Leasing Activity Drives Market Wide Absorption
The year started off with some significant leasing activity across multiple submarkets. The largest new lease signed was Little Diversified Architectural Consulting in the CBD submarket at 52,289 SF in 615 S. College Street.
Coworking operators continue to flock to creative office projects including Spaces who expanded into their second Charlotte location at 307 W. Tremont Ave. This is Spaces second leased signed in three months, which bumps their Charlotte presence to almost 60,000 SF.
Rates are still pushing higher as the average CBD quoted rental rate was closer to the $32.00 per square foot mark.
Rising rates can be attributed to a healthy appetite for new Class A product. Q1 2018 ended with approximately 1.9 Million square feet under construction with several speculative projects waiting for anchor tenants to jumpstart new development.
Q1 2018 Charlotte Office Market Summary
Development remains a topic of conversation with Legacy Union and Ally Center leading the charge of CBD activity. Both buildings represent a combined 1.6 million square feet under construction with Legacy Union and Ally Center at 65% and 55% pre-leased respectively. Creative office space is in strong demand, which has led to the reposition of dated assets across the city. Some projects of note are Asana Partners 307 W. Tremont Ave., White Point Partners Bower Fibers project which is 100% leased, and White Point Partners Tompkins Hall which will be occupied in its entirety by Duke Energy.
Expect short term vacancy rates to slightly dip in Q2 2018 as notable developments won't deliver until later in the year. Rental rates will continue to rise and Class A product in the CBD will likely eclipse $40 per square foot by the end of the year. Investment activity is also expected to increase as several CBD towers are currently on the market. Anticipate increased investment activity going North as the Lynx Blue Line extension to the University submarket opened in March 2018.