No Signs of Slowdown in the Delivery of New Development
Charlotte continues to see strong development activity as nearly 2.5 Million square feet is under construction across CBD and Suburban submarkets.
Market wide vacancy remained low at 10.3% during Q2 2017. New deliveries and leasing momentum are expected to keep absorption neutral as job growth pushes the Charlotte unemployment rate down to 4.5%.
Urban Class A rental rates continue to trend past an average of $31.00 per square foot, while premier suburban submarkets like Southpark inch closer to rivaling the rental rates of the CBD submarket.
Expect steady activity in new construction projects throughout 2017 as momentum for pre-leasing has been positive. Currently over 50% of newly delivered product is pre-leased. A few of the most notable speculative deliveries thus far in 2017 include Spectrum Properties’ 300 South Tryon, Portman’s 615 S. College Street and Beacon Partners’ 500 East Morehead.
Q2 2017 Charlotte Office Market Summary
Charlotte remains a hotbed of leasing activity with year to date absorption totaling 437,550 square feet. Development will remain healthy as several speculative projects are proposed in CBD and Midtown submarkets. Greater focus is on the Midtown/South End submarket as tenants seek to ramp up their recruiting power by leasing creative office space in the area. Expect an increase in rental rates and decrease in suburban submarket vacancy as constricted speculative construction will push for more rental growth. The capital markets sector should pick up activity as a wide range of buyers from outside of the market continue to eye Charlotte’s growth as an opportunity to capitalize on buildings with low vacancy.