Charlotte Industrial Market Continues Robust Growth

Key Takeaways

  • Average Industrial Rental Rate for Q3 2018 was $4.69 PSF for Warehouse
  • Net Absorption for Q3 2018 was 1,040,399 SF for Charlotte, Iredell County, Cabarrus County & York County
  • The York County Submarket Made Up the Largest Portion of Absorption with 578,895 SF
  • The Largest Transactions in Q3 2018 Included: NFI's lease of 507,000 SF at Logistics77 at Riverwalk, Husqvarna's lease renewal of 163,200 SF at Long Creek Business Park, and Avante Health's lease of 156,899 SF at Concord Airport Business Park.

Market Conditions

The Charlotte Regional industrial market remains strong, with rental rates near historic highs and sale prices steadily increasing.During the third quarter of 2018, net absorption for Charlotte and surrounding counties was a positive 1,040,399 SF. This was a decrease from the second quarter of 2018, which showed a positive absorption of 2,052,598 SF. This is still well above average historical numbers. All signs point to a market that is still robust and strong.

The York County submarket made up the largest percentage of the positive absorption with 578,895 SF, followed by the Airport West submarket with a positive absorption of 271,029 SF, third is Iredell County submarket with a positive absorption of 91,109 SF. The Cabarrus County submarket had the largest negative absorption with (50,697) SF.

Top industrial leases in the third quarter included NFI's lease of 507,000 SF at Logistics77 at Riverwalk, Husqvarna's lease renewal of 163,200 SF at Long Creek Business Park, and Avante Health's lease of 156,899 SF at Concord Airport Business Park. Other leases of note include DHL's lease renewal of 101,218 SF at Bond Distribution Center, and Philadelphia Truck Lines' lease of 83,599 SF at 2708 Yorkmont Road.

The third quarter's overall vacancy rate (which includes warehouse and flex) was 5.10% and decreased 0.30% from the second quarter of 2018 with 5.40%. The average industrial rental rate was $4.69 PSF for warehouse, which is seven cent higher than the previous quarter's rate of $4.57 PSF.

Demand continues to be high for industrial space, as evidenced by absorption throughout the year. E-commerce is fueling industrial fundamentals, and there continues to be new development in the larger/bulk warehouses throughout the Charlotte MSA. However, the supply of industrial buildings for owner occupiers continues to be a challenge within the market.