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CORRECTED: Super market: Demand rises for neighborhood grocery-anchored retail

Publix has opened a 55,000-square-foot store in SouthEnd’s Shops at South Line. The locale, at 2222 South Boulevard, is across the street from home-improvement store Lowe’s and near the new Camden apartment complex. Photo by Roberta Fuchs

Publix has opened a 55,000-square-foot store in SouthEnd’s Shops at South Line. The locale, at 2222 South Boulevard, is across the street from home-improvement store Lowe’s and near the new Camden apartment complex. Photo by Roberta Fuchs

Editor’s Note: Karnes Report Charlotte Retail contained an error regarding space at the Rock Hill Galleria being leased by Sears. That information has been removed from this story.

Demand for retail space is up in the smaller shopping centers, with large supermarket chains such as Publix anchoring both old and to-be-built sites. Regional shopping malls, meanwhile, are not faring as well, reporting the highest levels of negative demand among retail categories in the first half of the year.

But, according to data analytics firm Karnes, it’s hard to gauge results for the larger enclosed venues because of the nature of their occupants and owners. SouthPark, for example, saw more than 13,500 square feet free up with the departure of City Tavern and Guess. But the credit card mecca says it is rapidly signing new leases, with Reid’s Fine Foods and outdoor gear provider The North Face moving in.

It’s the smaller venues that are attracting the most interest, Karnes said in its most recent report on Charlotte-area retail, which covers Mecklenburg, Cabarrus, Gaston, Iredell, Lincoln, Union and York counties. Neighborhood centers with one anchor tenant and community centers with two or three anchors and a wider range of storefronts are reporting the majority of net demand, filling some 431,000 square feet in the first half of the year.

And supermarkets are leading the pack.

Andy Misiaveg, a partner at the Charlotte office of retail advisory services company The Shopping Center Group, says the region’s population growth is creating a push for expansion in the sector. While many retail establishments retain their big 50,000-square-foot-plus size, others are resizing to gain entry into niche markets that include mixed-use projects. Growth, he said, is occurring in the city as well as the suburbs.

Karnes reports that neighborhood centers, which maintain the largest inventory of retail space at 17 million square feet, saw vacancy drop 0.2 percent from the end of last year to 9.4 percent in June. And food providers dominated the landscape.

During the first half of this year, Publix moved into Magnolia Plaza in Cornelius and Mint Hill Commons. The Florida-based chain didn’t fail to notice SouthEnd’s migration boom, and opened a 55,000-square-foot store in the newly developed Shops at SouthLine on South Boulevard. Publix has been targeting the Charlotte area of late, opening nine stores last year and purchasing several BI-LO outlets. Future plans include anchoring the Willow Oaks Crossing Shopping Centre in Concord this year.

Publix appears to have sent locally grown Harris Teeter, which was acquired by The Kroger Co. of Cincinnati in a $2.4 billion deal last year, into a VIC-induced tailspin. The company has had to rethink its strategy, pushing it to start growing again while considering larger stores that fit into the Kroger model of between 76,000 and 100,000 square feet. According to Karnes, Harris Teeter took up 50,000 square feet at Springfield Town Center in Fort Mill during the first half of this year, and has plans to anchor the newly built Antiquity Town Center in Cornelius. A company spokesperson did not provide information for details on its expansion strategy in time for publication.

On a smaller scale, Super Mercado La Unica opened a 27,000-square-foot grocery in east Charlotte’s Independence Promenade Shopping Plaza, while Fresh Market took over 27,000 square feet at Promenade on Providence in south Charlotte.

Taking first place for community center leasing, appliance and furniture retailer Conn’s HomePlus moved into 49,000 square feet at Akers Center in Gastonia and 45,000 square feet at University Plaza in north Charlotte. Discount clothing and home accessory chain Gabe’s was a close second, signing on for 45,000 square feet at Akers Center, with promises to occupy 61,000 square feet at Commons at Chancellor Park on University City Boulevard, dubbed a power center because it contains several big box stories.

Other significant gains in community center space, according to Karnes, include Planet Fitness moving into 18,000 square feet at Archdale Marketplace, the shopping center on South Boulevard where Babcock Home Furniture & More took over 20,000 square feet.

Union County saw the highest absorption of retail space. The largest tenant gain, at 41,000 square feet, was the newly delivered Wal-Mart Neighborhood Market at The Shoppes at Howard’s Mill in Waxhaw. That was topped off by garden supplier Southern States taking over 31,000 square feet at the Monroe Shopping Center.

All told, net demand among the retail types, which include the big-box-laden power centers, unanchored specialty centers, malls, and the smaller community and neighborhood centers, was strong in the first half. Some 392,000 square feet of demand outpaced the 309,000 square feet of new supply, resulting in an ebbing of the region’s vacancy rate to 8.7 percent.

Regional shopping centers, however, saw a drop in leased space. Sears’ departure from York County, on the heels of the department store’s leaving Eastridge Mall in Gastonia late last year, contributed to malls having the highest rate of negative absorption among retail types. Despite having a vacancy rate of 3.4 percent, regional centers saw some 80,100 square feet of vacant space come on the market in the first half of the year.

On the plus side, the newly finished Charlotte Premium Outlets in the southwestern part of the city, added tenants such as Levi’s Outlet Store and handbag and accessories store Vera Bradley. At Carolina Place, national clothing retailer Deb Shops left its 6,800-square-foot digs, but teen apparel provider Forever 21 expanded into 5,100 square feet.

SouthPark, meanwhile, says it hasn’t seen any decline in demand. Global brand The North Face filled the 5,500 square feet that came online after contemporary clothing retailer Guess departed. And while City Tavern vacated some 8,200 square feet when it left its tony digs, Reid’s Fine Foods will move into that space by the end of the year.

“Retail is cyclical in nature,” says Nicole Kennon, director of marketing and business development at SouthPark, “and we’re constantly evolving.” She says the mall strives to expand with high-end retailers like Neiman Marcus, which opened in late 2006, but also is focusing on family-friendly fare. The mall recently added a Lego store and doll vendor American Girl to its roster. Luxury handbag retailer Brahmin and Disney Store are slated to move in this fall. Although Kennon would not provide SouthPark’s vacancy rate, she said sales were strong.

Retailers, she said, “see SouthPark as the best place to locate.”

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