THE VOTE is nearly unanimous: The slowdown in the U.S. economy has taken its inevitable toll on retail markets in the Southeast. However, no one's singing the blues. And in the Gulf Coast region, especially in Louisiana and Alabama, developers and retailers are still doing quite well, thank you.
A regional overview by Greenville, S.C.-based land investment firm RealtiCorp shows retail demand strongest in several major metroplexes: Birmingham, Ala.; Atlanta; Greenville, S.C.; Raleigh, Charlotte and Winston-Salem, N.C.; South Florida; and Florida's Orlando-Tampa-St. Petersburg I-4 corridor.
Louisiana
While the RealtiCorp study did not include Louisiana, “Things are going very well there,” according to Brian Wechsler, vice president of new development and leasing with Houston-based Weingarten Realty Investors. “We've seen some continued population growth in the state,” Wechsler says. “Baton Rouge tends to be the hottest market as far as residential and job growth.”
New Orleans remains the largest retail market, although good development sites are becoming scarce. “But Veterans Highway will always be the dominant retail corridor,” Wechsler insists. In Shreveport, the area's first SuperTarget center, developed by Weingarten, opened strongly in July. Hammond and Houma, La., are also seeing retail growth, says Wechsler.
Alabama
Alabama continues to grow, especially in Birmingham and Hunstville, says Jim Wilson, who heads Montgomery-based Jim Wilson & Associates. “Those cities are probably in the top 30% of the nation in terms of income, and we did not lose population in the last census.”
“I think it's still going strong,” adds Don Kelly, senior executive vice president and partner in The Mitchell Co., based in Mobile, Ala. Kelly cites a number of positive signs in the state, including completion of the second and third phases of The Summit, Birmingham's first lifestyle center, and a new power center in Huntsville. “It's also very healthy in Montgomery,” he adds.
Speaking of Montgomery, Jim Wilson & Associates has just put in a lifestyle center and a power center in its 350-acre multi-use development, East Chase. Another lifestyle center, Montgomery-based Aronov's Eastern Shore Towne Center, is planned for the Mobile market. The center, which will feature 320,000 sq. ft. of GLA, opens in fall 2002.
Florida
While business is beginning to slow in Florida, retailers still seem to be cautiously moving forward, according to John Dowd, senior vice president of development for The Goodman Co., West Palm Beach, Fla. “Our most notable project is Freedom Commerce Center, an 855-acre mixed-use project in Jacksonville that will have 1.2 million sq. ft. of retail.”
The retail component includes both a more traditional community/power center and a lifestyle center, Dowd reports. “Florida is still in a positive growth mode in every major market we look at, but developers are re-thinking their plans to make sure they're doing the right thing.”
Robert Smith, RealtiCorp's regional partner in Orlando, notes that a large portion of the demographic growth in the state “seems to be occurring in the outlying suburbs, at the outer fringes of the larger cities. The migration of residents from the Midwest and South Florida toward the less dense Central Florida markets seems to be the driving force for new development opportunities.”
Georgia
The bloom may be off the rose a bit in Georgia, according to Hay Grayson, regional partner for RealtiCorp in Atlanta. “There are fewer opportunities for developers because they are all chasing the remaining retailers with expansion plans,” he says.
“The past few years have been booming in Atlanta, but with the technology decline there has been a noticeable increase in office vacancy rates; the apartment occupancy rates have been touched by the decrease in the number of jobs created each year; all of which are affecting the retail market.”
One project just beginning to get off the ground is the major Atlantic Steel redevelopment in downtown Atlanta. Mitch Jacoby, senior vice president of Jacoby Development Inc., the project's developer, says he is in discussions with a number of retailers, including Wal-Mart, for his retail facilities, and is “optimistic” about the prospects of landing the retail giant. He is already involved with Wal-Mart in several other cities in Georgia, including Albany, Villa Rica and Suwanee.
The Carolinas
North Carolina is generally feeling the effects of the economic slowdown, although “you've got different niche players looking in different markets,” says Marty Kotis, head of Kotis Properties in Greensboro. Rents have held steady, he says, although increases are harder to come by. “The slowed pace of development is also a measure of credit tightening,” he notes. “And people are not as anxious to build spec retail space.” The area does continue to benefit from a more moderate cost of living, he says, although the pending Wachovia/First Union merger could mean a loss of jobs. A number of projects are bringing new retailers to the market. Urban Retail Properties' 1.3 million-sq.-ft. The Streets at Southpoint will open in Durham on March 2002, bringing with it the state's first Nordstrom.
South Carolina, too, has experienced a slowdown, although “there are always bright spots,” insists RealtiCorp CEO and principal Dan Bruce. “Most of your stronger retailers are certainly still doing business.”
The Greenville market is strong, with retail emerging on the fringes of the city due to population and employment growth. The coastal area, including Charleston, is seeing significant activity, says Bruce. “Some users are also looking in the Columbia market,” he adds.
Steve Lewis is an Atlanta-based writer.
Southeast project listings
| Project Name | City, State | Developer | Headquarters | Center | Project Type | Current GLA* | Completion Date* | Anchors |
|---|---|---|---|---|---|
| Parkway Place Huntsville, Ala. | CBL/Colonial Properties Chattanooga, Tenn./Birmingham, Ala. | M|R | 600,000 sq. ft. | Fall 2002 | Dillard's, Parisian |
| Colonial Promenade Hoover Hoover, Ala. | Colonial Properties Trust Birmingham, Ala. | S|N | 192,000 sq. ft. | June 2002 | TBA |
| Vestavia Hills City Center Birmingham, Ala. | AIG Baker Birmingham, Ala. | S|R | 452,000 sq. ft. | Fall 2001 | TBA |
| River Ridge Birmingham, Ala. | Bayer Realty (Bayer Properties) Birmingham, Ala. | P|N | 353,176 sq. ft. | Fall 2001 | SuperTarget, Best Buy, Staples, Linens 'N' Things |
| The Summit (Phase II) Birmingham, Ala. | Bayer Realty (Bayer Properties) Birmingham, Ala. | L|E | 593,068 sq. ft. (164,669 sq. ft.) | 4th Qtr. 2001 | Parisian, Barnes & Noble, Saks Fifth Avenue |
| Eastern Shore Towne Center Mobile, Ala. | Aronov Realty Management Montgomery, Ala. | L|N | 320,000 sq. ft. | Fall 2002 | TBA |
| Eastdale Mall Montgomery, Ala. | Aronov Realty Management Montgomery, Ala. | M|R | 869,717 sq. ft. | Fall 2001 | Sears, Parisian, Dillard's |
| Festival Bay Orlando, Fla. | Belz Enterprises Memphis, Tenn. | M|N | 1.1 million sq. ft. | 2001 | Bass Pro Shops, Vans, Ron Jon Surf Shop |
| Granada Shops Naples, Fla. | Cortelis Co. Miami, Fla. | P|N | 270,000 sq. ft. | August 2001 | Expo Design Center, Pier One, Marshalls |
| Pier Park (Phase I) Panama City Beach, Fla. | St. Joe Commercial Jacksonville, Fla. | E|N | 275,000 sq. ft. | Summer 2002 | Jimmy Buffett's Margaritaville |
| Publix at Bayside Lakes Palm Bay, Fla. | The Sembler Co. St. Petersburg, Fla. | C|N | 65,000 sq. ft. | Open | Publix |
| Riverside Market Square Jacksonville, Fla. | The Sembler Co. St. Petersburg, Fla. | C|N | 46,000 sq. ft. | Spring 2002 | Publix, Quizno's, Mail Boxes Etc., Starbucks |
| 4000 Ponce Coral Gables, Fla. | CMC Group Inc. Miami | MU|N | 32,000 sq. ft. | 2002 | TBA |
| Mitchell Ranch Plaza New Port Richey, Fla. | AIG Baker Birmingham, Ala. | S|N | 541,000 sq. ft. | Summer 2002 | TBA |
| Columbus Park Crossing Columbus, Ga. | CNM Associates Atlanta | P|N | 760,000 sq. ft. | Spring 2002 | TBA |
| McDonough Marketplace McDonough, Ga. | JDN Realty Corp. Atlanta | S|N | 418,664 sq. ft. | Summer 2002 | TBA |
| Mill Creek Buford, Ga. | North American Properties Cincinnati | P|E | 560,000 sq. ft. (30,000 sq. ft.) | Spring 2002 | Costco, Marshalls Ross Dress For Less |
| Stonecrest Marketplace Lithonia, Ga. | North American Properties Cincinnati | P|N | 450,000 sq. ft. | Spring 2002 | Babies 'R' Us, Staples Linens 'N' Things |
| Cruse Crossing Cumming, Ga. | North American Properties Cincinnati | N|N | 75,000 sq. ft. | Winter 2002 | TBA |
| Centre at Evans Evans, Ga. | Wyatt Realty Services Inc. Aiken, S.C. | S|N | 253,683 sq. ft. | February 2002 | Wal-Mart |
| Columbus Park Crossing Columbus, Ga. | Ben Carter Properties Atlanta | P|N | 350,000 sq. ft. | August 2002 | Circuit City, Staples, Bed, Bath & Beyond |
| Target @ Cumming Cumming, Ga. | The Sembler Co. St. Petersburg, Fla. | P|N | 238,000 sq. ft. | March 2002 | Target |
| Henry Town Center McDonough, Ga. | The Sembler Co. St. Petersburg, Fla. | P|N | 650,000 sq. ft. | July 2002 | Target, BJ's Wholesale, Belk |
| The Avenue Peachtree City Peachtree City, Ga. | Cousins Properties Atlanta | F|N | 155,000 sq. ft. | March 2001 | Ann Taylor Loft, Chico's, Williams-Sonoma |
| Camp Creek Marketplace Atlanta | North American Properties Cincinnati | P|N | 596,000 sq. ft. | Spring 2003 | Target |
| Salem Road Station Atlanta | Cousins Properties Atlanta | N|N | 67,270 sq. ft. | October 2000 | Publix |
| Atlantic Station Atlanta | Jacoby Development Inc. Atlanta | MU|N | 1-2 million sq. ft. | TBA | TBA |
| Griffin Crossroads Griffin, Ga. | Halpern Enterprises Atlanta | S|N | 500,000 sq. ft. | 2002 | Wal-Mart Supercenter |
| Clearview Mall Metairie, La. | Stirling Properties Covington, La. | R|R | 720,411 sq. ft. | Fall 2002 | Maison Blanche, Sears |
| Palace Centre Hammond, La. | Stirling Properties Covington, La. | L|N | 74,000 sq. ft. | Open | TBA |
| Siegen Lane Marketplace Baton Rouge, La. | Mall Properties Inc. New York | P|E | 1 million sq. ft. | Open | Lowe's, Sam's Club, Wal-Mart SuperCenter |
| Colonial Promenade Bossier Bossier City, La. | Colonial Properties Trust Birmingham, Ala. | S|N | 200,000 sq. ft. | February 2002 | TBA |
| Dogwood Festival Market Jackson, Miss. | Aronov Realty Management Montgomery, Ala. | L|N | 300,000 sq. ft. | April 2002 | McRae's, Borders, Old Navy, Linens 'N Things |
| Triangle Town Center Raleigh, N.C. | The Richard E. Jacobs Group Birmingham, Ala. | M|N | 1.3 million sq. ft. | February 2002 | TBA |
| Southeast Plaza Goldsboro, N.C. | Ivey/Swain Associates LLC Wilmington, N.C. | N|N | 49,400 sq. ft. | Open | Food Lion, Dollar General |
| The Shops at Monk's Corner Wilmington, N.C. | Monk's Corner Associates LLC Wilmington, N.C. | S|N | 18,270 sq. ft. | Open | Sprint PCS, Great Clips |
| Millpond Village Cary, N.C. | Konover Property Trust Cary, N.C. | MU|N | 198,000 sq. ft. | Open | Lowe's Foods, Great Clips |
| Golden Gate Shopping Center Greensboro, N.C. | Lat Purser & Associates Charlotte, N.C. | S|RD | 178,045 sq. ft. | Open | Food Lion, Harris Teeter |
| Kenilworth Commons Charlotte, N.C. | Edens & Avant Columbia, S.C. | N|E | 63,341 sq. ft. (15,000 sq. ft.) | 1st Qtr. 2002 | Harris Teeter, MailBoxes Etc. |
| Tanger Outlet Center Myrtle Beach, S.C. | Tanger Factory Outlet Centers Greensboro, N.C. | O|N | 400,000 sq. ft. | Spring 2002 | Liz Clairborne, Reebok, VF Factory Store, Mikasa |
| The Mall of South Carolina Myrtle Beach, S.C. | CBL/Burroughs & Chapin Chattanooga, Tenn./Myrtle Beach, S.C. | M|N | 1.3 million sq. ft. | Fall 2003 | Belk, Dillard's, Sears |
| West Ashley Town Center Charleston, S.C. | Realticorp/Food Lion-Ravenel Greenville, S.C./Charleston, S.C. | N|N | 78,000 sq. ft. | 2000 | Food Lion |
| Florence Mall Florence, S.C. | Edens & Avant Columbia, S.C. | N|E | 312,928 sq. ft. (30,000 sq. ft.) | 2002 | SteinMart, Peebles, Books-A-Million |
| Northpointe Durham, N.C. | Sodi Inc./Armada Hoffler Durham, N.C./Chesapeake, Va. | P|N | 489,500 sq. ft. | 1st Qtr. 2001 | Kroger, PETsMART, Ross, The Home Depot, Costco |
| Grand Ridge Resort Outlet Center Waynesville, N.C. | Jones Lang LaSalle Retail Atlanta | O|N | 750,000 sq. ft. | Summer 2002 | TBA |
| The Streets at Southpoint Durham, N.C. | Urban Retail Properties Co. Chicago | M|N | 1.3 million sq. ft. | March 2002 | Nordstrom, Belk, Hecht's, JCPenney, Sears |
| Peabody Place Ent. Complex Memphis, Tenn. | Belz Enterprises Memphis, Tenn. | E|N | 300,000 sq. ft. | Open | Jillian's, AnnTaylor Loft |
| Tanger Outlet Center Sevierville, Tenn. | Tanger Factory Outlet Centers Greensboro, N.C. | O|E | 339,600 sq. ft. (14,352 sq. ft.) | November 2000 | Bombay Co., Waterford Wedgewood |
| Center Type: E=Entertainment Center, S=Strip Center, N=Neighborhood Center, C=Community Center, M=Regional/Superregional Mall, P=Power Center, O=Outlet Center, L=Lifestyle Center, F=Fashion/Specialty Center, MU=Mixed-Use Development. Project Type: N=New Project, E=Expansion, RN=Renovation (updating look, refacing, common area or amenities upgrade), RD=Redevelopment (demalling or remerchandising). Completion Date*: Subject to change. Existing/Planned GLA (Expansion GLA): GLA=Gross Leasable Area. TBA=To be announced/unavailable. | |||||
The winner and still champ…Wal-Mart!
It's not even close. Whatever city you visit, whoever you ask, Wal-Mart stands out as the dominant retailer in the Southeast. “Every time you turn around there's a new Wal-Mart SuperCenter — and they don't take prisoners,” says Jim Wilson, head of Montgomery, Ala.-based Jim Wilson and Associates.
Value-oriented retailers dominate the market, with familiar names including Target and Costco still going strong. Home-improvement retailers The Home Depot and Lowe's also continue to prosper, as does department store chain Kohl's, a relatively new player in some Southeastern markets that looks to be a real comer.
Of course, with the economy slowing, some retailers are bound to suffer. Store closings are becoming more commonplace — some in response to local market pressures, others a part of national initiatives. Harris Teeter, for example, abandoned the Atlanta market but is expanding in other areas. On the other hand, OfficeMax and the Cooker restaurant chain, among others, are involved in nationwide retrenchment programs, and grocery chain Bruno's is now in Chapter 13.
— Steve Lewis
Southeastern retail market conditions: CBD & suburban areas
| Market Area | Inventory (sq. ft.) | Vacancy Rate (%) | Vacancy (sq. ft.) | Mall Vacancy Rate (%) | Avg. Net Absorption (sq. ft.) | GAFO* Sales Per Household | Total under Construction (sq. ft.) | GLA Per Capita 2000 (sq.ft.) |
|---|---|---|---|---|---|---|---|---|
| Atlanta | 122.8 mil | 11 | 13.5 mil | 10 | 3.5 mil | $17,891 | 18.2 mil | 27.24 |
| Birmingham, Ala. | 18.6 mil | 6.9 | 1.28 mil | 6.9 | -107,918 | $14,274 | 1.39 mil | 18.56 |
| Charlotte, N.C. | 23 mil | 10.9 | 2.5 mil | 1.8 | 960,568 | $15,335 | 6.75 mil | 24.74 |
| Columbia, S.C. | 13.99 mil | 9 | 1.25 mil | 5 | 376,250 | $16,318 | 750,000 | 24.74 |
| Memphis, Tenn. | 26.99 mil | 12 | 3.23 mil | 7.8 | 438,523 | $16,242 | 1.8 mil | 23.62 |
| Miami | 39.16 mil | 7 | 2.74 mil | 6.5 | 483,750 | $15,811 | 11.5 mil | 18.48 |
| Nashville, Tenn. | 28.5 mil | 6.4 | 1.82 mil | 6.4 | 1.18 mil | $15,871 | 12,420 | 23.6 |
| New Orleans | 22.7 mil | 8.5 | 1.93 mil | N/A | 519,500 | $15,871 | 1.73 mil | 15.78 |
| Orlando, Fla. | 41.62 mil | 7.4 | 3.08 mil | 2 | 1.54 mil | $17,286 | 1.54 mil | 28.8 |
| Tampa | 58.5 mil | 7.5 | 4.38 mil | N/A | 777,500 | $14,042 | 1.26 mil | 22.89 |
| Source: Integra Realty Resources Viewpoint 2001. GLA per capita provided by National Research Bureau. *GAFO (General, Apparel, Furniture and Other) sales provided by Claritas Data Services. | ||||||||