Published May 10, 2013
Although Columbia’s retail market has bounced back from the depths of the Great Recession, there are few signs that any new construction is on the horizon, according to CBRE Columbia’s first-quarter report.
While the market has been improving, new construction remains limited because the price for first-generation space remains significantly higher than renting existing space, according to the report, which was released Thursday.
“Combined with high preleasing requirements from financing institutions, new construction faces many hurdles to overcome,” the report said. “However, as attractive spaces become scarce, more construction could be on the horizon.”
Much of the new construction has been single-tenant, build-to-suit projects.
For the most part, new retail activity has been spread around the Columbia area.
The Harbison Boulevard area was the site of the first new shopping center to open since 2010. The shopping center includes retailers like Staples, Ulta and DSW shoes.
Also in the first quarter, Trader Joe’s opened a 13,000-square-foot grocery on Forest Drive.
The overall market vacancy rate was 8.4%. The report covered 569 buildings that comprise nearly 22.5 million square feet of retail space.
The Lexington submarket, which includes 60 buildings and 2.5 million square feet, had the area’s lowest vacancy rate of 3.7% at the end of the quarter. The vacancy rate in the Forest Acres submarket of 60 buildings and 2.1 million square feet was 4.5%.
Vacancy rates for other submarkets were: southeast Columbia, 6%; Cayce/West Columbia, 7.4%; St. Andrews, 8.9%; North Columbia, 9.9%; Dutch Fork/Irmo, 10.8%; northeast Columbia, 11%; and downtown/Central Business District, 13.5%.
The average asking rental rate ranged from a low of $7.77 per square foot in the downtown area to $13.94 per square foot in northeast Columbia. The average for the Columbia market was $11.46 per square foot.
“Prices will increase as vacancy declines, particularly in the retail hubs of Lexington, Forest Drive and Harbison,” the report said. “Some retailers will revisit emerging areas in northeast Columbia and Lexington County as the housing market in those areas grows.”
The report also said more announcements of new developments come as the year progresses. A number of high-profile sites including the former State Hospital campus on Bull Street, Capital City Stadium on Assembly Street and the former Kmart at Jackson Boulevard and Garners Ferry Road are under contract, but no plans for those properties have been released.