By Martin Sinderman
Contributing Writer

Legislation providing tax credits for the redevelopment of vacated retail “big boxes” and shopping centers would probably have little impact on the Charleston metro area over the short term. But given the nature of these properties and the retailers that occupy them, it might prove to be a useful tool in the not-that-distant future.

As introduced in the South Carolina House of Representatives last month by Rep. Scott Talley, R-Spartanburg, the South Carolina Retail Facilities Revitalization Act (H. 3841) would provide tax credits as incentives for redeveloping empty retail facilities.

Under Talley’s proposal, those re-doing a vacant shopping center or big- box retail building in the 75,000-square-foot-and-up range would be eligible for either local property or state income tax credits, based upon the expenses they incur in the process. The facilities have to be vacant for a full year prior to applying for the credits; once granted, the credits must be taken in installments over a five-year period.

The bill is based on similar legislation, introduced by Talley and passed by the General Assembly last year that provides similar credits for the redevelopment of vacant textile mills. That legislation has resulted in the successful redevelopment of several such facilities across the state, according to Talley, including the conversion of the former Mills Mill in Greenville to condominiums, a vacated mill on Gervais Street in Columbia into a Publix, and the former Springs Industry Bleachery in Rock Hill into a residential/retail complex.

Going bigger

Large, vacated retail properties are posing problems for communities across the nation these days, according to Ronald Rogers, professor of Real Estate and Finance and director of the Real Estate Center at the University of South Carolina.

“As a lot of the big-box retailers are deciding to move into even bigger boxes, communities nationwide have become concerned by the eyesores created by the abandoned boxes left behind,” says Rogers. As typically configured, these buildings are suited to a limited number of uses, he notes, “And it’s not easy to convert them to alternative uses.”

These problems are only going to get worse as major retailers, such as Wal-Mart, tinker with their store concepts, according to J. Terrence Farris, director of the Master of Real Estate Development program at Clemson University.

For example, “Wal-Mart has gone from the ‘discount center’ to the ‘superstore,’ basically moving from a 100,000 – 200,000-square-foot box in the process,” Farris explains. In South Carolina there are currently 45 Wal-Mart supercenters, he notes, with only 16 regular discount centers left accompanied by nine Sam’s Clubs.

Few vacant boxes

But, aside from a few instances, “Vacant big boxes are really not that big a problem these days in the Charleston market,” says Colliers Keenan retail brokerage associate Erin England, who notes “The rapid growth of the tri-county area has reduced much of what vacancy we had here.”

High-profile vacant retail facilities in the 75,000-square-foot-and-up size range in the local market, according to England, are currently limited to around 150,000-square-foot former Sam’s Club on Rivers Avenue, which the Bentonville, Ark.-based retailer left for a new store at Centre Pointe; and a former K-Mart, also on Rivers. And in the vacated center department, the former Desperado retail/nightclub entertainment complex has been purchased and is planned to be partially occupied by the Mueller Co., a window/building products manufacturer; meanwhile, a large portion of the 190,000-square-foot Shipwatch Square on Rivers remains vacant, he said.

Just because Charleston’s growth has helped keep retail boxes and centers occupied for now doesn’t mean that will always be the case, though. As major retailers continue to experiment with different store configurations, and shift locations within the market in response to local growth trends, chances are good that there will always be instances of large retail facilities becoming vacant.

And H. 3841 could be just the ticket to addressing those situations.

“The tax credit idea is brilliant,” says Rogers. “Tax credits have proven to be a very effective way to attract capital to desirable activities, such as historic preservation and low-income housing. And applying them here would be a great way to encourage developers to be creative and find a way to convert these properties to more efficient uses.”

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