With a lull in retail sales and signs pointing to a nationwide economic downturn, developers in the Carolinas are focusing on pedestrian-friendly lifestyle and village centers rather than regional projects in saturated markets.

“We're now at the point where we have reached the end of a long growth period,” says Jensie Teague, managing director of retail development in Charlotte for Dallas-based Trammell Crow Co. “In addition, the anti-sprawl movement has gained significant momentum, and as far as big-box development goes, most of the major markets have reached saturation. With these combined factors, it's a lot harder to gain entitlements for developing the big boxes.”

Development in the Carolinas is, as Teague says, “flat and heading down.” But retail activity continues in both states. “The Carolinas are benefiting from a sizeable exodus of older Americans from the North and Upper Midwest who have found the coastal areas to be ideal retirement destinations,” says Cammack Morton, president and CEO of Cary, N.C.-based Konover Property Trust. “Their move into the area sets up an extremely healthy climate for the business required to support the increased population. All in all, it's a terrific retail environment.”

North Carolina

The Tarheel State enjoyed especially substantial growth over the past decade. During the 1990s, North Carolina's overall population increased by 21.4%, according to the U.S. Census Bureau. In terms of retail activity, one of the most significant projects now underway is Trammell Crow's redevelopment of Southpark Mall, an upscale center in Charlotte that will bring Saks Fifth Avenue and Nordstrom into the area for the first time. Slated for completion within three years, the redevelopment comes on the heels of an extensive and hotly contested rezoning. “From the standpoint that it will be one of the few major centers of its kind between Atlanta and Washington, D.C., Southpark probably is one of the most noteworthy projects in the Southeast,” notes Teague.

In June 2000, research firm The Myers Group ranked Charlotte (along with Raleigh) among the 10 fastest-growing major housing markets in the nation. Capitalizing on its emerging status, development has begun in Charlotte of a number of new lifestyle/village centers around the city's I-485 Beltway and Lake Norman/Huntersville areas. Another Trammell Crow project, Southlake, a regional mall of more than 1 million sq. ft. with an urban village concept, is being developed at the intersection of I-77 and Reames Road. Meanwhile, Torington, a grocery-anchored lifestyle center, is under construction at I-485 and Johnston Road near the Ballantyne community to the south, which remains under development.

Numerous retailers will be hanging their signs in Charlotte for the first time. Along with Dick's Sporting Goods, which recently signed a lease for several locations, Cost Plus/World Market opened stores in Pineville and the University area in late 2000. Costco, the third wholesale warehouse to open in the Charlotte market, is under construction at the site of a failed center, Tyvola Place, near the intersection of I-77 and Tyvola. The center will be torn down to accommodate a 148,000-sq.-ft. Costco and 66,000 sq. ft. of additional space.

With the increasing competitiveness of the category, it's hardly surprising that the supermarkets are pulling out all the stops to outdo their rivals. Bi-Lo continues to expand into Charlotte, with its first units under construction in Fayetteville. With the acquisition of surplus Hannaford units from Food Lion in the eastern half of the state, Lowes Food has also expanded.

Meanwhile in small- and mid-market North Carolina towns such as Thomasville, Hendersonville and Roxboro (as well as in smaller cities in South Carolina), Weldon Wyatt is continuing about the business of converting standard Wal-Marts into the chain's new supercenter format. The existing stores typically will occupy from 100,000-200,000 sq. ft. to 250,000-300,000 sq. ft., says Weldon Wyatt, chairman of the Aiken, S.C.-based development firm.

If Charlotte is in good shape economically, Raleigh has even more to crow about. The city boasts the highest median family income in North Carolina at $59,000. That's $5,000 more than Charlotte. The Triangle itself is said to rank seventh nationally in per capita construction activity — a factor that goes a long way in explaining why big-name retailers such as Sports Authority, Crate & Barrel and Costco have wasted no time in affixing their names to area leases. Costco opened in Durham in November 2000, Sports Authority in Raleigh last summer and Crate & Barrel last fall at Crabtree Valley Mall, also in Raleigh.

South Carolina

Activity also continues, though at an admittedly slower pace, in South Carolina. According to local developer Edens & Avant's Columbia Shopping Center Report, the retail center market by fall 2000 exceeded 14 million sq. ft. — a 400,000 sq. ft. net increase over six months earlier. About 70% of the new space was added in the Northeast Richland sub-market alone.

Since 1996, growth in the Columbia retail market has been concentrated in three major sub-markets: Northeast Richland, Northwest Columbia, and Lexington. The fastest-growing residential area in the region, Northeast Richland, adds more than 2,000 new homes each year. Retail activity in Northeast Richland is concentrated along Two Notch Road, the Clemson-Hardscrabble intersection, and the Farrow-Interstate 77 interchange. In the past six months, the area added 280,000 sq. ft. with the construction of Northpointe Commons — a new, Wal-Mart-anchored community center. A Target-anchored community center that will add 180,000 sq. ft. is now under development on Two Notch Road.

In Northwest Columbia, the majority of the retail activity revolves around Columbiana Center, a 787,000-sq.-ft. regional mall. With a current inventory of 2.7 million sq. ft. of retail space, the area expanded its inventory by 81,000 sq. ft. with the opening of Columbiana Station III. A Goody's recently opened, and construction is underway on Murray Landing, a 97,000-sq.-ft. Publix-anchored neighborhood center at Irmo Drive and SC 6 (North Lake Drive).

In Lexington, most retail activity is concentrated along US 378 between Hope Ferry Road on the east and US 1 on the west. Under construction is Hope Ferry Commons, a 50,000-sq.-ft. office/retail complex. In neighboring East Columbia several closings took place, including Food Lion, which shut the doors on its Five Point store in the Marketplace, and Kroger, which closed its Decker Mall store.

In St. Andrews, completion is nearing on the conversion of the Marketpoint Center into office space, removing 97,000 sq. ft. from the retail inventory. The Clusters of Whitehall also is being converted into office space, eliminating another 68,000 sq. ft. of excess retail space. Only time will tell whether this represents a trend of diminishing retail in the area, or just a few isolated closures.

Patti Connor is a Jacksonville, Fla.-based writer.

SIDEBAR: Going to Carolina



During the 1990s, North Carolina's population increased by 21.4%, compared with the national average of 13.2%, according to the U.S. Census Bureau.

That makes North Carolina the ninth fastest-growing state in the nation. An influx of people into urban counties such as Wake and Mecklenberg and coastal counties such as Dare and Brunswick fueled 75% of that growth. North Carolina picked up an additional seat in the U.S. House, while Wake and Mecklenberg will add additional seats in the state legislature.

Two major industries have played a part in this growth. Over the past 10 years, the Charlotte area has boomed because of its growing stature as the banking capitol of the South. Such major industry players as Wachovia and First Union Corp. are based in “The Queen City.” More banking resources ($774 billion) are headquartered in Charlotte than in all but one other U.S. city. Nine of the nation's top 200 banks operate in Charlotte.

Meanwhile, the area around Duke University, NC State, and the University of North Carolina, known as the Research Triangle, has become a leading center for scientific research. This has brought an influx of high-paying technology jobs to Raleigh, Durham, and Chapel Hill.