Industrial Market Report: Charlotte
A strong market and speculative building....
Commercial real estate conditions for the greater Charlotte area remain robust. Rental rates and sales prices are still at historic highs for industrial properties. Likewise, vacancy rates are well below their respective averages. Developers have taken advantage of the market and are constructing speculative buildings. Approximately 3 million square feet of new industrial product will come on the market in the first half of 2018.
Without a doubt, these speculative buildings will have an impact on vacancy, but mostly for larger tenants looking for 100,000 SF or more. The added supply is expected to keep up with demand and not exceed it. One reason for this is that many of our clients this past quarter are Charlotte transplants. We have found that companies continue to move here for its business-friendly environment, great weather, and proximity to their customers. This population increase continues to drive our market. With industrial land in Charlotte selling near $175,000 an acre, more developers are venturing up I-77 to Huntersville and Mooreseville. Of note, Saddle Creek Corp. leased up 301,000 SF of spec space in Troutman, NC which is due May 1st.
Another big industrial announcement is the Charlotte Douglas International Airport rezoning of 2 residential parcels. This land was acquired over many years to buffer noise to the surrounding area, but is no longer needed. The 168 acres on the airport’s south side will have I-1 zoning (light industrial) and the 100 acres to the North will be zoned I-2 (heavy industrial). Zoning should be completed by the end of this summer and the airport has already contacted developers for bidding. Also included in the announcement was the airport’s 4th parallel runway to be added in the next 4-5 years. Their goal is to increase the volume and the size of airplanes that the airport can handle. Once completed, more industrial land suited for flex space will be unlocked.