble space. Academy Sports opened its first Columbia location at the Village at Sandhill in the Northeast submarket. A second location later opened in the Harbison/St. Andrews submarket. The presence of such retailers raises the quality of shopping in Columbia and retains shoppers who formerly resorted to shopping online or at nearby Charlotte. Killian’s Crossing Site Plan, Northeast Columbia Submarket Downtown Columbia is undergoing substantial improvements and transformations. Main Street, Five Points and the Congaree Vista all welcomed new restaurants and retailers in 2014 and will welcome more in 2015. The University of South Carolina’s growth coupled with new student housing and residential mixed-use developments have the potential to support further retail development. A growing downtown population will require more entertainment, dining, shopping and fitness options. Over the past year, Main Street has welcomed Pitas and Bourbon, the Vista has welcomed Hickory Tavern and Black Bean Co., and Five Points welcomed Sizzle Bacon Eatery. UNDER CONSTRUCTION With limited existing supply, new big box anchored retail centers are being developed throughout major submarkets in the market. 281 Park Terrace Drive Rendering, Harbison/St. Andrews Submarket > Activity at Killian’s Crossing in the Northeast submarket is gaining Source: The Seitz Group momentum with an announcement from its first major tenant. Kroger plans to begin construction in the spring on a grocery store that will include a jewelry counter, a clothing section and medical services. The development, at the intersection of Clemson Road and Farrow Road, will offer multifamily and single family residential units, and hotel space, along with retail space and outparcels. Construction completed on McDonald’s, which is now open to customers. > Academy Sports, which opened earlier this year in the Harbison/St. Andrews submarket, anchors a redevelopment along Park Terrace Drive at the former Staples and Hudson Smokehouse site. Guitar Center plans to enter the Columbia market and occupy space adjacent to Academy Sports. The development, which is located behind Columbiana on Park, offers approximately 31,500 square feet of shop space in two buildings. Sports Clips and Salsaritas plan to locate in the center. Rosewood Crossing Rendering, Downtown Submarket Source: Fletcher Bright Company www.colliers.com/southcarolina RESEARCH & FORECAST REPORT | Q4 2014 | RETAIL | COLUMBIA > Construction is underway at Rosewood Crossing, the former K-Mart redevelopment at the intersection of Fort Jackson Boulevard and Garners Ferry Road, across from Cross Hill Market in the downtown submarket. The center is being redeveloped into 98,000 square feet of retail space to house national tenants Marshalls, Michaels and PetSmart. Upon completion, the center is likely to draw further activity to the up and coming retail corridor, which is already home to Cross Hill Market, a Whole Foods anchored center, and a Target anchored center, Shoppes at Woodhill. A steady population, affluent neighborhoods and close proximity to the University of South Carolina provide a promising environment for retailers. RECENT ANNOUNCEMENTS Fourth quarter announcements include new restaurants, relocations and expansions. > Old Chicago Pizza and Tap Room will soon open at the Adluh Flour Mill Adluh Flour Mill Redevelopment Rendering, Downtown Submarket Source: Studio 2LR, Inc. redevelopment. > Panera Bread is planning to open at the site of Bluestein’s Wholesale Dry Goods along Gervais Street. > Parkland Plaza in the Cayce/West Columbia submarket recently welcomed two new tenants. Catch and Release consignment relocated from 3905 Fernandina Road and occupied 6,000 square feet at the center. Monterrey Mexican Restaurant leased 1,895 square feet and relocated from across the street. The restaurant’s former space is being redeveloped into a new 230-unit apartment complex, which will likely bring greater traffic to the center and attract more tenants. > Construction began on Spirit Communications Park, the city-owned baseball stadium at the Columbia Commons redevelopment. The redevelopment is located along 181 acres at the former state mental hospital campus. The project is Parkland Plaza Rendering, Cayce/West Columbia Submarket expected to draw major retailers to the market. Source: Studio 2LR, Inc. > Plato’s Closet opened its first Northeast Columbia location at Sparkleberry Square, located at the intersection of Two Notch Road and Sparkleberry Lane. > El Mariachi, a specialty Mexican grocer, leased 15,375 square feet of retail space at Decker Plaza in the Northeast submarket. 2014 YEAR IN REVIEW New retailers entered the market, existing retailers expanded their footprints and health and fitness clubs grew their presence. > Destination XL opened its first Columbia store at 1005 Bower Parkway in the Harbison/St. Andrews submarket. > Chicken Salad Chick opened its second Columbia location along Harbison Boulevard. The fast-casual restaurant’s first Columbia location was in Lexington. The Village at Sandhill, Northeast Columbia Submarket > The Village at Sandhill welcomed new tenants. Value City Furniture leased approximately 25,000 square feet of space at Forum I and opened during the second quarter. Palmetto Moon welcomed customers at its first Columbia, SC store during the second quarter, leasing 4,300 square feet of space at the Village at Sandhill. > Bikram Yoga opened its second location at Columbiana Station on Bower Parkway in the Harbison/St.