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Charleston's growth spurs new breed of suburban shopping centers in era of online spending

All year long the drumbeat has been steady: brick-and-mortar retail is dying.

It's true that some big-box merchants who didn't change business models with the times, such as Sears and Kmart, are disappearing along with a few other national chains caught up in the surge of click-and-order shopping.

And the post-holiday purge will likely shake off other underperformers.

But brick-and-mortar is far from dead.

Charleston Town Center in Palmetto Commerce Park

A new small retail site called Charleston Town Center is planned off Palmetto Commerce Parkway in North Charleston. Warren L. Wise/Staff

While online sales have been inching up each year, less than 12 percent of all retail transactions occurred from Internet shopping during the July through September quarter last year, according to the U.S. Commerce Department.

That's the highest amount ever, and e-commerce sales are predicted to grow, but on the flip side it also means about 88 percent of all retail purchases still occur in a physical store.

That's one reason more retail centers are popping up in the Charleston suburbs, where population growth continues to surge.

From northern Mount Pleasant to outlying Summerville and from western West Ashley to the southern communities of James and Johns islands, at least 10 new retail centers have either been built during the past year, are on the cusp of opening or are in the planning stages. Other established locations are adding on or revamping their footprints.

None of the new offerings, however, is a traditional shopping center with big-box merchants or national soft goods retailers.

"We are seeing some new product come out of the gate and being delivered, but we are not seeing the power centers," said Will Sherrod of commercial real estate firm NAI Charleston. "They are either unanchored or grocery-anchored developments with Starbucks or daily-need-type stuff."

Riverland Market outparcel under construction

An outparcel building remains under construction in front of the newly opened Publix supermarket in the new Riverland Market Shopping Center on James Island. Warren L. Wise/Staff

Beside grocers such as Harris Teeter, Publix or Lowes Foods, customers will find small locally owned stores, service-oriented shops or a new restaurant or two. Don't look for Gap, American Eagle or Aeropostale in the new centers.

And none of them is an enclosed mall, a trend from 40 years ago that has fallen out of favor with today's shoppers.

Driving the new retail centers is the continued influx of residents to the Charleston region. 

The Charleston Regional Development Alliance, using U.S. Census Bureau statistics, estimates 26 new people move to the region every day, and the area's population is growing three times faster than the national average. The Charleston area now has nearly 788,000 people who call the Lowcountry home. 

And with several mega-housing developments rising in the suburbs, the Charleston-area's retail vacancy rate averages between 3.5 percent and 5.0 percent, according to the commercial real estate firms Lee & Associates, Avison Young and Colliers International. Generally, vacancy below 10 percent is considered a healthy market.

Charles Fitzhenry of commercial real estate firm RealtyLink said the big-box and national chain retailers aren't looking to expand in today's retail climate.

"We are having a lot of trouble leasing to bigger boxes right now," he said. "The trend is toward smaller merchants — anything you can't buy online, experience-oriented retail and medical offices."

The outpatient-care component is new to retail sites.

"Traditionally, they were tenants you didn't want in the shopping center," Fitzhenry said. "But now we see more value in it because they bring in more traffic."

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Another factor driving the move to multiple structures in outdoor shopping centers is sought-after end spaces.

"We try to capture as much end-cap space as possible," Fitzhenry said. "Instead of one big, long facade, we try to break it up into different buildings. When you break it up, you get two end caps. It's a more expensive way to build, but it allows for more end caps and windows that tenants want."

Nexton Square decorating

Angel Santos works on holiday decorations in the central lawn in Nexton Square Shopping Center near Summerville. It's one of nearly a dozen new retail sites opening across the Charleston region. Halls Chophouse and Taco Boy restaurants are the major anchor tenants in the site on the edge of the 5,000-acre Nexton community, where between 16,000 and 20,000 people could one day reside. Warren L. Wise/Staff

In the rapidly filling Nexton Square near Summerville, Fitzhenry said there are at least 20 end caps.

Sherrod of NAI Charleston agreed that the big national retail merchants won't expand until they "right size" their footprints.

"You haven't seen as many of them because the size, space and economics don't work for land and entitlement costs," Sherrod said.

National retailers traditionally seen in malls prefer co-tenancy arrangements with similar merchants.

"Look at King Street,"Sherrod said. "It's a giant lifestyle center just like Mount Pleasant Towne Centre and Northwoods Mall. You are not going to see national chains in a one-off location because when people go shopping, they like to hit more than one store. Retailers want people to shop and hit them all."

Each of the new grocery-anchored sites includes multiple buildings for tenants such as restaurants, alcoholic beverages, medical care, gift shops, fitness locations, dry cleaners, telephone sales and hair and nail salons.

Some outparcels, such as those at Point Hope Commons in the developing Cainhoy Plantation in Berkeley County and Riverland Market on James Island, remain under construction, awaiting tenants who will follow the flow of new rooftops. Cainhoy Plantation alone expects to have 9,100 houses at build-out.

Some retail developments don't have a major anchor.

In Nexton Square, some of the biggest spaces are occupied by restaurants while more than three dozen other businesses fill in the retail site on the edge of the 4,500-acre Nexton development, which is projected to have as many as 16,000 residents.

Live Oak Square Shopping Center on Johns Island (copy)

Live Oak Square Shopping Center is a collection of six buildings with several tenants, including two restaurants recently opened, on Maybank Highway on Johns Island. Warren L. Wise/Staff

On Johns Island, a 16-acre development called Hayes Park is in the works off Maybank Highway. It will include a restaurant, general store, retail shops and other tenants. Up the road, Live Oak Square includes restaurants, cafes and grooming and wellness offerings.

In southern Summerville, Knightsville Crossing, once anchored by a Piggly Wiggly, was remade this year with a hardware vendor as the anchor and a new breed of convenience store on an outparcel.

Across from Cane Bay Plantation, where 40 percent of the 10,000 planned houses are on the ground, another small retail center is in the works on the northern edge of Nexton.

Additionally, new structures are being proposed or built at standing retail sites across Mount Pleasant.

A separate 12,612-square-foot building is planned for the Market at Oakland. The Walmart-anchored Wando Crossing will soon see a new Total Wine shop after part of the retail site was knocked down and rebuilt. Over on Coleman Boulevard, new construction is expected in part of Moultrie Plaza, on either side of the shuttered Wild Wing Cafe.

Publix's GreenWise Market

Publix's specialty GreenWise Market opened earlier this year as the anchor store in the new Indigo Square Shopping Center in Mount Pleasant. File/Warren L. Wise/Staff

At Northwoods Mall, a new restaurant called Bahama Breeze Island Grill is slated for an outparcel where the former Sears auto shop operated. In Palmetto Commerce Park, a small retail development called Charleston Town Center is in the works.

Sherrod predicted people will continue to visit shops and retailers will adapt over the next few years as traditional brick-and-mortar venues find their sweet spot in the era of online shopping.

"Retail is not dead," he said. "It's just evolving. Consumerism is still happening."

Reach Warren L. Wise at 843-937-5524. Follow him on Twitter @warrenlancewise.

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