Low Vacancy Keeps Rental Rates Near Historical Highs
- Average Industrial Rental Rate for Q1 2017 was $4.71 PSF for Warehouse
- Net Absorption for Q1 2017 was 551,910 SF
- The South Submarket Made Up the Largest Portion of Absorption with 383,232 SF
- The Largest Deals for Q1 2017 Included: Spears Manufacturing leasing 140,000 SF; Mueller leasing 134,500 SF; Murray Supply leasing 124,000 SF; VS America leasing 100,150 SF and 3M leasing 60,000 SF
The Charlotte Regional industrial market continues to remain strong, with rental rates near historical highs and sale prices increasing. During the first quarter of 2017, net absorption for Charlotte and Mecklenburg County was a positive 551,910 SF. This was a decrease from the fourth quarter of 2016, which showed a positive absorption of 1,223,251 SF. Comparatively, the third quarter of 2016 had positive absorption of 915,695 SF and the second quarter of 2016 had positive absorption of 1,126,970 SF. The South submarket made up the largest percentage of the positive absorption with 383,232 SF, followed by the East submarket with a positive absorption of 154,540 SF. The Northwest submarket had the largest negative absorption with -235,268 SF. Larger warehouse projects under construction in the first quarter 2017 included Scannell Properties’ Wilkinson Commerce Center (216,500 total SF) as well as Foundry Commercial’s Steele Point I & II (367,750 total SF) and Westpark 85 (458,135 total SF). The first quarter’s largest deals included Spears Manufacturing leasing 140,000 SF, Mueller leasing 134,500 SF, Murray Supply leasing 124,000 SF,
VS America leasing 100,150 SF and 3M leasing 60,000 SF.
The average industrial rental rate was $4.71 per square foot for warehouse, decreasing slightly from the previous quarter’s rate of $4.79 per square foot. The current rate represents a year over year increase of 3.51% from first quarter 2016 with rate of $4.55 per square foot. Warehouse rates for third quarter 2016 had average industrial rate of $4.76 per square foot with second quarter 2016 and first quarter 2016 rates averaging $4.55 per square foot.
Demand continues to be high for industrial space. As in the past quarters, the common theme in the market is the lack of space in the 20,000 SF to 50,000 SF range. Some of this demand should be met with over 1.9 million square feet of space under construction.