North Carolina

Charlotte Sees New Construction, Renovations of Second-Generation Office Space

by John Nelson January 22, 2018

It’s impossible to ignore the ongoing boom of new commercial real estate development in downtown Charlotte. Get a glimpse of the skyline from the Interstate 277 loop and you can see the already-present structures standing tall among the handful of cranes and half-completed construction filling in the gaps. More than a dozen projects are currently underway in Center City, with more expected during the next 12 to 18 months. New and Improved Recently opened towers, like 300 South Tryon and 615 South College, have attracted major corporate relocations to downtown CBD, including Regions Bank and Sitehands. Ally Bank just announced its 400,000-square foot move to Ally Charlotte Center, and Crescent Communities just kicked off development of a new tower in the burgeoning Stonewall corridor for a 2020 completion date. Companies seeking the top-of-market space in the city’s newest downtown office developments want to have a presence in the heart of Charlotte’s energy. There, they can recruit elite talent and build their brand. Of course, that presence comes with the highest rental rates and parking costs, in addition to elevated tenant-buildout budgets in a market where construction costs continue to rise. At the other end of the spectrum, some are finding …

January 22, 2018

Market Reports North Carolina Office Southeast Southeast Market Reports

Charlotte’s Ballantyne Office Submarket Shows No Signs of Slowing Down

by John Nelson September 4, 2017

The housing market remains hot in Charlotte with sustained growth in both sales activity and sales price. Affordable prices, a strong market and robust salaries are driving first-time buyers to take the plunge and purchase their first home and there’s no better place to live in Charlotte than in the 28277 zip code, otherwise known as Ballantyne. The Ballantyne area is nationally known for not only a place to work with more than 5 million square feet of Class A office space, but also a desirable place to live with housing opportunities ranging from $145,000 to over $4 million. The 28277 zip code has top-rated schools, an abundance of restaurant and shopping options, private and public golf courses, and the area’s only Four-Star recognized hotel, spa and restaurant. The office sector remains hot with continued employment growth attributing to falling vacancy rates, new construction and rising rents. Charlotte has an overall vacancy rate of 10.4 percent and the overall weighted average asking rent for Class A space in Charlotte is $25.98 per square foot. There is currently over 2.3 million square feet of office product under construction in Charlotte and close to 7 million square feet planned or proposed. The …

September 4, 2017

Market Reports Multifamily North Carolina Southeast Southeast Market Reports

Regional Job Growth Reinvigorates Charlotte’s Multifamily Market

by John Nelson August 28, 2017

The Charlotte economy has created jobs at a faster rate than the national average throughout this cycle. With 34,900 new jobs over the last 12 months and more than 110,000 over the last three years, the regional job market has created a new demand for the luxury multifamily inventory throughout infill and select suburban submarkets. Four of the MSA’s top five employers — Wells Fargo, Bank of America, Carolinas HealthCare System and Novant Health — each have a combined 1,000-plus job openings in Charlotte, while AXA, Red Ventures, Dimensional Fund Advisors and CompuCom have begun major expansions across the metro area. This has created a need for additional multifamily inventory, which has expanded by 7,700 units over the last 12 months, while absorption was just shy of 7,000. The modest downtick in occupancy was more than offset by a 4 percent same-store rent growth (30 basis points higher than the five-year trailing average of 3.7 percent). Two marquee high-rise projects are nearing completion in the central business district’s Third Ward: Greystar’s Ascent and Childress Klein’s Museum Tower. The early returns show unprecedented per square foot rents for the metro area. In most infill locations, developers are offering one month free …

August 28, 2017

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Charlotte Industrial Market’s Absorption, Rent Growth Spur Optimism

by John Nelson August 21, 2017

The industrial market in Charlotte is healthy, with trends pointing to another solid year of net absorption and rent growth. The market continues to attract institutional capital, as cap rates hover slightly below 6 percent for Class A product in the metro’s primary submarkets. Charlotte’s job growth continues to drive population migration into the market. More than 37,000 new jobs have been added in the past 12 months, dropping the unemployment rate from 5.2 percent to 4.9 percent. North Carolina has a young, educated workforce and boasts 53 universities and colleges. The state is nationally recognized for its labor climate. Major employers span the gamut of the business world, from financial and energy stalwarts such as Bank of America and Wells Fargo, Duke Energy and Siemen’s Energy Inc., to more industrial players such as Daimler Trucks North America, Lowe’s, FedEx and Snyder’s-Lance Inc. Charlotte is a logistically sound market, with the city’s airport ranking as the eighth busiest in the U.S., according to the Federal Aviation Administration. A relatively new intermodal rail facility and continued investment in road infrastructure projects are also helping to foster an optimistic environment. The HB2 legislation, which proved a major obstacle to attracting new companies …

August 21, 2017

Market Reports North Carolina Retail Southeast Southeast Market Reports

Grocery, Infill Mixed-Use Projects Make Up Bulk of New Retail Supply in Triangle

by John Nelson March 20, 2017

The Raleigh and overall Triangle retail markets ended 2016 in a very healthy position. The Triangle vacancy rate is currently at 6.09 percent, nearing 10-year lows dating back pre-recession and includes retail absorption nearing 900,000 square feet over the past four quarters. The region’s diverse economic engine driven by technology, university systems, heathcare and Raleigh as a state capital, combined with a relatively low cost of living and temperate climate, continue to push population growth and related retail expansion. With fierce grocery competition, a natural evolution of inward growth and urbanization and several large mixed-use development projects, the Triangle retail market is thriving. However, e-commerce, rightsizing and store closures continue to challenge the broader U.S. retail market and the Triangle has not been spared. Grocery Competition With several homegrown grocery brands, North Carolina and the Triangle region have historically been one of the most competitive areas for grocers in the United States. Regional players like Harris Teeter (now owned by Kroger), Lowes Foods, Food Lion, The Fresh Market, Ingles and Earth Fare (all based in North Carolina) have competed for years with out-of-state supermarkets Kroger, Whole Foods Market, Trader Joe’s and even Walmart. This year brought a new level of …

March 20, 2017

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Rents, Occupancy Rise for Triangle’s Industrial Market as Supply Lags Demand

by John Nelson March 13, 2017

The Raleigh-Durham business climate has been on the climb for several years now and it doesn’t seem to be slowing anytime soon. The market continues to outpace most of the mid-tier markets across the country by all metrics of economic stability, quality of life, business environment, education, arts and quality of workforce. As a result, construction of office and retail projects has been strong, yet industrial construction and thus available space is lacking. Average asking rental rates have continued to rise in response to increasing demand and low supply. The remaining 550,000 square feet of industrial space that is expected to deliver has significant prelease commitments, creating competition for tenants looking for space. Raleigh-Durham’s warehouse market sits at a current vacancy of 3.8 percent with average asking rental rates at $5.01 per square foot triple net. The biggest challenge is for new and expanding tenants needing 35,000 to 200,000 square feet of space. Demand has been outpacing supply for several years in the market and industrial developers who recognized this trend were unable to fill the need because of the lack of available financing during the downturn. It has just been in the past 24 months that significant construction has …

March 13, 2017

Market Reports North Carolina Office Southeast Southeast Market Reports

Despite Active Construction in Raleigh-Durham, Office Absorption Outpaces Supply

by John Nelson March 6, 2017

At the close of 2016, over 1.9 million square feet of office space was absorbed in the Raleigh-Durham market and overall vacancy increased by one percentage point from 10 percent to 11 percent. Activity was strong and can partially be attributed to a very active suburban Raleigh submarket that absorbed over 1.1 million square feet. Vacancy in this submarket ended the year at 10 percent, down from a high of 17 percent in 2010. It was also an active construction year for Raleigh-Durham, with developers completing over 1.3 million square feet of new office space. There is currently another 2.7 million square feet of new projects underway, and an additional 2 million square feet of proposed projects. Downtown Durham, an approximately 4.5 million-square-foot market, has multiple office projects underway, including: The Chesterfield: Renovation on the 286,000-square-foot building should be completed soon with the first tenants moving in in July 2017. The project, being developed by Wexford Science + Technology, is approximately 75 percent leased. One City Center: The mixed-use, 432,000-square-foot project has 130,000 rentable square feet of office space and should open in late 2017. The office component is 50 percent preleased. Activity in downtown Durham has been driven by …

March 6, 2017

Market Reports North Carolina Office Southeast Southeast Market Reports

Limited Office Construction in Triangle Area Bolsters Market Fundamentals

by John Nelson October 3, 2016

The Raleigh-Durham office market has not only recovered from the Great Recession, it is solidly in expansion mode, and tenants are facing market conditions not witnessed in 15 years. The current cycle has been marked by a prolonged period of limited development activity. While job growth in the local market has been rebounding for more than five years, the construction pipeline has only recently filled in a meaningful way, and a large portion of the development activity in 2014 and early 2015 was driven by build-to-suits. With Class A vacancy now at a 15-year low, speculative development is heating up again. While projects totaling 1.4 million square feet were underway in the first quarter, most of this product will not be delivered until 2017 or later, and approximately half of the space has already been spoken for. In the near term, the market heavily favors landlords. The Triangle office market began 2016 with strong activity as tenants absorbed 453,997 square feet, driving vacancy down by 40 basis points to 12.1 percent. This figure is down by 180 basis points on a year-over-year basis and has fallen from a cyclical high of 18.7 percent. Class A vacancy ended the first quarter …

October 3, 2016

Market Reports North Carolina Retail Southeast Market Reports

Infill, Transit-Oriented Developments are Driving Charlotte’s Retail Market

by John Nelson September 26, 2016

As Charlotte’s employment surpasses the pre-recession peak of 2007 and the metro swells to almost 2.4 million residents — growing three times faster than the national average — Charlotte is on every retailer’s radar and poised for continued retail growth. Retailers seeking customers with disposable income benefit from Charlotte’s strong affordability index, relative to similarly sized cities, and have enjoyed a positive trend in household incomes, which increased 8 percent between 2010 and 2015. This income growth is bolstered by the 35- to 54-year-old “big-spender” segment, which makes up approximately 30 percent of Charlotte’s population, and is expected to continue to grow in spite of shrinking nationally. Retail developers and investors are also big fans of these fundamentals, which have yielded positive retail absorption over the past 12 months, impressive rent growth of 4.3 percent year-over-year, and vacancy of 5.5 percent, well below the historical average. Similar periods of growth in Charlotte’s history have delivered traditional grocery-anchored neighborhood centers, garden-style apartments and mid-rise office buildings, primarily surface-parked to accommodate the vehicle-centric nature of Charlotte. That trend is changing as Charlotte adapts to the cultural shift and increased density that now prioritizes proximity, access and convenience over McMansions and white-picket-fenced suburbia. …

September 26, 2016

Industrial Market Reports North Carolina Southeast Southeast Market Reports

New Industrial Construction is Easing the Supply Squeeze in Charlotte

by John Nelson September 19, 2016

In recent years, the fundamentals in Charlotte’s industrial real estate market have continued to improve. Overall, the market can be characterized by an increase in tenant activity and the emergence of new submarkets more active on the development front than in the past. Tenant growth can be attributed to organic growth from users expanding, velocity of new deals, as well as emerging submarkets within the market. Charlotte’s central location near the transportation arteries of I-77 and I-85 continues to make the city’s industrial space very attractive to logistics and distribution companies. Charlotte is growing by approximately 20,000 residents per year, according to U.S. Census Bureau data. The population growth, coupled with the trend of brick-and-mortar retailers transitioning portions of their business to e-commerce, makes for a positive outlook on Charlotte’s industrial fundamentals. The strongest tenant activity is in the 25,000- to 75,000-square-foot range, with tenants looking to upgrade the quality and functionality of their space. Beginning in fourth-quarter 2015 and continuing into first-quarter 2016, there was noticeable activity among tenants relocating from owner-occupied facilities to leased spaces. This trend has been driven by a limited supply of options for purchase, historically high construction prices and a steady economy. Furthermore, the …

September 19, 2016

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