No Signs of a Slow Down as 2018 Comes to a Close in Charlotte
- Average Industrial Rental Rate for Q4 2018 was $4.81 PSF for Warehouse
- Net Absorption for Q4 2018 was 950,011 SF for Charlotte, Iredell County, Cabarrus County & York County
- The York County Submarket Made Up the Largest Portion of Absorption with 572,313 SF
- The Largest Transactions in Q4 2018 Included: Ospera Logistics lease of 199,700 SF at 11108 Quality Drive, SI Fulfillment Solution's lease of 117,000 SF at Steele Point II, SPRiZZi Bev-Co's lease of 113,316 SF at 20310 Chartwell Drive and DHL's lease renewal of 100,975 SF at Bond Distribution Center.
The Charlotte Regional industrial market remains strong, with rental rates near historic highs and sales prices steadily increasing. During the fourth quarter of 2018, net absorption for Charlotte and surrounding counties was a positive 950,011 SF. This was a slight decrease from the third quarter of 2018, which showed a positive absorption of 1,040,399 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 572,313 SF, followed by the North submarket with a positive absorption of 237,708 SF, third is the South submarket with a positive absorption of 120,940SF, and fourth, was the Airport/West submarket with a positive absorption of 120,051 SF. The East submarket had the largest negative absorption with (224,621) SF.
Top industrial leases in the fourth quarter included Ospera Logistics lease of 199,700 SF at 11108 Quality Drive. This was followed by SI Fulfillment Solution’s lease of 117,000 SF at Steele Point II, and SPRiZZi Bev-Co.’s lease of 113,316 SF at 20310 Chartwell Center Drive (former Michael Waltrip Racing facility). One last lease of note was DHL’s lease renewal of 100,975 SF in Building II of Bond Distribution Center.
The fourth quarter’s overall vacancy rate (which includes warehouse and flex) was 6.80%, an increase of 1.70% from the third quarter 2018. The average industrial rental rate was $4.81 PSF for warehouse, which is a 3.0% increase compared to the previous quarter’s rate of $4.69 PSF.
Demand continues to be high for industrial space, as evidenced by the heavy absorption throughout the year. E-commerce continues to fuel 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.