Q2 2012 Charlotte, North Carolina Industrial Market Trends

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Q2 2012 Charlotte, North Carolina Industrial Market Trends


Vacancy in Charlotte’s 104-million-square-foot warehouse/ distribution market fell slightly in the second quarter of 2012, to 12.1%. The rate is down 20 basis points for the quarter and unchanged year-over-year. July data show a decrease of 20 basis points. The national rate for this property type is 12.7% in the second quarter. Asking and effective rents fell both lost ground in 2011. Reis reports respective second quarter gains of 0.5% and 0.9% for these rental categories. Asking and effective rents finished the quarter at $4.01 psf and $3.54 psf, unchanged year-over-year. July data indicate a one penny increase in the effective average. This is not an active market for rents. In fact, solid rental gains, in which both rental categories increase by more than 2.0%, are not forecast here until 2013.


The Flex/R&D market is seeing some improvement in 2012, if such a term can be used for a market with vacancy over 20.0%. Second quarter vacancy in this sector is 20.5%, down 10 basis points over the quarter but still up 30 year-over-year. On the plus side, net absorption was positive 15,000 square feet for the quarter, after positive 45,000 the quarter prior. Average asking and effective rents for second quarter are $7.22 psf and $6.16 psf, up only 0.1% and 0.2% but up 0.4% and 0.3% over 12 months, a good performance for this market. Asking and effective rents are forecast to increase by just over 2.0% in 2012, according to Reis.


Cushman & Wakefield reports an overall industrial vacancy rate of 16.9% in the second quarter, up 50 basis points year-over-year. Cassidy Turley reports a total warehouse vacancy rate of 7.9% for Charlotte and a total flex space vacancy rate of 16.5%. This source reports an average asking rent of $3.93 psf (triple net) for warehouse space and $9.02 psf for flex space. According to Jones Lang LaSalle, “while large block demand is driving rental rates up, tenants shopping for smaller deals are still able to take advantage of generous concessions and favorable rental rates.” This source reports an average total asking rent of $3.37 psf for warehouse/distribution and $2.95 psf for manufacturing.