Q2 2022 Commercial Real Estate Report: Charlotte, NC
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Commercial real estate in Charlotte, NC saw steady, positive performance in the second quarter of 2022.
Charlotte’s office vacancy rate held steady at 19%, while rents increased by 2%.
The average direct asking rents of office space rose to about $32, with Class A office space elevated to about $40 per square foot.
The industrial sector in Charlotte is also boding well, with vacancy rates down to 2.7% amid strong demand and greater development activity.
Charlotte’s multifamily market saw a rapid 5% increase in rent and a steady vacancy rate.
General Overview & Area Demographics
Charlotte is the most populous city in North Carolina. It is the seat of Mecklenburg County and the second-largest city in the southeastern United States, just behind Jacksonville, Florida.
Charlotte’s 2022 estimated population is about 900,000, making it the 17th-most populous city in the United States. The Charlotte metropolitan area ranks 22nd-largest in the US and had a 2022 population of about 2.2 million.
The Charlotte–Concord–Gastonia Metropolitan Statistical Area (officially designated by the US Office of Management and Budget as part of their Core Based Statistical Areas series) is defined as seven counties in central North Carolina and has a 2022 U.S. Census estimated population of about 2.7 million.
General Commercial Real Estate Performance in Charlotte, NC
The second quarter of 2022 was a steady one for commercial real estate in Charlotte, NC.
Rents increased across the board:
- Average office space rents in Charlotte increased to about $32.00.
- Asking rents for industrial space in Charlotte increased to about $6.25 per square foot, a 17% year-over-year increase.
- Asking rents for multifamily space in Charlotte grew to about $1,600 a month, a 17% year-over-year increase.
These growth trends are expected to continue throughout the rest of the year, as demand for commercial space remains high.
Nonetheless, short-term economic uncertainty amid rising inflation and interest rates may impact the market in Q3.
Charlotte’s Office Market Activity in Q2 2022
In the second quarter of 2022, Charlotte’s office market remained strong with positive absorption and declining vacancy.
However, average rents continued to rise, reaching about $32.59 per square foot.
The cost per square foot also increased, reaching an average of $247.
Despite these increases, the market is still forecasted to be strong for the rest of the year with more tech businesses moving into the area and employees staying in the office, either full-time or within a hybrid setting.
Notable Office Market Deals in Charlotte in Q2 2022
Below are five office leasing deals in Charlotte that totaled about 36,780 square feet in the second quarter of 2022. The transactions included:
- Four Points by Sheraton leased 11,536 square feet at SouthPark Towers.
- Berkshire Hathaway HS MergerCo. leased 10,025 square feet at Morehead Square.
- Choice Residential Group leased 5,825 square feet at Plaza Midwood.
- Skanska leased 4,714 square feet at Parkway Plaza.
- Newport Management Group leased 4,570 square feet also at Parkway Plaza.
These are some of the most notable office space deals that took place in Charlotte in Q2 2022.
Charlotte’s Industrial/Warehouse Market Trends
The Industrial/Warehouse market in Charlotte has been on an upward trend for the past few years.
This is due to the influx of new businesses and the expansion of existing businesses in the area.
The average asking rent per square foot for Industrial/Warehouse space in Charlotte is about $6.25 per square foot, a 17% increase from this time last year.
The vacancy rate for Industrial/Warehouse space in Charlotte dropped to about 2.7% due to high tenant demand and investors continuing to deploy capital in the area. This is a notable drop from Charlotte’s Q2 2021’s industrial vacancy rate of about 8%.
Notable Industrial Real Estate Lease Deals in Charlotte in Q2 2022
Macy’s, Home Depot, and Prime Beverage Group all leased new industrial property in Charlotte in Q2 2022.
- Macy’s leased about 1.4 million square feet of industrial space in Rowan County for an undisclosed rate.
- Home Depot leased about 420,000 square feet of industrial space in the Stateline submarket for $9.95 per square foot.
- Prime Beverage Group leased about 331,000 square feet of industrial space in the North Charlotte submarket for $5.32 per square foot.
These are among other notable lease deals that occurred in Charlotte in Q2 2022.
Charlotte Industrial Real Estate Development Status in 2022
Capital markets appear bullish again, aiding industrial real estate development in Charlotte in Q2 and Q3 2022: about 12 MSF of new industrial real estate is underway.
Charlotte’s Multifamily Market Activity in Q2 2022
In the second quarter of 2022, Charlotte’s multifamily market had an average vacancy rate of 4.8%. The average effective rent was about $1,600, which is about a rapid 5% increase from the previous quarter.
There are about 20,000 new multifamily units currently under construction in Charlotte, expected to impact vacancy rates once delivered.
Multifamily sales grew by about 50% compared to Q1 2022, with $300k per unit holding as the average sale price.
Multifamily forecasts for Charlotte’s market remain favorable for the rest of 2022 even as confidence in the nation’s economy wavers.
Takeaways for Charlotte Commercial Real Estate Investors
Charlotte’s commercial real estate performance in Q2 2022 was steady and positive:
- The market forecast for the rest of 2022 is positive, with expected rent growth across the board.
- Charlotte’s commercial real estate market is expected to continue to outperform the national average.
- Curious investors should also examine some of Charlotte’s prime submarkets, such as the University area and the South End submarket.
- More Single-family, build-to-rent development projects are taking place in Charlotte’s outlying suburbs.
Do your research, stay diligent, and happy investing.
Methodology
All figures presented in this article are based on MyEListing.com’s commercial real estate listing data in corroboration with other freely available data and information covering the commercial real estate industry.
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