Retail Loves the Holy City Even with 158,000 plus square feet (sf ) hitting the market in the fourth quarter of 2017, the vacancy rate continued its march downward dropping 0.8% to! Much of the rising tide in retail is fueled by single and multifamily development. If you just look at the top 11 mega developments underway they should deliver 78,000 plus single family homes over the next few years. This building growth is driven by the creation of solid manufacturing jobs from employers such as Boeing, Mercedes and Volvo. Much like many coastal cities, the barriers to entry such as rising construction costs, scarcity of prime sites and increasing impact fee s have fueled the increase in annual base rents from $20.00 per s 10% $24 8% $22 6% $18 2% $16 YE12 YE13 YE14 YE15 YE16 YTD17 Significant grocers are expanding or entering the region to meet the demands of the additional roof tops. Existing grocers, such as Publix and Harris Teeter are actively expanding their foot print. Newcomers, such as Lowes Foods, Whole Foods, Trader Joe s, Lidl, Aldi and Green Wise, are attempting to take a share in the market. The Retail Market will continue to flourish with the expansion of rooftops. Retailers of all sizes will continue to make their mark in the region, beginning with one location and expanding in all areas across the Low Country. $22.70 $20 4% 0% square foot (psf ) in the first quarter of 2017 to $22.70 psf at the end of the fourth quarter of 2017. $14 YE12 YE13 YE14 YE15 YE16 YTD17 300,000 250,000 200,000 150,000 100,000 50,000 0-50,000-100,000-150,000-200,000 233,214 3Q16
21,344,721 sf 5.0% $22.70 psf Submarket Indicators Daniel Island Clements Ferry 1 $21.81 $21.81 Downtown 3.2% 1.8% 1.4% 6.9% 6.3% 4.3% $53.25 $50.94 $50.02 $50.16 $41.13 3,984,795 3,884,795 3,884,795 3,851,214 3,823,061 6.6% 7.2% 7.0% 5.4% 3.6% 8.7% 7.2% 5.1% $24.23 $23.92 $24.24 $22.32 $21.52 1,058,192 2.9% 1.9% 3.2% 2.0% $16.74 $13.73 $13.42 $13.18 $13.22 North Hanahan 5,602,376 5.5% 7.0% 5.6% 5.9% 5.6% 6.6% 8.8% 8.4% $12.53 $14.69 $13.68 $13.59 $13.40 3,611,488 3,599,488 3,599,488 3,504,488 3,504,488 3.8% 2.6% 2.7% 3.3% 3.3% 3.4% $19.45 $19.68 $20.51 $18.20 $16.69
Submarket Indicators (Continued) 3,954,813 2.6% 3.9% 4.4% 4.7% 4.7% 4.8% 5.3% $16.54 $16.71 $16.56 $15.77 $16.01 West Islands 1.1% 1.8% 0.7% 2.1% $27.18 $25.01 $23.97 $18.71 $18.91 Tri-County Submarkets Daniel Island Clements Ferry Summerville Ladson Downtown North Daniel Island Johns Island Mount Pleasant James Island North Hanahan West Islands
Market Overview Tri-County Area 21,344,721 21,286,351 21,286,351 21,168,655 21,131,987 4.8% 4.2% 4.1% 5.0% 6.3% 5.9% 5.5% 5.2% $22.70 $23.08 $22.85 $20.00 $18.71 233,214 (131,954) 82,015 (40,914) 118,498 Notable Leases Tenant Type Address Market SF Restaurant Depot 3687 Rivers Avenue North Hanahan 63,000 Whole Foods Station, Savannah Hwy 45,000 Big Lots Renewal Crowfield Village Shopping Center, 431 St. James Ave 41,388 Gander Outdoors The Promenade at Northwoods, 7800 Rivers Ave North Hanahan 40,325 Community Thrift Oakbrook Plaza I & II, 10040 Dorchester Road 16,000 Notable Sales Buyer Address Market SF Sale Price SAP Summerville, LLC 121-125 Angus Street 6,000 $4,500,000 Topps Capital, LLC 1799 N Highway 17 10,908 $3,705,000 El Cid Alpha, LLC Bees Ferry Landing, 3750 Savannah Hwy 14,729 $3,600,000 Tamsberg Pepperidge, LLC Steak 'n Shake, 4821 Tanger Outlet Blvd North Hanahan 3,578 $2,842,200 Grant Realty Corporation Family Dollar, 104 Patriot Lane 8,320 $2,232,500 Trends to Watch Absorption Absorption is healthy. Rental Rates Rental rates are rising. Vacancy Vacancy is low.
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. 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. Contact Information David Mantek Vice President 843.412.3663 david.mantek@ Vitré Ravenel Stephens Vice President 843.513.7555 vitre.stephens@ Avery Martin Bishop Associate 843.406.5586 avery.bishop@ Tate Walkush Administrative Coordinator 843.266.0716 tate.walkush@ 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 including, 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 that is being offered for lease directly from the landlord or owner of a building and does not include Sublet Space that is being offered by another tenant trying to sublet a space that has already been leased. 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. 2018 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.