Demand for Space Remains Strong

Office vacancies in Charlotte dropped to 8.1% in first quarter 2000 from 9.1% at yearend 1999, according to CB Richard Ellis Inc. Vacancies in the central business district stood at 4.3%.

Overall net absorption totaled 651,014 sf, with SouthPark absorbing the most at 218,597 sf. The average rental rate increased from $20.06 psf in first quarter 1999 to $20.86 psf in first quarter 2000.

Development activity was approximately 2.9 million sf at the end of first quarter with 49% of the space pre-leased. Construction was down in the overall industrial market from 1.3 million sf in fourth quarter 1999 to approximately 690,625 sf in first quarter 2000.

The multifamily market has also been active. Nearly 5,000 units are projected to be delivered this year, but absorption appears to be keeping pace. The Southeast and the Northeast, two high-rent suburban markets are experiencing a lot of the growth, as rental rates continue to rise. The average monthly rent has increased from $658 to $688 during the past 12 months.

Demand for retail space also continues to be strong, with areas north and east of the city experiencing the most growth.

Warehouse/distribution and manufacturing space are still in demand, according to a market report by another broker, Childress Klein Properties, although that demand is now somewhat moderate compared to the past 18 to 24 months. The demand for urban space is forcing the industrial to move further outward due to a lack of suppy and the increased cost of available land.

Overall vacancies increased from 6.2% in fourth quarter 1999 to 7% in first quarter 2000. Net absorption was down from 670,000 sf in fourth quarter 1999 to 490,836 sf in first quarter 2000. The average asking lease rate increased from $3.97 psf in fourth quarter 1999 to $4.27 psf in first quarter 2000.