Charlotte Industrial Market 10.7% Vacant and Heading Higher

The overall vacancy mark in fourth quarter 2001 was at 10.7%, up from 9.4% in the third quarter. Flex product (office and warehouse combination) is suffering the most at a 22.9% vacancy level. Next comes warehouse/distribution, 7.5% vacant, followed by manufacturing, 4.8%.

Sluggish local and national economic conditions contributed largely to the vacancies, the report indicates. Charlotte's manufacturing sector lost 5,900 jobs from November 2000 to November 2001. The government employment sector grew by 3.8%; wholesale and retail by 3.2%. Unemployment rose from 4.7% in August 2001 to 5.3% in November.

Those numbers affected net absorption which reached only 690,313 sf in 2001, an 80% decrease from the 2000 mark of 3.4 million sf. "Although down for the year, annual absorption exceeded activity for many other U.S. markets which experienced annual negative totals," Ryan D. Clutter, a CBRE investment properties associate who prepared the report, tells GlobeSt.com. Fourth-quarter absorption totaled 179,035 sf.

New construction, particularly the construction of speculative buildings decreased by 20% over 2001. "The development community responded responsibly to the market slowdown" and pulled back on spec projects, Clutter says. "However, vacancy rates should remain higher than normal as the market recovers from the recent slowdown."

A total 1.61 million sf of new industrial space was completed in 2001. Two new buildings, Crossings I and II, surfaced in the fourth quarter, both vacant. Industrial buildings still under construction totaled 774,600 sf and are due to be completed by third quarter 2002.

About 61% of the new construction last year was build-to-suit and properties pre-leased prior to construction.

Average asking lease rates for newer class A warehouse properties are $3.35 per sf to $3.80 per sf. Rates for existing space are $2.75 per sf to $3.25 per sf. Average citywide flex rates asre $9.75 per sf for office and $4.95 per sf for warehouse.