Each of the city's real estate markets appears healthy as 1999 opens Driven by a combination of considerable job growth and a critical mass of hometown financial institutions, commercial real estate markets in Charlotte are thriving.
In the local office market, net absorption through the first three quarters of 1998 equaled almost that absorbed during all of 1997. In the retail sector, vacancy rates were increasing slightly by the end of 1998 with the market trying to digest big-box development left over from the mid-90s. Meanwhile, users gobbled up Charlotte-area warehouse space in 1998 with more appetite than they have had in years, while the flex space market remained stable.
Population and Employment The population of the seven-county Charlotte MSA (Metropolitan Statistical Area) grew to 1.39 million in 1998, reflective of an annual growth rate of 2%. Meanwhile, based on analysis of seven months of statistics from the U.S. Department of Labor, "The Charlotte area should add 16,000 to 20,000 jobs on an annualized basis during 1998, representing a growth rate of 2.1% to 2.7%," says Eric Karnes, president of locally based Karnes Research Co. These estimates represent a slightly slower job growth rate than occurred in 1997 and 1996 when employment growth hit 3.3% and 2.8% respectively. "The exceptionally tight labor market is becoming a concern for the economic development officials seeking to reverse the recent slowdown in industrial and office relocations in the area," says Karnes.
Major private-sector employers in the Charlotte area include Carolinas Healthcare System (11, 738 employees in 1997), First Union Corp. (9,946) and Bank of America (9,708). During 1998, major business announcements included a 250-employee call center by PNC Bank Corp. of Pittsburgh; a 100-employee label-printing plant by Toronto-based CCL Label; and a $30 million electric component plant by Pass & Seymour LeGrand.
Office Market Highlights As of the beginning of 1998's fourth quarter, according to Karnes, the 25.4 million sq. ft. Charlotte multi-tenant office market was 7.2% vacant, up from 6.3% three months earlier. Quoted full-service rental rates ranged from a low of $14.50 in the Crown Point/ Matthews submarket to a high of $22.50 in Downtown. Year-to-date net absorption for the overall market was 1.4 million sq. ft. through the first nine months of 1998, says Karnes, closing in on the 1.7 million sq. ft. absorbed in 1997.
A little more than 3 million sq. ft. of office space was underin the market as of the beginning of 1998's fourth quarter, says Karnes, with another 3.4 million sq. ft. proposed. "Based on scheduled completions for the fourth quarter [of 1998], says the firm, "the overall vacancy rate could increase to 8% to 8.5% by year-end, and 8.5% to 9.5% by mid-1999."
Industrial Notes Net absorption in Charlotte's 20.5 million sq. ft. warehouse market hit the 1.36 million sq. ft. level by October 1998, according to Karnes, nearly equaling the 1.38 million sq. ft. occupancy gain achieved in all of 1997. As a result, vacancy rates hovered in the mid-14% range. Flex space absorption totaled 411,331 sq. ft. during the first three quarters of 1998, outpacing 1997's total in this 6.4 million sq. ft. product sector, leaving it 11.6% vacant. Warehouse rental rates range from $3.60 to $6.00, says Karnes, rising to the $7.00 to $9.00 range for flex space. Warehouse construction totaled 530,000 sq. ft. last with flex construction weighing in at 166,300 sq. ft.
Retail Roundup "Demand among big-box and discount retailers has waned somewhat over the last two to three years," says Karnes, "due to oversaturation that occurred in selected submarkets during the early to mid-1990s." As a result, overall vacancy in Charlotte's 22.7 million sq. ft. retail market increased modestly, from 7.6% to 9.3%, between July 1997 and October 1998. "Most of Charlotte's vacant retail space," says Karnes, "remains concentrated in older community centers in the Northwest and Northeast retail submarkets."
New Charlotte-area retail construction totaled 2.1 million sq. ft. as of October 1998, with another 1.9 million sq. ft. proposed. More than half of Charlotte's current retail construction is in one project -- 1.4 million sq. ft. Concord Mills, a Simon DeBartolo/Mills Corp. regional mall underway at the I-85/Kings Grant Boulevard junction.
Apartment Market According to a third quarter 1998 report from Charlotte-based Carolinas Real, vacancy in the local apartment market stood at 5.3%, down from 7.1% during the first quarter. During the six months ending August 1998, the Karnes report notes, "There were 2,196 apartment units absorbed, while 1,252 units were completed." Of 59,000 units surveyed, rents ranged from an average of $0.67 for three-bedroom units to $0.82 for one-bedroom units. Assuming that the 3.458 units currently under construction are all completed within the next year, and demand remains at the historical average of 2.200 units annually, the report adds, "the vacancy rate (in this market) could rise back up to approximately 7.0% over the next year."
Completion nears on The Village at carolina place CHARLOTTE, N.C. - The final phase of a 50-acre congregate care community, developed by local company Resources for Senior Living (RSL) is set to begin this year. Located near the South Carolina border, The Village at Carolina Place already includes the Dorchester, a three-story, 375-unit building for independent living seniors, The Laurels, a 98-unit assisted living apartment complex and The Haven, a 60-bed dementia care facility designed for people with Alzheimer's. The final addition, 108 new independent living cottages, is scheduled to break ground this spring.
The development's pay-as-you-go policy allows seniors to move between residences as their need for assistance grows. Each neighborhood has separate programming and staffing. For instance, The Haven is designed specifically for those with dementia and features apartments arranged around a common area containing a living room, sunroom and indoor walking street. A company spokesman says typical staffing ratios are one caregiver to every 3.5 residents.
A 20,0000 sq. ft. medical office building also is included on the property. Developed and managed by RSL, the building houses physicians' offices and diagnostic centers specializing in geriatrics as well as other non-medical senior services.