Charlotte Scores Big in Economic Development Wins
- It was a busy end to 2018 with a handful of major announcements’ hitting the press. AvidXchange announced plans to bring more than 1,220 jobs to the region through a $41M expansion. Honeywell announced that it will bring 750 jobs to Charlotte through its headquarters relocation and LendingTree announced another 436 job headquarter expansion into the Charlotte area.
- Recent wins were attributed to the culmination of a successful merger of Charlotte’s two economic development powerhouses. The Charlotte Chamber of Commerce and the Charlotte Regional Partnership came together to form the Charlotte Regional Business Alliance, tasked with business recruitment, expansion and innovation in the city of Charlotte.
- Although absorption dipped in Q3 2018, steady leasing activity amounted to just over 354,000 square feet of positive absorption to end Q4 2018. Overall and Class A vacancy rates lowered from the previous quarter, ending at 9.5% and 11.3% respectively for Q4 2018.
- Rental rate growth remains a topic of conversation as overall Downtown rates eclipsed $33 per square foot in Q4 2018. Rental rates ended with a high-water mark of $41 per square foot in Charlotte’s Downtown and Southend submarkets.
Q4 2018 Charlotte Office Market Summary
Fourth quarter 2018 saw healthy overall market activity and all signs point to a successful start to the new year. Construction pipeline also remained robust with 3,610,348 square feet under construction as we capped off the year. Over 500,000 square feet of new product is expected deliver in the first quarter of 2019 but anticipate absorption levels to exceed the previous quarter as leasing momentum continues.
Concerns over trade tariffs and rising interest rates have undoubtedly influenced the global economy as the stock market saw major volatility in the fourth quarter. Market volatility will have repercussions on lending, investor appetite and corporate growth, but it is unclear how heavily it will affect the Charlotte market. Investment sales are expected to slow in the new year, but overall market fundamentals look strong. While everyone keeps a close eye on domestic and global trends, we expect rental rates to creep higher, vacancy rates to lower and activity to remain steady through the better half of 2019.