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Demand Weak for 'B' Office in a Tight 'A' Uptown Market

CHARLOTTE-Although class B space is plentiful and rents are lower, the product isn't getting many takers Uptown, brokers say. Owners are starting to increase commissions and may even begin dropping rents.

By Robert Anthony | Updated on December 05, 2000

CHARLOTTE-With a vacancy rate of about 3% in the 8.7 million-sf class A uptown office market, property owners of class B assets assumed their time was coming to fill empty premises. But that isn’t happening despite lower rents and an abundance of class B product.

Brokers say expanding companies Uptown may have to consider class B space or look elsewhere. Carolinas Real Data Inc. feels the tight class A market will continue as it has for the past four years. The construction of the 46-floor, 950,000-sf Hearst Tower will do little to put more available class A space on the market. The office tower, still under construction, is already leased up with the exception of 35,000 sf.

Tenants able to find class A space in this market are paying from $25 per sf to $30 per sf. For companies that don’t need all the amenities that go along with prime real estate, there is an abundance of class B space going for $18 per sf to $21 per sf. According to Gary Chesson of Trinity Partners, the inventory of class B space is only going to increase. He notes that a number of renovated properties are being returned to the market as class B.

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