Colliers International recently released its second quarter Charleston Retail Market Report for 2015.
The report showed that as a result of the city's growing residential sector, improving economy, favorable demographics and active tourism industry, Charleston's retail market is experiencing -- and should continue to experience -- significant growth.
At the end of 2015's second quarter, Charleston's retail market had a 5.1 percent vacancy rate -- down from 5.5 percent the quarter prior. Retail space in desirable locations is becoming harder to find, which led to retailers backfilling vacant space or signing leases for new centers -- some of which are still under construction. The average retail rental rate in the city is $18.40 NNN, up from $18.21 NNN the previous quarter.
Gross retail sales in the city were at $1.9 billion in May, down from the previous year but up 5.3 percent from May 2013.
The report cited King Street in the downtown area as "a popular destination for tourists and locals alike." The entertainment district is experiencing major growth, and tenants' rental options are becoming limited.
At the end of the second quarter, the vacancy rate was 3.3 percent for the downtown submarket.
Recently, Volvo and Mercedes-Benz Vans announced that 5,300 new jobs would be created over the next 10 years. Jobs were also created by the recent opening of the region's second Walmart Neighborhood Market on St. James Avenue in Goose Creek; two other Walmart stores are under construction in North Charleston and Summerville.
Major activity in the suburban retail submarket contributed a vacancy rate of 5.2 percent at the end of the second quarter, down from 5.5 percent the previous quarter.
Nordstrom Rack is slated to open Sept. 3 at Bowman Place, which will also be home to DSW and Kitchen & Co., which are set to open this year.
"(Retail) vacancy is expected to decline further as demand for space grows," the report said. "Land and construction costs are rising, which will further contribute to climbing rental rates. Investment sales are likely given the tight market and current low interest rates."
For more statewide commercial real estate news and reports, visit www.colliers.com/southcarolina/insights.
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