Charlotte, North Carolina’s commercial real estate market is constantly evolving and changing, reflecting the economic and social trends of each city and region. Every year, there are new and exciting developments, transactions, and opportunities in the commercial real estate sector, as well as challenges and risks.
How We Identified the Top Commercial Property Sales in Charlotte
We used a multitude of data sources, including public records, news articles, and industry reports, to identify some of the top commercial property sales in Charlotte, as well as the office vacancy rates and trends in the market. Our team analyzed this data to provide a comprehensive overview of the commercial real estate landscape in Charlotte. Whether you are looking to buy, sell, lease, or invest in commercial real estate in Charlotte, this post will provide you with valuable insights and information to help you make informed decisions.
A major factor impacting the commercial real estate market in Charlotte and other cities are rising interest rates and economic uncertainty. Higher interest rates increase the cost of borrowing and financing for commercial real estate transactions, as well as reduce demand and affordability for buyers and investors. Economic uncertainty can also create volatility and risk in the market, as businesses and consumers may postpone or cancel their plans to lease, buy, or sell commercial properties. Commercial real estate stakeholders closely monitor interest rate and economic trends and adjust their strategies accordingly.
Here are a few of the most significant property deals of the year so far Charlotte:
- The sale of The Hub South End, a mixed-use development with 265,000 square feet of office space, 22,000 square feet of retail space, and a 260-room hotel, for $207 million to Asana Partners and Lionstone Investments.
- The sale of The RailYard, a two-building office complex with 334,000 square feet of space in South End, for $200 million to Shorenstein Properties.
- The sale of The Vue, a 51-story condo tower with 409 units and 35,000 square feet of retail space in uptown Charlotte, for $150 million to Northwood Investors.
- The sale of The Ally Center, a 15-story office building with 368,000 square feet of space in uptown Charlotte, for $146 million to Starwood Capital Group.
- The sale of The Metropolitan, a mixed-use development with 170,000 square feet of office space, 111,000 square feet of retail space, and 101 condos, for $140 million to Asana Partners and Lionstone Investments.
The Latest on Charlotte Office Vacancy Rates
One of the indicators that reflects the impact of interest rates and economic uncertainty on the commercial real estate market is the office vacancy rate. The office vacancy rate measures the percentage of office space that is unoccupied or available for lease or sale in a given market or submarket. A high office vacancy rate can signal a weak demand or oversupply of office space, while a low office vacancy rate can signal a strong demand or undersupply of office space.
Another factor that is currently impacting office vacancy rates and the commercial real estate market across the nation is the continuing impact of work-from-home. The COVID-19 pandemic has accelerated the adoption of remote and hybrid work models, which allow employees to work from home or other locations instead of commuting to a central office. This has reduced the need and demand for office space, as well as changed the preferences and expectations of tenants and landlords. Some of the trends that have emerged from the work-from-home phenomenon are the increased demand for flexible workspaces, suburban offices, and amenities that support health and wellness.
Using data from various sources such as Cushman Wakefield and Commercial Edge here are the office vacancy rates year over for Charlotte starting in 2021:
- In 2021, the office vacancy rate in Charlotte was 12.44%, slightly higher than the national average of 12.0%, as the city’s office market faced challenges from the pandemic and its aftermath. The vacancy rate increased by 230 basis points year over year, reflecting the negative net absorption of 1.4 million square feet.
- In 2022, the office vacancy rate in Charlotte rose to 19.5% by the end of March, significantly higher than the national average of 16.7%, as the recovery of the office market was hampered by space givebacks and a weak capital markets environment. The vacancy rate increased by 710 basis points quarter over quarter, reflecting the negative net absorption of 3.3 million square feet.
- In 2023, the office vacancy rate in Charlotte is projected to increase further to 20.0% by the end of June, reaching a record high for the market, as the demand and occupancy of office space remain low despite the vaccination rollout and the reopening of the economy. The vacancy rate is expected to increase by 50 basis points quarter over quarter, reflecting the negative net absorption of 500,000 square feet.
Looking Ahead: Charlotte Commercial Real Estate Outlook
The commercial real estate market in Charlotte has experienced some notable property sales and transactions in 2023, as well as some challenges and opportunities in terms of office vacancy rates and trends. Looking ahead, the outlook for 2023 and beyond is cautiously optimistic as the market faces some uncertainties and risks, such as the potential oversupply of office space, the changing demand for flexible workspaces, and the competition from other cities and regions.