Charlotte’s Office Sector Still Feeling the Effects of the Pandemic as Vacancy Steadily Climbs
- With no end in sight for COVID-19, lease transactions in the Charlotte office market remained slow during Q3 2020, as many expected. Landlords have held steady to their current asking rents, but we have seen a strong rise in concessions offered in unique ways. For example, many Landlords are willing to offer significant free rent and above standard tenant improvements to drive occupancy and retain existing tenants.
- Like the previous quarter, sublease space was the main theme for Q3 2020. For example, CompuCom put their somewhat recently built 150,000 SF Headquarters in Fort Mill, SC on the market for sublease after less than 3 years of occupancy. The amount of sublease space on the market in Charlotte has now surpassed 1 Million square feet since March 2020 as Tenants continue to look to cut costs.
- Most new office groundbreakings have come to a halt as most Landlords are shifting their efforts to leasing current projects that are underway or backfilling the subleases coming online. As we head into the end of year, we expect new project announcements and groundbreakings to decrease greatly until we see an increase in leasing activity on current developments as construction nears completion.
- Net absorption has dropped significantly in both urban and suburban submarkets as many Tenants elect to either move out or put their spaces up for sublease. We expect absorption to continue to decrease as companies continue to work remotely through the end of 2020 and beyond.
|Q3 2020 Charlotte Industrial Market||Overall||Class A|
|Absorption||(426,283) SF||(310,808) SF|
|New Construction||155,249 SF||133,190 SF|
|Under Construction||6,408,640 SF||5,757,912 SF|
|Downtown||$36.23 PSF||$39.20 PSF|
|Suburban||$29.57 PSF||$32.93 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.