Retail trends including e-commerce, customer convenience and rapid delivery pace are forcing retail real estate markets to make changes.
K.C. Conway, director of research and corporate engagement at the Alabama Center for Real Estate, said retailers must adapt and provide appropriate services to remain successful.
“There are many shop owners who are using retailer-controlled distribution centers to save money, shorten the supply chain and keep their retail inventory off-site and ready to ship,” Conway said in a report provided by Colliers International.
Conway’s report shows how these factors provide stable retail footing and bode well for the industrial sector. The report found that while 250 brands closed stores in 2017, 750 opened stores.
In Columbia, the retail market absorbed 46,620 square feet over the past year, according to Colliers’ figures. The overall average triple net shopping center rental rate was $13.38 per square foot, with core retail space rent averaging $20.84 per square foot. The core retail area vacancy rate average was 6.1%.
Other markets include:
- Shopping Centers – Columbia’s shopping center market totals 13.14 million square feet of shop space. During the first quarter of 2018, the market absorbed 41,488 square feet and market vacancy rose to 9.7% after finishing 2017 at 9.2%.
- Urban Retail – Columbia features 1.93 million square feet of urban retail composed of six urban areas. Triple net average rental rates remained at $23 per square foot, with overall vacancy at 11.2% during the first quarter of 2018. Five Points showed the lowest vacancy rate at 8.3%, with the Vista at 9.8% and the Main Street Central Business District at 18.1%.
- Northeast Columbia has 3.95 million square feet of retail space, the largest of all the submarket sectors. Vacancy rates dropped from 10.9% at the end of 2017 to 10.3% in the first quarter of 2018 and absorbed 11,580 square feet. The average tripe net shopping center rental rate was $16.46 per square foot.
- Harbison and St. Andrews – The second largest submarket has 3.6 million square feet of retail space. Vacancy rates rose to 12.1% from 9.9% at the end of 2017 and absorbed 8,022 square feet during the first quarter. The average triple net overall shop space was $10.77 per square foot.
- Lexington – Vacancy rates dropped to 4.53% with a net absorption of 709 square feet in a submarket that has grown to 1.7 million square feet. The average triple net shopping center lease rate is $20.12 per square foot.
- The Golden Triangle, which spans Forest Drive and Garners Ferry/Devine Street, has 1.25 million square feet of core shopping centers with limited space for additional development. In the first quarter of 2018, the area vacancy rate was 1.42% and the average triple net rental rate was $21.20 per square foot.
Collier’s market forecast predicts urban retail will continue to be in demand in the downtown area. Currently established retailers are succeeding because of increased foot traffic from multifamily residents and more visitors to downtown. Tenants wanting to get into the area are willing to pay higher rental rates.
Colliers predicts a positive year for the Columbia retail market because of continued success and construction in the Lexington submarket and increasing demand for retail space in the Golden Triangle. Vacancy rates are projected to drop and rental rates to increase.
Notable recent sales transactions in Columbia highlighted in the Colliers report include:
- The 180,000-square-foot former Dillard’s at Columbia Place located at 7201 Two Notch Road sold to Richland County in February for an undisclosed sale price. The county wants to relocate its offices as part of its Richland Renaissance redevelopment plan.
- A 51,010-square-foot retail storefront at Ballentine Market in Irmo sold in February for $3.7 million. The retail center at 1331-1351 Dutch Fork Road is fully leased and anchored by Food Lion.
- A three-property portfolio of 717, 721 and 729 Lady Street in Columbia sold for $1.25 million in January.
- A fully-leased 16,000-square-foot retail strip center in Sumter sold for $1.3 million.
Recent lease transactions in Columbia include:
- TSN Realty leased 34,161 square feet in Northeast Columbia at 7515 Two Notch Road in a freestanding retail building.
- In January, Planet Fitness leased 20,000 square feet and Badcock Home Furnishings leased 17,500 square feet within a strip mall located at 1470 Chestnut St. in Orangeburg.