Landlords Keep Tight Hold on Market with Positive Absorption & Rising Rental Rates
- Average Industrial Rental Rate for Q4 2016 was $4.79 PSF for Warehouse
- Net Absorption for Q4 2016 was 1,223,251 SF for Mecklenburg County
- The South Submarket Made Up the Largest Portion of Absorption with 602,880 SF
- The Largest Transactions in Q4 2016 Included: Bonded Logistics Pre-Leasing 371,895 SF, Hearth & Home Leasing 102,660 SF, Lindy's Homemade Leasing 61,664 SF, Carolinas Healthcare Leasing 40,000 SF and Safe Fleet Leasing 40,560 SF
The Charlotte Regional industrial market continues to build strength, with rates continuing to climb and sale prices increasing. During fourth quarter 2016 net absorption for Mecklenburg County was positive 1,223,251 SF. This was a 33.5% increase from the third quarter of 2016, which had a positive absorption of 915,695 SF. The South submarket made up the largest percentage of the positive absorption with 602,880 SF, followed by the Airport/West submarket with a positive absorption of 495,537 SF. Larger warehouse projects under construction in the fourth quarter 2016 include Scannel Properties’ Wilkinson Commerce Center, Trinity Partners’ Shopton Ridge, and Liberty Property Trust’s CDC South and Shopton Ridge. The fourth quarter’s largest deals include Bonded Logistics pre-leasing 371,895 SF, Hearth & Home leasing 102,660 SF, Lindy’s Homemade leasing 61,664 SF, Carolinas Healthcare leasing 40,000 SF and Safe Fleet leasing 40,560 SF . The vacancy rate for the fourth quarter 2016 was 4.70% compared to 5.50% in the third quarter 2016. The average industrial rental rate was $4.79 per square foot for warehouse, increasing slightly from the previous quarter’s rate of $4.76 per square foot.
Demand continues to be high for Industrial space. As in the past quarters, the common theme in the market is still the lack of space in the 20,000 SF to 50,000 SF range and lack of outside storage/trailer parking. Some of this demand should be met with over 1,000,000 square feet of speculative space hitting the market in the first half of 2017.