Shopping Centers Today

NOV 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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N O V E M B E R 2 0 1 6 / S C T 49 which the firm intends to turn into a mixed-use devel- opment called Rea Farms, featuring 250,000 square feet of retail. Another 66- acre development next to the Waverly is also in the plan- ning stages. "We anticipate a large grocery component to the Rea Farms project," said Lucier. "Grocery is one of the main drivers for a lot of these developments." Publix and Harris Teeter have been expanding ag- gressively in the Charlotte metro, trying to maintain dominance against a host of other grocers now on the march through the South, among which are Walmart and Fresh Market as well as Whole Foods. Other su- permarkets opening in the metro include Lidl, Harveys Supermarket and Sprouts. Attempting to make sense of the crazy-quilt com- petition for new grocer sites in Charlotte, Rich lists these shopping center projects: Harris Teeter will anchor a redevelopment of the Sedge- field Shopping Center, in the historic South End area; Publix will anchor an in-fill development in the Cots- wold neighborhood; Whole Foods will be part of an up- town development called Crescent Stonewall Station, which will be adjacent to one of Charlotte's light rail sta- tions; Fresh Market will have a new store with the redevel- opment of Strawberry Hill Shopping Center, in south central Charlotte; Sprouts grabbed the grocer spot in a south Charlotte develop- ment called Ballantyne-Co- linayre; and the Shoppes at Mallard Creek, in northeast Charlotte, tapped Walmart Neighborhood Market to anchor its development. A decade ago the popu- lar new category in eateries was the "better burger," pioneered by the likes of Five Guys, Shake Shack and Smashburger. The new popular category is fast pizza — think Chipotle with pizzas instead of burritos. "Several made-to-order pizza and tra- ditional pizza concepts have hit Charlotte hard," said Rich, "including Firenza Pizza, Uncle Maddio's Pizza Joint, Pieology, MidiCi The Neapolitan Pizza Company and Blaze Pizza." The other trend line in Charlotte eateries is expan- sion by local chef-owned res- taurants, and several land- lords are favoring these over well-known chains, Rich says. The problem is not in finding tenant eateries, but in finding space. "A lot of restaurant groups are ac- tively searching in the mar- ket, with the challenge being low inventory," said Lucier. "The vacancy rate for retail sits at about 5.4 percent." Charlotte has about 1 mil- lion square feet under con- struction, Lucier notes, but absorption in the second quarter was at 687,000 square feet, and this comes on top of 290,000 square feet of space absorbed in the first quarter. "Occupancy is good in Charlotte and getting bet- ter," said Rich. As can be expected with low vacancy rates, rents are heading up. But with some larger-box vacancies and older shopping centers still in operation, the aver- age rental rate across the Charlotte metro area is still less than $23 per square foot. Rental rates for new developments are in the $30 range and often higher. This is pushing the market's upper limits. The highest rental rates are in the South- Park section of town, home to the upscale SouthPark Mall, where rates tend to be above $35 per square foot and some even pass the $40 mark. New in-fill projects in the so-called "Uptown" (it is actually part of downtown Charlotte) are above $35, and new leases in the south Charlotte area exceed $30 per square foot, says Lucier. In short, North Carolina is growing. On average, about 40 people per day are moving into the city, according to the mayor. And they all have to shop somewhere. S C T NOTABLE NUMBERS '13 '14 '15 '16* 2,000 1,500 1,000 500 Retail completions SQUARE FEE T ( 000'S ) Chef-owned restaurants are sprouting throughout Charlotte Source: Marcus & Millichap AVERAGE HOUSEHOLD INCOME $ PER SQUARE FOOT 2016 $14.73 2013 2014 2015 $14.25 $14.55 $13.43 Retail rent 5.4% RETAIL VACANCY RATE '13 '14 '15 '16 5.3% 4.2% 4.0% 3.6% Retail sales growth *projected

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