Retail Is Still Thriving The region s vacancy rate crept up slightly from the previous quarter, while the availability rate dropped marginally. Asking NNN rental rates dropped over $1.50 per square foot (psf ) between the fourth quarters of 2017 and 2018. National retailers announced plans to close stores throughout the United States in 2019 causing some uncertainty for the following local stores: Gymboree, Gap, Banana Republic, The Children s Place, Destination Maternity, Motherhood Maternity, A Pea in a Pod, and Beauty Brands. As some large anchor (big box) stores closed locations around the region, a few are being repurposed to accommodate new uses. In the area of, MUSC announced it will open a facility in 2019 in the former 128,000 sf JC Penney box. A 55,000 sf bowling and family entertainment facility opened in the former Kmart on Ladson Road in Summerville. New developments have begun construction throughout the region; several of which will be considered as specialty shopping centers consisting of traditional anchor stores, fashion, restaurants, entertainment and other mixed-use shops. In Mount Pleasant, 25,000 square feet (sf ) of retail was approved as part of the Patriots Point development and is expected to begin opening gradually in 2019 over the span of a few years. The overall development consists of 100 acres with 3.5 million sf of mixeduse properties, inclusive of hospitality, office, retail and residential. Total Wine opened its second location in the region at Wando Crossing Shopping Centre. Dollar Tree relocated from Wando Crossing into a former Rite Aid store in the Sea Island Shopping Center on Ben Sawyer Boulevard. Due to high rental rates, Wild Wing Restaurant closed its doors after twenty-two years of business in Mount Pleasant. Downtown saw a trend in hotels announcing redevelopment plans of former retail and restaurant establishments, including the most recent plan to replace Sushi Blue Eatery with a fifty-room hotel. Nexton Square, a premier master planned community in Summerville, announced 22 restaurants and shops coming to the mixed-use development. Some key tenants include Poogan s Southern Kitchen, Southern First Bank, Tropical Smoothie Café, Bad Daddy Burgers, Bar Louis, Guinot Skincare and Title Boxing. As seen above, retail had its ups and downs in 2018, but it is expected to thrive moving into 2019.
21,391,746 sf 4.9% $21.66 psf Submarket Indicators Daniel Island Clements Ferry 4.2% 9.4% 6.8% 9.9% Downtown 1,784,486 1,784,486 3.4% 3.1% 2.7% 6.8% 7.2% 6.6% 5.7% $46.90 $46.24 $48.95 $52.62 $52.21 4,057,774 4,057,774 3,907,774 3,902,433 3,773,833 2.6% 4.2% 5.8% 3.6% 4.4% 6.1% $25.25 $25.24 $25.04 $24.45 $24.26 2.3% 1.9% 4.0% 5.3% 2.2% 4.3% 5.5% $15.01 $15.19 $14.41 $14.08 $16.74 North Hanahan 5,741,492 5,741,492 5,683,638 5,618,638 5,618,638 5.7% 7.4% 6.0% 6.5% 7.1% 7.8% 8.2% 7.4% $11.78 $11.73 $12.15 $12.76 $12.53 3,600,429 3,600,429 3,594,929 3,594,929 3,586,609 2.0% 5.8% 2.7% $15.84 $16.72 $16.95 $18.47 $19.38
Submarket Indicators (Continued) 3,641,087 3,641,087 1.8% 1.8% 3.1% 3.9% 3.9% 5.5% 4.8% $18.62 $17.46 $19.76 $17.89 $17.61 West Islands 1.5% 1.4% 1.3% 1.9% 2.6% 1.4% 1.6% 1.5% $20.50 $23.76 $23.76 $24.56 $27.18 Tri-County Submarkets Daniel Island Clements Ferry Downtown Summerville Ladson North Hanahan North Daniel Island Mount Pleasant Johns Island James Island West Islands
Market Overview Tri-County Area 21,391,746 21,391,746 21,091,393 21,021,052 20,884,132 4.1% 3.8% 4.5% 4.9% 5.0% 5.1% 5.3% $21.66 $22.27 $22.79 $23.44 $23.47 Net Absorption (5,287) 470,423 2,329 281,016 262,499 Notable Leases Tenant Type Address Market SF Kids Super Funstation Festival Centre, 5101 Ashley Phosphate Road North Hanahan 8,653 Palmetto Hot Tubs North Center, 5900 Rivers Avenue North Hanahan 8,457 Rio Chico Renewal The Market at Cane Bay, 1724 State Road 4,853 Burn Boot Camp Wespanee, 1369 Ashley River Road 3,800 San Miguel Mexican Bar & Grill Indigo Square, 1772 N Highway 17 3,203 Notable Sales Buyer Address Market SF Sale Price Ferncroft Capital 415 King Street Downtown 4,646 $4,920,000 Knightsville ENT, LLC Knightsville Crossing, 1605 Central Ave 36,108 $4,600,000 Re Strada, LLC 188 King Street Downtown 3,166 $2,800,000 4965 Centre Point Drive, LLC 4965 Centre Point Drive North Hanahan 6,317 $2,060,000 MCCURU, LLC Applebee's, 7818 Rivers Ave North Hanahan 3,704 $1,800,000 Trends to Watch Service Providers Businesses that provide services continue to thrive in retail locations. Rental Rates New developments' rental rates are climbing to keep up with construction costs. State of Retail Many large format retailers are unable to keep up with the ever-changing state of retail, and are forced to close locations.
Retail Terms and Definitions Total Square Footage Retail inventory includes all multi-tenant and single tenant properties at least 25,000 square feet. Downtown retail inventory includes King Street and Market Street retail spaces as well as properties at least 25,000 square feet. Retail Buildings Classifications Super Regional Centers are properties with greater than two million square feet of space, drawing from a trade area encompassing multiple smaller submarkets. Sub Regional centers include centers of 500,000 square feet or greater that service one main submarket exclusively. Single Tenant retail includes power center tenants in free-standing centers as well as stand-alone retailers. Large Strip Centers are car oriented strip retail centers of 150,000 square feet or greater. Small Strip Centers are centers of 50,000 to 150,000 square feet, and include many local and grocery anchored centers. Contact Information Craig Massey Associate 843.860.7687 craig.massey@ David Mantek Vice President 843.412.3663 david.mantek@ Vitré Ravenel Stephens Senior Vice President 843.513.7555 vitre.stephens@ Vacancy and Availability The vacancy rate is the amount of physically vacant space divided by the inventory and includes direct and sublease vacant. The availability rate is the amount of space available for lease divided by the inventory. Net Absorption The net change in physically occupied space over a period of time. The dollar amount asked by landlords for available space expressed in dollars per square foot per year in most parts of the country. Retail rents are reported on a triple net basis where all costs include, but not limited to, real estate taxes, insurance and common area maintenance are borne by the tenant on a pro rata basis. The asking rent for each building in the market is weighted by the amount of available space in the building. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average asking rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Asking rental rate averages only includes Direct Space being offered for lease directly from the landlord or owner of a building. It does not include Sublet Space being offered by another tenant trying to sublet an already leased space. For more information on this report, please contact: Charlene Aydelotte Massey Business Operations Manager, Researcher 843.725.7200 charlene.massey@ 1315 Ashley River Road, South Carolina 29407 United States Researcher Comments Market research data and transaction information is now provided by CoStar. 2019 Avison Young - South Carolina, Inc. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.