The COVID-19 pandemic has hurt Charlotte retail business but not as hard as in other U.S. cities, according to a new study. And it’s expected to do well in the new year.
Charlotte and other Southern cities like Raleigh have seen retail foot traffic drop about 25%, according to commercial real estate analytics firm CoStar Group based in Washington, D.C.
That’s compared to other East Coast cities like New York and Boston and West Coast cities such as San Francisco and Seattle that saw losses of retail visits of up to 60%.
More than 40 major retailers declared bankruptcy in 2020 and 11,000 stores closed, according to CoStar’s study. That left nearly 150 million square feet of retail space empty.
CoStar market analyst Jesse McConnico said Charlotte had been seeing some of the best retail rent growth in the country in 2019, but that retail rent growth and demand have slowed in 2020.
“Charlotte has definitely been impacted by the coronavirus pandemic just like every other market has,” McConnico said about retail store closings.
However, McConnico said Charlotte is still outperforming other metros across the country because of its population and job growth that is fueling demand for retailers and consumer goods.
According to U.S. Census data released in May, Charlotte is now the 15th most populous city in the country with a population increase of 19.9% from 731,400 people in 2010 to 885,700 in July 2019, The Observer previously reported.
McConnico said new employers, and more coming in the new year with high-paying jobs, is a driver for more retail. Centene is adding over 3,000 jobs in the University City area and Intercontinental Capital Group will add over 500 jobs. Lowe’s Home Improvement is building a 2,000-employee global tech hub in South End.
Charlotte is also appealing for commercial rents that are more affordable than many other markets, McConnico said, and the quality of life and low cost of living continue to spur growth.
McConnico said about 700,000 square feet of retail space is under development in the Charlotte market and more than 70% is already pre-leased.
“We expect Charlotte to do well because we are still seeing employers relocate and expand here and we still expect the population growth to continue through 2022,” McConnico said. “Overall, the outlook is better than the average U.S. metro.”
Charlotte’s growing retail
Retail space and development continues throughout the Charlotte metro area with new openings and planned mixed-use spaces.
Jim Plyler, a partner with Piedmont Properties Corfac International in Charlotte, said leasing smaller retail space has fared well in Charlotte and some companies are expanding even during the pandemic.
Charlotte developer Crosland Southeast and investment firm Nuveen Real Estate plan to begin making changes in 2021 at the 12-acre Plaza Midwood shopping center at the corner of Pecan and Central avenues. The first phase will include 90,000 square feet of shops and restaurants in a mixed-use space that will include a new street, lined with retail, through the property.
In South End, Atlanta-based Portman Holdings is building a 16-story office and retail tower on Hawkins Street that will include 15,000 square feet of retail and restaurant space.
In NoDa, Charlotte developer Grubb Properties is turning a 10.5-acre property off of East 36th Street into 100,000- to 125,000-square-feet of offices, ground-floor retail and about 300 apartments.
And in Dilworth, Selwyn Property Group Inc.’s building plans for a one-acre property at East Boulevard and Scott Avenue include up to 10,000 square feet of retail space.
Plus, Camp North End, a 76-acre industrial site near the center city on Statesville Avenue has 1.3 million square feet of space, Charlotte Five previously reported. The site includes offices, restaurants and vendors, including its first brewery that opened in November.
North of Charlotte, the Lake Norman area also is growing its retail space.
The Birkdale Village complex in Huntersville is among the area’s first mixed-use developments with 250,000 square feet of retail space, 320 apartments and 50,000 square feet of offices. It is home to a movie theater, shops such as Banana Republic and Dick’s Sporting Goods, as well as restaurants like Red Rocks and eeZ Fusion & Sushi.
The LangTree Lake Norman community in Mooresville, north of Charlotte, has made additions during the COVID-19 pandemic as RL West development offered mixed-use space that includes retail and restaurants, including the new brewery Ghostface Brewing.
“I worry more about the office market more than the retail market,” Plyler said as companies rethink office needs for the future with more people working from home.