SOUTHEAST SNAPSHOT, SEPTEMBER 2005

Charlotte Retail Market

Trent Gustafson President Percival McGuire Commercial Real Estate Development LLC

Through the second half of 2004, the vacancy rate for the Charlotte retail market was 5.9 percent, per The Karnes Report. Generally, the market is stable, and as new developments come on line, there will be pressure on vacancy rates. In effect, the amount of pre-leasing that takes place will determine whether demand keeps pace with the increased supply.

Some of the most active developers in the Charlotte retail sector include Childress Klein, Crosland and The Ghazi Company, all of which have significant projects throughout the market. In east Mecklenburg County, Childress Klein is developing The Bridges at Mint Hill, which is located at the intersection of Interstate 485 and Lawyers Road; this 1.3 million-square-foot, open-air center is planned to be complete in spring 2007. Furthermore, Crosland is developing the 270-acre Blakeney multi-use development, which is situated on all four quadrants of the intersection of Rea and Ardrey Kell roads in south Charlotte, just 2 miles from I-485. The retail component of this development will feature 495,000 square feet and is expected to open in January 2006. Also, situated on one of the largest city blocks in Uptown Charlotte at the site of the Old Convention Center, The Ghazi Company is developing EpiCentre, a mixed-use development that will include an entertainment/retail component.

In addition, Taubman is developing another project significant to the market—Northlake Mall in north Mecklenburg County—which features a 14-screen AMC Theater as well as 415,000 square feet of enclosed mall tenant space; the retail center is scheduled to be complete this fall. At Simon’s SouthPark Mall, which is located at 4400 Sharon Rd. in Charlotte, Nordstrom and Neiman Marcus will have stores completed by the fall of 2006. Nordstrom is a relatively new retailer in the market, as its store within SouthPark Mall represents its second in the Carolinas, and Neiman-Marcus also is entering the market with the development of its SouthPark location.

Whole Foods, REI and Gander Mountain are all noteworthy retailers that have entered the Charlotte retail market as well. Overall, there have been many new additions to the market; the synergistic nature of retail has attracted new retailers from all over the world.

In general, most of the new retail development taking place in Mecklenburg County is occurring along the perimeter, mostly resulting from the continued construction of I-485. Therefore, many areas that previously were not accessible now are thriving because of the planned outer belt. Furthermore, neighboring counties are experiencing new development as well effecting from Charlotte’s growth.

In the future, several areas meet the criteria for strong growth markets, which is apparent through the development circling around I-485. The Lancaster County, South Carolina, panhandle is a specific area that will see extensive growth in the near future. Already it is experiencing rapid residential growth due to its proximity to Ballantyne and northeast Union County, two of the fastest growing submarkets in the Charlotte market. This area is primed for ancillary retail development.

— Trent Gustafson, president, Percival McGuire Commercial Real Estate Development LLC

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