The 43-million-square foot Charlotte area multi-tenant, general purpose office market is still confronted with double-digit vacancy; the second quarter rate was 16.3%. That is down 40 basis points for the quarter but up 10 basis point year-over-year. July data from Reis indicate no change. The Class A rate is 14.1%, down 90 basis points from one quarter earlier, and the Class B/C rate is a remarkable 19.2%, up 30 basis points over the quarter and up 10 year-over-year. Double-digit vacancy rates have prevailed here since 2001.
Reis’ reports that second quarter net absorption has been positive at 169,000 square feet, strongly weighted toward Class A space. According to Reis’ latest construction data, there are 1 million square feet of multi-tenant office space under construction for completion in later 2012, with another 90,000 on tap for 2013. The only office completion thus far in 2012 was the 30,060-square-foot, owner-occupied Groninger Headquarters in the I-77 submarket. Looking forward, Reis does not expect vacancy to fall below the 15.0% mark until 2014, with construction continuing to post moderate annual totals.
For the second quarter of 2012, Reis reports average asking and effective rents of $21.42 psf and $17.60 psf, both up 0.2% for the quarter. These rates are up 0.4% and 0.6% over 12 months. Asking rents and effective rents fell by one cent in July. Reis reports Class A and B/C asking rents of $24.35 psf and $17.40 psf, respectively. Reis does not forecast any substantial large gains for another two or three years.
Cushman & Wakefield reports an overall vacancy rate of 14.4% in the second quarter, down from 15.4% 12 months earlier. This source reports a direct asking rent of $22.91 psf in the second quarter, up from $21.87 psf one year earlier.