The retail outlook is shining brightly in the Carolinas, with both states growing in population, jobs and development.

James Taylor sang: "In my mind, I'm going to Carolina." These days, a lot of shoppers as well as real estate professionals are singing the same tune.

Whether the stores are in small towns, medium-sized cities or 1-million-person metropolises, the condition of retail development in North Carolina and South Carolina appears strong, judging by demographic data, sales figures, and observations of retail developers and owners.

Few Carolina retail developers see any real danger signs, but one business professor says all retail real estate developers -- not just those in the Carolinas -- must sharpen their market research to keep from overbuilding.

Dr. Don Jud at the University of North Carolina at Greensboro says developers should research years of retail sales trends in sub-markets to find the best place to build, rather than just follow their competitors to currently hot areas. Jud says clustering retail projects where similar stores already exist leads to the boom-and-bust cycles developers always complain about.

"My advice is to look at sales trends in the metro area and within sub-areas of the market," says Jud. "Look at previous data to figure out the building of space over the previous 10 to 20 years to get an idea of the responsiveness of retail building to increases of sales within the city. Look at historical information instead of the rules of thumb [of building where competitors are already located]."

Industry changes Developers say overbuilding retail stores and under-attracting shoppers have not yet been a major problem in the Carolinas. That is likely because both states have been growing in population and adding jobs in service industries, such as banking and medicine, as well as manufacturing everything from automobiles to fiber optic cable. North Carolina currently ranks 21st and South Carolina 26th in the nation in year-to-year percentage change in employment growth.

Still, job growth in the Carolinas is not distributed evenly among industries. Rural areas have long been home to the apparel and textile industries, two large employment segments that are still shedding workers. Over the past year, North Carolina's apparel employment has dropped 4.5 percent and textile employment has dropped 3.7 percent. The situation is worse in South Carolina, where apparel employment is off 7.7 percent and textile employment is off 4.2 percent.

With the exception of these two segments -- as well as the besieged cigarette manufacturing industry (centered around Winston-Salem, N.C., and Kannapolis, N.C.) and rural tobacco growers -- the two states continue to attract new and expanding industries. South Carolina's Greenville area landed BMW's Z-3 sports car factory several years ago and nearly two dozen automotive suppliers landed nearby. Bridgestone/Firestore has broken ground on a new tire factory near Aiken. Even rural areas like Timmonsville have recently won some big projects, such as Honda's new all-terrain vehicle factory now under construction.

"South Carolina has a very robust economy," says David Lockwood, vice president of leasing services for The Keenan Co./Colliers International in Columbia, S.C. "Disposable income and buying power in all of the major markets are up, as is overall sales per square foot in the retail centers. Shop space [rent] ranges from $8 per sq. ft. to $12 per sq. ft. and anchor space from $6 to $9. Those amounts have been rising slightly.

"Two years ago, occupancy rates in the neighborhood centers was in the 88 percent range. Now it is in the 91 percent to 92 percent range," he continues. "Right now, the development that is taking place is feeding demand only. I think developers here are cautious about building too much speculative space."

The story is much the same to the north. Although North Carolina lost out several years ago on both the BMW and Mercedes-Benz automobile factories, it has made up for them with dozens of smaller factories. In fact, for the past few years, North Carolina has ranked among the top five states for the location of new or expanding corporate facilities. New factories in the state manufacture pharmaceutical capsules, axle parts, fiber optic cable, roller bearings, machine tools and other products once manufactured farther north.

Retail-friendly environment Although North Carolina's population is double that of South Carolina -- 7 million vs. 3.5 million -- the two states are very similar:

* Both are largely rural with a half-dozen large cities.

* Both have 3.5 percent unemployment rates, the lowest in the Southeast.

* Both have similar hourly earnings per worker: $11.50 for North Carolina and $10.44 for South Carolina -- pay scales that are lower than those of most other Southeastern states.

* Both have governments eager to present their states as friendly to union and regulation-weary industries from the North, as well as to overseas corporations that want a North American presence.

* And both states recently have gained the confidence of national retailers, with new ones moving in and those already present pumping hundreds of millions of dollars into new developments.

"The activity has been tremendous," says Randal Johnson, first vice president in the Charlotte, N.C., office of Virginia Beach, Va.-based Divaris Real Estate Inc. and Carolinas state director for the International Council of Shopping Centers. "I worked for a retailer before moving to the real estate side, and we retailers always thought the Carolinas would slow down at some point, since they had been growing steadily since 1991.

"But there doesn't seem to be any end in sight," Johnson continues. "Just in Charlotte, national big-box retailers that came in several years ago with a three-store plan are now expanding, and retailers new to the market are coming in with five-store plans. Raleigh [N.C.] is seeing tremendous growth as well. If you talk to the economic developers there, they will tell you they think it will eventually pass Charlotte."

Other retail professionals agree, going so far as to predict that the Raleigh-Durham-Chapel Hill metro- politan area will start growing toward the Burlington-Greensboro-Winston-Salem-High Point area, which is centered 100 miles to the west along I-40/I-85.

"If you fly from Greensboro toward Raleigh at night, you can see all of those lights coming together. I think in the next 10 years [the population in] Raleigh will pass Charlotte," says Dominic Ranelli, director of the shopping center division for Steven D. Bell Inc., Greensboro, which also manages apartment complexes throughout the Southeast.

Bright lights, smaller cities North Carolina is so strong, says Ranelli, that seemingly out-of-the-way cities like Wilson (more than an hour "down east" from Raleigh) can revive their shopping. He plans on revitalizing Wilson's 500,000 sq. ft. mall just as the company did Holly Hill Mall in Burlington, which went from 40 percent vacancy and $35 million in sales five years ago to 100 percent occupancy and $100 million in sales now.

"If you create the right tenant mix [in smaller-city malls], shoppers might still drive to the large-city malls, but they will not go as often," says Ranelli. "Shoppers want the same kind of tenant mix in smaller malls as they can find in larger cities. And if you treat the tenants [in smaller malls] as your customers, they will stay with you. You can do some things in places like Wilson and Burlington that you can't do in larger cities like Charlotte."

Weldon Wyatt, president of Wyatt Development, Aiken, S.C., a company that builds Wal-Marts and CVS drugstores throughout the Southeast, says the discount and drug retail segments remain vibrant, even in small towns that, according to Census records, are having slow growth.

"In 1997, we did some projects in towns as small as 5,000 population all the way to large metro areas," says Wyatt. "I think the small-town stores are doing well [with Wal-Marts] because of the lack of competition. With interest rates as good as they are, there is a lot of money out there for companies that want to grow. I think there is a lot of room for growth. I see no slowdown."

Downtown renewal Bruce Aughtrey, senior leasing agent for Windsor Aughtrey Co., Greenville, S.C., is cheerfully puzzled at the strength of the South Carolina and western North Carolina markets.

"Personally, I thought it would slow down 18 months ago, but the markets and the rent structures have remained stable," he says. "Space remains tight, particularly in Class A space. The coming of BMW fueled a lot of growth in our area,but I do think that the small towns don't seem to have grown much."

Aughtrey estimates rent rates in his area range from $9 per sq. ft. to $15 per sq. ft., with prime tracts selling for as much as $125,000 an acre. Lease rates in the past several years have increased at least $2 per sq. ft., thanks to what Aughtrey calls "frenzied" interest from video stores, restaurants and banks all chasing after the same sites near strong retail.

Earl Kurtz, vice president of retail leasing for Edens & Avant, Columbia, S.C., says rent rates in Columbia range from $10 per sq. ft. to $18 per sq. ft. While the state's capital city has seen the same shift to the suburbs as have other metro areas, some developers are pondering a new retail development along the Congaree River, just a few blocks west of the city's downtown on the site of an old prison.

"The thing about South Carolina is that, while other states have gone through boom periods, South Carolina has seen slow, steady growth," says Kurtz. "Some towns like Greenville have exploded in industrial growth, and Myrtle Beach with residential growth, but the state as a whole has been steady. I think 1998 will be a good year for commercial growth."

The prospect of renewed retail interest in downtown metropolitan areas is not limited to Columbia. Developers in Charlotte, new home to both a professional football stadium and a convention center within a few blocks of each other, are mulling over plans that would bring back many of the department stores that abandoned the downtown area in the late 1980s.

Steve Vermillion, president of Crosland Retail, a division of The Crosland Group, foresees a revitalized downtown Charlotte. "I think you may see some retail moving back over the next two to five years," he says. "One plan would include new building, and the other would use the old downtown convention center. The [existing] Overstreet Mall downtown is full and doing well." Vermillion says Charlotte is growing so strong that he expects quality department stores that are not yet there -- such as Saks Fifth Avenue and Nordstrom -- to come into the market soon.

Outlet shopping Retail developers with projects in the Carolinas as well as in other states can easily attest to the Carolinas' market strength.

"The Carolinas' development is much more influenced by growth in the commercial, industrial and residential markets, while other states might be more influenced by density of population," says Richard Marshall, senior vice president of development with Charlotte-based Lat Purser & Associates, which has developments from Florida to New Jersey. "There are some developments near the Research Triangle that seem to be leading the residential growth, which would indicate the retailers have a very high confidence level in the market."

Steve Tanger, president and CEO of Greensboro, N.C.-based Tanger Factory Outlets also confirms the health of the Carolina market. The Tanger portfolio contains 30 centers in 23 states, including three outlets in North Carolina -- one on the Outer Banks, one in the mountains and a 17-year-old pioneering center in Burlington -- and one under development in Concord, near Charlotte.

"Our centers in North Carolina average about 10 percent more in sales per square foot than our company average," says Tanger. "So we are pleased to call it home."

Outlet shopping has been a staple in the Carolinas for decades, and its popularity continues. Brian Lewbart, public relations director for Baltimore-based Prime Retail, says his company's two centers in the Carolinas -- one near Raleigh, N.C., and one not far from the BMW factory along I-85 in Gaffney, S.C. -- are performing at or above expectations. The 235,000 sq. ft. South Carolina outlet center, Carolina Factory Shops, is undergoing a 70,000 sq. ft. expansion expected to be completed within 18 months. Fifty percent of the space already has been preleased.

"We attracted 2 million [shoppers] in the first full year, 1997, which we feel is a strong indication of our acceptance in the market," says Lewbart. "About 30 percent come from the Charlotte market and 36 percent are tourists, so we think we are drawing from a wide geographic area."

Will growth continue? Despite such Carolina successes, some experts sound a cautionary note. Jensie Teague III, managing director for retail development for Charlotte, N.C.-based Faison Inc., says low interest rates could cause overbuilding in the big-box category. Low interest rates could also damage some mid-market malls, he says, as shoppers shift to the power centers.

"Most of the obsolescence in the market is being caused by retailers changing their prototypes and moving on to larger footprints and abandoning smaller stores for bigger ones," says Teague. "Another concern is that there is not an abundance of new retailing concepts on the horizon. On the other hand, retailers are the most creative people on Earth when it comes to developing new concepts. The only thing certain is that store sizes and concepts will change."

All growth has to end sometime. Dr. Susan Laury, a research economist at the University of South Carolina at Columbia, predicts that things will start to slow down later in 1998.

"I don't expect a big drop-off," Laury says, "but I don't expect things to continue at the pace they have been growing. Employment growth won't fall off too much. What happens in South Carolina reflects what is happening in the national economy, and that is not expected to grow as fast."

Clint Johnson is a Winston-Salem, N.C.-based freelance writer.

North Carolina * Cary, N.C.-based FAC Realty Trust Inc. is building three shopping centers in the state. Park Place (182,000 sq. ft.) in Cary will be anchored by Food Lion and a 16-screen Carmike Theater complex when it is completed in spring 1999. University Plaza (41,964 sq. ft.) in Pembroke and Peak Plaza (68,400 sq. ft.) in Apex also will feature Food Lion when they are completed this month and this fall, respectively.

* Renovations are planned for University Mall in Chapel Hill and Parkwood Mall in Wilson, according to the centers' manager, Steven D. Bell & Co., Greensboro, N.C. Changes to University Mall will include interior and exterior renovations and an expansion to accommodate a theater, food court, two anchors, three restaurants and 112,000 sq. ft. of small-store GLA. The 380,000 sq. ft. mall is currently anchored by Belk and Dillard's. Remerchandising and an interior renovation also are planned for Parkwood Mall. The 360,000 sq. ft. shopping center is anchored by Belk, Sears and JCPenney.

* Thomas Enterprises Inc., Smyrna, Ga., will complete two new developments by fall 1998: The Pavilion at Kings Grant (350,000 sq. ft.) in Concord; and Fayetteville Pavilion (131,875 sq. ft.) in Fayetteville. Anchors have not yet been announced for the power centers.

In addition, the company is renovating Carolina Pavilion in Charlotte. Space formerly occupied by Best Products will be reconfigured to accommodate two new tenants. The 875,000 sq. ft. shopping center currently includes Circuit City, Sports Authority, Old Navy Clothing Co. and HomePlace.

* Charlotte, N.C.-based Faison Inc. is developing Apex Crossing in Apex. The 75,000 sq. ft. strip center will be anchored by Hannaford supermarket when it is completed in 1999.

* Construction was completed this month on Phillips Place in Charlotte. A development of The Harris Group, Charlotte, the mixed-use project features 130,000 sq. ft. of upscale retail and entertainment space, 402 residential units and a 124-room Hampton Inn. Organized on a Main Street grid, the design of the project will evoke the old-world look of Italy and England with stucco facades, classical columns, and gabled and mansard roofs. Tenants include a 10-screen Consolidated Theater complex, Via Veneto, Dean & Deluca, Restoration Hardware, and Waverly Home. Charlotte-based TBA2 is the project's architect.

* Columbia, S.C.-based Edens & Avant recently completed the redevelopment of Northside Plaza in Henderson. New lighting and store fronts were among the improvements, and tenants such as Food Lion and CVS were added to the 66,090 sq. ft. shopping center.

Edens & Avant also is redeveloping Edgecomb Plaza (85,740 sq. ft.) in Tarboro and Village Square (54,097 sq. ft.) in Rural Hall. Edgecomb Plaza will receive lighting and parking lot upgrades, and Food Lion will join the tenant mix. Anchors have not yet been announced for Village Square. Both projects are expected to be completed this fall.

In addition, the company plans to build an unnamed shopping center in Robbins. The center, which will be anchored by Lowe's, will total 60,000 sq. ft. when completed in early 1999.

* The Richard E. Jacobs Group, Cleveland, is expanding and renovating Eastridge Mall in Gastonia. Phase I, completed last November, features a 104,000 sq. ft. JCPenney store. In phase II, scheduled to be completed this November, a 202,000 sq. ft. Dillard's store will relocate to the space formerly occupied by JCPenney, and an expanded 300-seat food court will move to the second level of the mall. Sears will become the center's fourth anchor in phase III, which is expected to be completed in July 1999. In addition, construction is under way on interior and exterior renovations of the 1 million sq. ft., two-level regional shopping center.

The company also is developing Triangle Towne Center in Raleigh. Anchors have not yet been announced for the 1.3 million sq. ft. shopping center, which is expected to be completed in summer 2000.

* Providence, R.I.-based Churchill & Banks Ltd. is building The Arboretum in Cary. The mixed-use center will include retail, restaurants, residential and hotel components when it is completed in late 1999. Retail GLA will total 460,000 sq. ft. and include tenants such as Morton's of Chicago, Houlihans, Cappricio's and Bristols. The project will be managed by Kane Realty Corp., Raleigh, N.C.

* The Mills Corp., Arlington, Va., and Indianapolis-based Simon DeBartolo Group are building Concord Mills in in Concord. The 1.4 million sq. ft. superregional value -oriented mall will feature Burlington Coat Factory, Sports Authority, Bed Bath & Beyond, T.J. Maxx, Rainforest Cafe, and Books-A-Million when it opens the third quarter of 1999.

South Carolina * The Richard E. Jacobs Group, Cleveland, has redeveloped Columbia Mall in Columbia. The center's GLA grew slightly last October with the addition of a 400-seat food court on the upper level. The 1.3 million sq. ft. shopping center is anchored by Dillard's, JCPenney, Rich's and Sears.

* Charlotte, N.C.-based Faison Inc. is building two strip centers. Farrow Point in Rock Hill will total 200,000 sq. ft. and will be anchored by Home Depot and PetsMart when it opens next month. West Ashley Marketplace in Charleston will total 135,000 sq. ft. and include Lowe's when it opens this summer.

* Aiken, S.C.-based Wyatt Development Co. Inc. has four Wal-Mart-anchored neighborhood centers under way/completed. Shoppes at Woodruff (283,533 sq. ft.) opened in February in Greenville. Future expansions are planned for the project. Fall openings are planned for two as-yet-unnamed shopping centers in Florence and Greer. Both will total approximately 215,000 sq. ft. upon final build-out. Another as-yet-unnamed shopping center is planned in Greenville. The project will total 236,610 sq. ft. when it opens in spring 1999.

* Expansion and renovation continues at Outlet Park ... Shoppes at Waccamaw in Myrtle Beach, according to Peoria, Ill.-based VT Development Corp., the project's manager. The outlet complex, which totals 750,000 sq. ft., will grow by 57,000 sq. ft. in May. The three malls that make up Outlet Park also are being renovated. Among the improvements: new interiors and facades, food courts, lighting and upgraded parking lots. A future expansion is planned that will bring the project's GLA to more than 900,000 sq. ft. Tenants at the complex currently include Waccamaw, Liz Claiborne and Nautica.

* This June, NASCAR SpeedPark will open at Broadway at the Beach in Myrtle Beach. Owned by Myrtle Beach-based Burroughs & Chapin Co. Inc., the project includes 333,000 sq. ft. of retail and entertainment GLA. The 22-acre NASCAR SpeedPark will feature eight tracks where users can race replicas of NASCAR cars.

* Cary, N.C.-based FAC Realty Trust is planning Mt. Pleasant Towne Centre in Mt. Pleasant. The 425,000 sq. ft. shopping center will feature retail and entertainment GLA when it is completed in May 1999.

* Columbia, S.C.-based Edens & Avant has expanded Fairfield Square (97,240 sq. ft.) in Winnsboro. The center grew 40,000 sq. ft. this spring with the addition of Food Lion grocery store.

In addition, the company will add/have added approximately 10,000 sq. ft to the following centers: Widewater Square (102,000 sq. ft.) and Trenholm Plaza (183,000 sq. ft.) in Columbia; Capital Square (90,000 sq. ft.) in West Columbia; Lakeside Plaza (185,969 sq. ft.) in Anderson; St. George Plaza (60,000 sq. ft.) in St. George; and Ravenel Town Center (60,050 sq. ft.) in Ravenel.

The company also is renovating six shopping centers: Clusters of Whitehall (68,029) and Northway Plaza (84,531 sq. ft.) in Columbia; Friarsgate Plaza (68,235 sq. ft.) in Irmo; Palmetto Plaza (119,424 sq. ft.) in Sumter; Triangle Village (116,567 sq. ft.) in Lexington; and Kalmia Plaza (217,930 sq. ft.) in Aiken.

Edens & Avant recently completed build-out of Kennerly Place in Columbia.

The 60,000 sq. ft. shopping center features Food Lion grocery store and CVS. The company also is planning Springs Crossing in West Columbia. Anchors have not yet been announced for the project, which is expected to total 75,000 sq. ft. when it opens this year.