2022 Office Space Report: Charlotte, NC
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The office space market is experiencing a paradigm shift: The once vibrant industry is seeing a demand for exploitation of technology, modernized offices, remote and hybrid working environments, and innovation.
Commercial office spaces in Charlotte are adapting to these changes quickly.
In this Charlotte, NC office space report, we’ll look at the office sector in Charlotte, NC by analyzing market trends, risks, opportunities, and recommendations for investors.
Charlotte, NC Office Space Highlights
Charlotte is a dynamic, changing, and relatively affordable market for CRE.
Some highlights in this Charlotte, NC office space report include:
- Charlotte is an expanding market with 3% YOY growth.
- Midtown commercial office rent in the midtown and uptown markets averages $36.65 a square foot.
- The quarterly rent growth in Charlotte was the 4th fastest in the nation.
There are many opportunities for CRE investors who have an interest in getting involved in office real estate in Charlotte.
The Pacing of Office Space Rents in Charlotte, NC
The current national vacancy rate for office spaces is 15.4%. The vacancy rate in Charlotte is lower than this:
- The average asking rent in Charlotte is $29.23 per square foot.
- The average office rent for Class A space in Charlotte is $31.20 a square foot.
- The office vacancy rate in Charlotte is 12.72%.
Additionally, Charlotte is an affordable, small city on a growth trajectory. Vacancy rates should continue to decline.
Long-Term Changes in Rent
The growth of Charlotte’s downtown area has brought with it the need for more office space.
Rents in this part of the city have been on the rise since the early 2010s. The major reason behind this is that the demand for office space has increased as companies look to set up shop in the city.
This means that investors looking to buy commercial real estate in Charlotte will have a greater chance of success if they choose to invest in this area earlier and benefit from their long-term investments over time.
Short-Term Changes in Rent
A wide variety of factors affect the cost of office rentals in Charlotte, including supply and demand, construction costs, occupancy levels, and the overall health of the local economy.
In general, however, you can expect to pay more for high-quality space in a central location with easy access to public transportation and parking.
Over the past few years, Charlotte, NC office space has experienced sustained growth.
As a result, office rents have increased significantly in the area. Furthermore, recent job growth and a growing tech sector have contributed to this trend.
Office Space Sales in Charlotte, NC
Charlotte’s office space market is seeing a stronger recovery than many other places.
As the market improves, sales and acquisitions are becoming more frequent.
Here are several notable office space sales and acquisitions in Charlotte, NC.
Notable Acquisitions So Far
In June 2022, Institutional Investor (part of CBRE) purchased The Line, an office building in the South End for $206 million.
It was bought from a joint venture between Portman Holdings and National Real Estate Advisors.
The building was bought in cash showing confidence in the move. CBRE has several other real estate holdings nearby.
In mid 2022, a real estate development firm called Crestlight Capital purchased the SouthPark Towers, which includes two office buildings, for $200 million.
The facility cost $155 million to fully develop, and was created as a joint venture with Portman Holdings.
Montecito Medical Expands Its National Footprint
In early 2022, Montecito Medical purchased a medical office building leased by Northeast Digestive Health Center in Concord for an undisclosed amount.
Montecito Medical has a large footprint in medical offices across the country. This purchase added 14,720 square feet to its portfolio.
Notable Sales So Far
In early 2022, Taconic Capital Advisors sold Three Resource Square, one of its major commercial office spaces, for $21 million.
The deal was brokered by CBRE, including debt financing of an undisclosed amount.
The building was at 85% capacity at sale. At least one of the companies leasing space is a dependable, long-term tenant.
In late 2021, Ferncroft Capital sold Morehead Square for $65.5 million to a joint venture between Invesco Real Estate and Spectrum Cos.
The deal was brokered by CBRE. At the time of sale, the building was 71% occupied. In recent years, it saw renovation projects on three of its six floors.
Market Forecast for the Rest of 2022
The future for the office market in Charlotte looks promising. This can be attributed to the positive outlook for the city’s economy, which will continue to drive demand.
Charlotte’s strategic focus on innovation and education, coupled with its position as a hub for business and financial industries, will also contribute to this growth.
General Investor Activity: Where is the most money flowing?
Investors have been very active in Charlotte, and this trend is expected to continue.
In fact, the market for new buildings has experienced steady growth. The key reasons for this surge in investor interest include Charlotte’s solid economic performance.
Takeaways for Office Space Investors
If you’re interested in investing in office space in Charlotte, there are a few things you should consider before making a final decision.
In the short term, office rents will continue to be positive, driven by low vacancy rates and strong demand. Longer term, the overall outlook for the office market is positive.
The current rate of growth will likely drive more investors to focus on this sector in Charlotte. Although space needs are increasing and tenant demand is high, there is still a lack of quality office space available.
The Uptown and Midtown districts are enjoying above-average rental rates and potential for growth.
A variety of factors will contribute to the demand for office space in Charlotte over the next few years.
The office market in Charlotte is one of the most active in the country. With residential and hotel investments booming, Charlotte has become increasingly known as a place where real estate investors can thrive.
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