Net Absorption Breaks Even as the Charlotte Office Market Begins to Feel the Affects of COVID-19 throughout Q2 2020
- As expected, the Charlotte office market saw lease transaction volume slow significantly during Q2 2020. Many office developments that had not begun construction prior to the COVID-19 slowdown have been put on hold as Landlords struggle to lease existing buildings. For the time being, Landlords have stuck to their current asking rents.
- A significant amount of sublease space is currently available with almost half a million square feet coming on market since Q1 2020. Approximately, 450,000 SF of this has come on the market since COVID-19 lockdowns began and we expect this trend to continue through Q3 2020.
- Construction remained largely unchanged during the second quarter. While there were no new office developments announced, ongoing construction of existing projects continued. Once some of the larger developments deliver, we expect under construction square footage to drop significantly.
- Charlotte’s financial sector continues to show positive growth despite the effects of COVID-19 being felt in other sectors within the MSA. One company of note that is currently expanding is, Better.com. The online mortgage lender plans to expand their local workforce up to 1,000 over the next few years.
- One significant bright spot during Q2 was Centene Corporation’s announcement to open a regional headquarters in the University submarket of Charlotte. The tech-healthcare giant plans to build a 1 Million Square Foot campus and hire up to 6,000 employees. The campus will be located on 80 Acres within University Research Park.
|Q2 2020 Charlotte Industrial Market||Overall||Class A|
|Absorption||(419,216) SF||(381,306) SF|
|New Construction||188,432 SF||42,250 SF|
|Under Construction||5,807,788 SF||5,420,529 SF|
|Downtown||$35.99 PSF||$39.08 PSF|
|Suburban||$29.12 PSF||$32.78 PSF|
A Note Regarding COVID-19 - As we publish this report, the U.S. and the world at large are facing a tremendous challenge, the scale of which is unprecedented in recent history. The spread of the novel coronavirus (COVID-19) is significantly altering day-today life, impacting society, the economy and, by extension, commercial real estate. The extent, length and severity of this pandemic is unknown and continues to evolve at a rapid pace. The scale of the impact and its timing varies between locations. To better understand trends and emerging adjustments, please subscribe to Colliers’ COVID-19 Knowledge Leader page for resources and recent updates.