Submarket Malls Putting More Emphasis on Upscale Retailers

CHARLOTTE-A new day in retailing is dawning in the south Charlotte area as the changing demographics push out the old shops to make room for a more upscale tenant mix.

An upswing in residential construction, plus commercial developments such as Ballantyne Corporate Park, has brought a different kind of shopper to the south Charlotte region, one with more disposable income.

Perhaps one of the most dramatic examples of the area’s retail reformation is occurring at the 1.2 million-sf Carolina Place mall. Almost a third of the leases there will be up for renewal in 2001, a year that could usher in many new merchants and restaurants, reflecting the area’s increasingly prosperous customer base.

According to industry sources, no large anchor tenants are on the departure list. Instead, a new one is likely to be added since the zoning and site preparation is already approved.

Carolina Place is 93% leased, with annual sales over $400 per sf, placing the mall in the top 10% of regional malls nationwide.

As reported by Karnes Research Co., this submarket had five million sf of retail space at the end of the second quarter, with a vacancy rate of 7%, compared with the citywide rate of 10%.

Several new projects will add more retail space. Perhaps the most prominent of these is the 485,000-sf Promenade being developed by Childress Klein Properties.

While Ballantyne is often recognized as the catalyst for the surge in upscale retailing, the mammoth mixed-use project is only part of why real estate experts are saying the boom will continue. Credit also goes to the completion of the Interstate 485 outerbelt. When connections to the west are completed, the market will be expanded even further.

About a third of the Carolina Place shoppers come from South Carolina, and many of these also shop at SouthPark. Most of the mall operators don’t think the addition of other retail developments in the area will saturate the market.

Many malls have a particular function, compared to Carolina Place, which is considered a destination mall. Over the years, some large retailers have struggled and failed in this market, but others have revamped and survived. One is Carolina Pavilion, an 850,000-sf shopping now fully leased, after being previously plagued with financially-troubled tenants.

The Carolina Pavilion draws many of its shoppers from South Carolina as it is situated at the bottom of the Charlotte south market along US 521. Lease rates here range from $7 per sf to the high teens. The rates move up to $25 per sf and above at the top of the market around Matthews and Pineville.