The KARNES Report Charlotte Industrial | 1st Quarter 2015
Industrial Vacancy Trends
Charlotte Industrial Snapshot
Number of Buildings
Total Inventory (Sq. Ft.)
Total Vacant (Sq. Ft.)
Vacancy Rate
Average Rent
Sq. Ft. Under Construction
Sq. Ft. Proposed
Completions
Net Absorption
Warehouse
316
35,119,879
2,398,132
6.8%
$4.36
620,622
2,130,436
310,960
65,810
Flex
280
10,784,001
1,513,140
14.0%
$9.00
0
383,205
10,000
80,863
T
he Karnes Charlotte industrial inventory comprises multitenant for lease warehouse and flex buildings larger than
15,000 square feet in Mecklenburg County and increased to
over 45.9 million square feet during the first quarter of 2015.
The delivery of new industrial space was reported in the
Southwest submarket with an expansion of two 5,000-squarefoot flex buildings at Granite Commerce Center and 310,960
square feet of vacant warehouse space at Ridge Creek West.
The 57,886-square-foot flex building at 2910 Whitehall Park
Drive in the Southwest submarket that was a built for Source
Technologies in 2000 was added to the Karnes inventory as
Time Warner Cable leased and began consolidating its suburban
offices into the building during the period. Warehouse space
maintains a 77% share of the Karnes Charlotte industrial
inventory with over 35 million square feet, while the inventory
of flex space totaled 10.78 million square feet during the first
quarter of 2015.
22%
17%
12%
7%
2%
1Q14
2Q14
3Q14
4Q14
Warehouse
6.8%
7.1%
6.5%
5.9%
1Q15
6.8%
Flex
17.9%
17.6%
16.1%
14.8%
14.0%
Average Rent Trends
$10
$8
$6
$4
$2
$0
1Q14
2Q14
3Q14
4Q14
1Q15
Warehouse
$4.25
$4.29
$4.33
$4.35
$4.36
Flex
$8.70
$8.78
$8.84
$8.84
$9.00
Warehouse Leasing Performance
Over 3.9 million square feet, or 8.5%, of Charlotte’s industrial
space was vacant during the first quarter of 2015, up 0.5% of
a point from the end of 2014 as net demand totaling 146,673
square feet was outpaced by the 320,960 square feet of new
industrial supply.
Charlotte’s warehouse market reported 65,810 square feet
of positive net demand, which was outpaced by the vacant
delivery of Ridge Creek West (310,960 square feet) during the
first quarter of 2015, resulting in a 0.9% of a point increase in
the warehouse vacancy rate from the end of 2014. At 6.8%,
Charlotte’s first quarter of 2015 warehouse vacancy rate was
nearly in line with the rate reported at the end of 2013 when
the warehouse inventory was 1.1 million square feet smaller.
The Southwest (106,396 square feet) submarket was the
only warehouse market in the region to report positive net
demand during the first quarter of 2015. Shopton Ridge 30-B
reported the largest new tenant occupancy with Houston
Wiring Cable renewing its lease on 42,000 square feet but
downsizing out of 32,000 square feet, which was occupied by an
undisclosed tenant during the period. Commerce Park reported
significant tenant activity with an undisclosed tenant vacating
22,500 square feet, while two undisclosed tenants occupied
17,604-square-foot and 30,000-square-foot units, and East
Coast Metal Distributors downsized from 32,800 square feet
1Q14
2Q14
3Q14
4Q14
1Q15
Net Absorption
363,098
-34,447
298,991
387,171
65,810
Completions
140,000
0
108,800
56,771
310,960
6.8%
7.1%
6.5%
5.9%
6.8%
Vacancy
Flex Leasing Performance
Net Absorption
Completions
Vacancy
1Q14
2Q14
3Q14
4Q14
1Q15
44,565
78,524
168,659
142,394
80,863
0
78,319
5,400
0
10,000
17.9%
17.6%
16.1%
14.8%
14.0%
The KARNES Report Charlotte Industrial 1st Quarter 2015
Data Provided By:
Copyright 2015 Karnes Research Company. Not for reproduction or resale.
www.karnesco.com
toll free 800.879.7172
1
The KARNES Report Charlotte Industrial | 1st Quarter 2015
into 20,160 square feet. Other significant tenant gains in
the Southwest warehouse submarket were reported at
Lakemont Business Park I (15,000 square feet), Shopton
Ridge 30-D (15,885 square feet), Airport Commerce
Center - Bldg 1 (21,000 square feet), and SilverLake
Distribution Center – V (25,277 square feet). Woodland
Business Park XVI, in the Central submarket, reported the
largest tenant contraction in the region with J.J. Haines
& Co. vacating 36,450 square feet. Interchange Park, also
in the Central warehouse submarket, reported significant
occupancy by General Insulation (24,208 square feet).
Significant blocks of warehouse space are expected to
become available through 2015 from MaGrand Paper
Corporation moving out of Commerce Center I (136,000
square feet), Belk, Inc. vacating NationsWest Distribution
Center – B (259,200 square feet), and Louis Dreyfus
closing at 1001 Bond Street (404,351 square feet).
Positive net demand totaling 80,863 square feet was
reported in Charlotte’s flex space during the first quarter
of 2015, along with delivery of two 5,000-square-foot
building expansions at Granite Commerce Center. At
14.0%, Charlotte’s first quarter of 2015 vacancy rate
for flex space was 0.8% of a point lower than the rate
reported at the end of 2014. At 73,432 square feet, the
Southwest submarket dominated flex absorption during
the period. Source Technologies’ former building at 2910
Whitehall Park Drive (57,866 square feet) was leased
by Time Warner Cable and accounted for the largest
flex moves in the market during the period. ScentAir
Technologies Inc. relocated from South Point Business
Park (36,404 square feet) and into Shopton Ridge 18-D
(57,600 square feet). Oakhill Business Park - Scarlett
Oak reported a net gain of nearly 16,000 square feet
leaving just over 27,000 square feet available in the
77,000-square-foot building.
Three buildings totaling just over 620,622 square feet
of warehouse space were under construction in the
Charlotte region during the first quarter of 2015 and
could complete during the second quarter. West Pointe
Business Park 8 (205,081 square feet) in the Northwest
submarket secured a commitment for nearly 102,000
square feet during the period. The two buildings at
InnerLoop North that will add over 415,000 square
feet of warehouse space when completed have only
secured commitment for 50,000 square feet of the new
space. With no other pre-leasing announced in the
three properties under construction, Charlotte’s newest
warehouse deliveries could push the region’s warehouse
vacancy over 8.0%, which would be the highest
rate reported since the third quarter of 2013 (8.3%).
Additional vacancy rate increases are expected through
2015 with large blocks of warehouse space expected to
become available.
Warehouse Historical Leasing Performance
Net Absorption
Completions
Vacancy
2011
2012
2013
2014
364,649
885,969
2,249,955
1,014,813
2015 YTD
65,810
0
270,400
0
305,571
310,960
13.3%
12.5%
6.9%
5.9%
6.8%
Flex Historical Leasing Performance
Net Absorption
Completions
Vacancy
2011
2012
2013
2014
2015 YTD
33,732
149,018
41,019
434,142
80,863
0
46,000
0
83,719
10,000
20.0%
19.0%
18.4%
14.8%
14.0%
1Q15 Charlotte Warehouse Overview by Submarket
Submarket
Central
CrownPoint/Matthews
East
North
Northeast
Northwest
Southeast
Southwest
Total
Inventory Vacancy SF
3,756,246
208,568
332,122
17,271
0
0
8,182,369
502,430
853,852
137,542
5,423,352
293,211
0
0
16,571,938 1,239,110
35,119,879 2,398,132
Vacancy
5.6%
5.2%
0.0%
6.1%
16.1%
5.4%
0.0%
7.5%
6.8%
Rents
$4.26
$6.58
$0.00
$4.44
$4.00
$3.50
$0.00
$4.51
$4.36
Absorption
-3,283
-5,737
0
-24,066
-7,500
0
0
106,396
65,810
1Q15 Charlotte Flex Overview by Submarket
Submarket
Central
CrownPoint/Matthews
East
North
Northeast
Northwest
Southeast
Southwest
Total
Inventory Vacancy SF
373,291
24,179
906,838
118,087
299,534
56,031
2,171,563
162,427
364,705
90,603
203,925
44,825
168,119
15,598
6,296,026 1,001,390
10,784,001 1,513,140
Vacancy
6.5%
13.0%
18.7%
7.5%
24.8%
22.0%
9.3%
15.9%
14.0%
Rents
$10.59
$8.48
$11.64
$10.13
$9.17
$7.67
$12.58
$8.38
$9.00
Absorption
9,913
9,014
987
-15,275
4,435
-1,015
-628
73,432
80,863
The KARNES Report Charlotte Industrial 1st Quarter 2015
Data Provided By:
Copyright 2015 Karnes Research Company. Not for reproduction or resale.
www.karnesco.com
toll free 800.879.7172
2