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New shopping centers fuel cautious optimism

4/9/2010

News about shopping for the past two years has been grim -failing chains, disappointing holiday seasons, lingering empty storefronts.

But consumers appear to be opening their wallets again. A trade group reported Thursday that retail sales rose 9 percent nationwide in March, the fourth consecutive monthly gain.

In the Columbia area, developers are planning to open new shopping centers.

"I do think that you're seeing a slow recovery," said Lyle Darnall, managing director for Edens & Avant, which is building a shopping center in fast-growing Lexington anchored by a Publix.

Another center is nearly ready to open in the shopping hot spot of Harbison. A third is planned to take advantage of SCANA Corp.'s new corporate campus in Cayce.

The recovery is tentative, though, experts said.

"It is too hard to predict right now," said Ryan Hyler, director of research and marketing for Columbia commercial real estate firm Colliers Keenan. "Everything I'm seeing in the market is mixed signals."

The Midlands ended 2009 with the lowest retail occupancy rate it had seen in 10 years at 88 percent, Hyler said. Companies reduced their asking rates for rent to lure tenants. The average rate was down a full $2 per square foot to $14 at the end of last year.

And state sales tax collections show the economy is still suffering. Collections were down about 2 percent for February, compared with the same month last year, according to the S.C. Department of Revenue.

Recovery will be long and slow in a state with the nation's fourth-highest unemployment rate, an uncertain housing market that is still losing sales in the Midlands and a still tight credit market, Hyler said.

"Any growth that you will see over the next 12 months will be that isolated, localized demand," he said.

And not everyone will benefit, Darnall said.

The 61,725-square-foot center shopping center Edens & Avant is building on U.S. 378 at Charter Oak Road is going forward only because the population already was in place to support it, he said. The area has grown by 50 percent over the past decade, he said. As a result, the new center is 83 percent leased and is on track to open in February.

"The shopping centers you will see benefiting mostly are the ones that are well-placed," Darnall said.

Fewer developers are willing to build on the promise of new housing like they did several years ago, he said. "You could put a shopping center out there and wait," he said. "They're not willing to take that risk anymore." But any growth is welcome, retail experts said.

Asheville, N.C.-based Biltmore Property Group already has fully leased a new 12,000-square-foot shopping center it is finishing on Harbison Boulevard, operations director Morgan Bromley said.

The center will be anchored by Jos. A. Bank, which will open at the end of this month. The developer is the franchisee for the store in the region, and Bromley said having that automatic and desirable anchor helped bring in other tenants quickly.

An Eyemart is set to open in May, and Portrait Innovations will open in July, Bromley said. A financial institution will take the final spot, he said.

The center, called Harbison Crossing and built in an English Tudor style, also leased quickly because of location, he said. "Where Harbison meets Bower (Parkway), that's pretty strong," he said.

Julian Wilson also saw an opportunity when energy giant SCANA moved to Cayce from downtown Columbia last year. The commercial real estate agent with Grubb & Ellis Wilson Kibler knew the couple of thousand employees they would bring would make the area ripe for retail development. "There's no food, no gas stations, no infrastructure out there to support them," he said.

So Wilson is planning an 11,000-square-foot shopping center on 12th Street across from Cayce City Hall.

Despite the guaranteed traffic, he still must wait for tenants to make a commitment before he can turn the first shovel of dirt.

Several years ago, the project would have been financed with just a strong anchor tenant in place, Wilson said -- in this case, San Jose Mexican restaurant. Now, the bank requires enough signed leases to cover the cost of the project, which means Wilson must sign at least a couple of more tenants before construction can begin.

"There's a whole lot less risk on the banks these days," he said.

But Wilson said he doesn't think that will be a problem, considering the increased traffic in the area. He said he already has a couple of sandwich shops and a nail salon considering spots in the shopping center.

"It's not that hard to lease given the amount of people that are now traveling the road," he said.