Cushman & Wakefield | Thalhimer Office Market Report for Charlotte
Posted February 8, 2012
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Lack of job growth in the area has stifled demand and led to an increase in the overall vacancy rate in the market, which is now up to 15.9 percent, according to the fourth quarter Charlotte Office Snapshot from Cushman & Wakefield | Thalhimer.
The report can be read in its entirety by clicking on the Full Screen button at the bottom of the SCRIBD document below.
Pending job cuts in the financial services sector, specifically Bank of America, could result in additional space coming on the market soon.
Recently published unemployment rates report that the current unemployment in the Charlotte MSA is 10.7% as of the end of September 2011, which is down from a high of 11.4% reported in the third quarter of 2010, but still above the national average of 8.6%.
The market remains a tenant-friendly environment with tenants looking for shorter terms with higher than normal leasing concessions to offset upfront costs.
Tenants remain wary of the stability of the economy, which has translated to tough lease negotiations with landlords, many of whom are being pressured by their lender. This theme will be commonplace into 2012.
CONSTRUCTION SUMMARY
Confident that leasing activity will increase, Ballantyne Corporate Park has begun construction on two ten-story office buildings totaling 550,000 square feet (SF) on a speculative basis. It is estimated that both buildings will be delivered to the market ready for tenant improvements during the fourth quarter of 2012.
At the end of 2011 there has been reported approximately 395,000 sf of office space deliveries during the calendar year, which is directly inline with the 398,000 sf that was delivered during 2010.
CBD SUMMARY
Bank of America Plaza reported the largest lease during the fourth quarter of 2011, which was the 140,000 sf leased to SCOR Global Life Americas, formerly Transamerica.
Bank of America Plaza's leasing activity during the fourth quarter lead to a decrease in the vacancy rate for the CBD to 12.6%, which is 0.5 percentage points lower than the reported vacancy rate during the second quarter of 2011.
OUTLOOK
Brokers remain optimistic due to the quality business climate that Charlotte offers. Many remain hopeful that corporate groups that are circling Charlotte will commit to relocating to the Queen City, which will revitalize the local economy and provide job growth and future stability to the area.
Job creation in the area is paramount for leasing activity to increase.
Recent announcements by Chiquita, Cap-Gemini, Time Warner Cable and others will add much needed jobs and a boost to the local economy. The addition to our community of these name brand companies will hopefully attract other businesses to the area during 2012.
From the investment side, the continued lack of access to debt has reduced the number of private investors in the market. However there are several institutional investors, as well as a few cash-heavy private investors, that are circling the market looking for opportunities to place capital. The investment market is expected to strengthen during 2012 with the anticipation of the trading of several projects that are currently on the market such as Coliseum Centre and One Wells Fargo.
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