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2021 Q4 Office Charlotte Report

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Omicron variant puts a halt to return to office plans for large occupiers

Key Takeaways

  • With the recent outbreak of the omicron variant, large Charlotte office occupiers such as Wells Fargo, Bank of America and others have postponed their return to office indefinitely.
  • Southend remains one of the hottest submarkets in the country as office developers continue to announce new projects and institutional investors continue to purchase existing offices
  • Office absorption finishes the year on a positive note with Lowes and USAA taking occupancy in their Southend locations
  • Suburban office leasing continues to struggle as more and more company’s embrace the WFH model

Not only is Southend the hottest office submarket in Charlotte, but it is also one of the hottest office submarkets in the country as institutional
investors and developers continue to invest in the area. To date, there is over 3.5 million sf of proposed office space in Southend that will break ground in the next few years. However, the estimated 2023 deliveries dropped off in large part due to Covid causing many developers to hit pause on their plans. Expect construction numbers to bounce back in 2024.

The most notable development is from Riverside Investment & Development, a developer based out of Chicago, which recently announced plans to build a mixed-use development in Southend, at the corner of E Morehead and S Tryon St, with over 800,000 sf of Class A office space. Another office development to keep an eye out for is Stiles’ East West Station, a 393,000 sf office tower located right at the light rail stop where East Blvd turns into West Blvd. In terms of capital markets activity, Apollo Global Management purchased the Lowes Design Tower for a record breaking $840 psf, shattering the previous record of $612 psf, when Cousins Properties purchased the Railyard.

In addition, Spectrum expanded its Southend office portfolio with the purchase of Morehead Square for $492 psf. Although the return to office has been paused for many occupiers, the Charlotte office market rebounded and ended the year with positive absorption. This is in large part due to tenants such
as Lowes, USAA, Honeywell, Dentsply Sirona and Ally financial moving into their respective locations. However, there is much work left to be done to reduce the amount of sublease space on the market as well as the large blocks of vacant space in CBD.


2021 Q4 Office Charlotte Report

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