Corporate Expansions and Relocations Continue in Charlotte
- Southend and and Charlotte's CBD continue to be the focal point of major corporate expansions and relocations. Most recently, Charlotte beat out Dallas to land Lowe's Co. Inc. "Global Technology Center", which will bring up to 2,000 jobs to Southend.
- Record levels of leasing activity has led Charlotte to being one of the nations leaders in office absorption. Over the past year, Charlotte trailed just New York and Seattle while posting 4.4 Million square feet of net absorption. New York and Seattle each posted right around 6.0 Million square feet.
- Overall vacancy rates dipped just below 9% to end the Q2 2019 at 8.9%, while Class A vacancy rates ended at 10.5%. That is a 0.3% decrease and 0.5% increase respectively over the previous quarter.
- Some of the most notable leases were Lowe's taking 357,000 SF at a tower being developed by Childress Klein and Ram Realty; United Rentals moving into 93,000 SF at University Highlands and Wray Ward inking a deal for 38,000 SF of adaptive reuse product in the FreeMoreWest neighborhood of Charlotte.
Q2 2019 Office Market Summary
The Southend Skyline continues to grow as Mooresville, NC based retailer Lowe’s Co. Inc. will anchor a new, 23 story building at the corner of Camden Road. and Worthington Avenue. Lowes could get upwards of $70 million in taxpayer incentives in exchange for significant job creation. This announcement, along with the Honeywell, Lending Tree and Truist headquarter relocations, prove how important well positioned office space is to attracting and retaining a highly-educated workforce living close to the urban core. Charlotte’s office market has emerged as a top performer this cycle, posting annual rent growth close to 7% each year since 2015. Although there’s been an increase in deliveries, office vacancies have compressed throughout the cycle due to strong absorption and pre-leasing trends.
Going into Q3 2019, we can expect vacancy rates to decline and net absorptions to increase. Over 3.2 Million SF of office space is under construction and we expect that to stay relatively flat in Q3 2019, as there will be trade-offs with new deliveries and projects breaking ground. We anticipate continued higher demand in urban versus suburban submarkets as proximity to the LYNX Blue Line Light Rail and walkable amenities remain key for employee retention.