Looking at the remainder of the year, Clutter says, "One thing that's different is that the amount of construction proposed or under way is about a million sf less than it was at this time last year." But with new construction moving down and a sublease market moving up, it's keeping the fundamentals in the marketplace at a good number, says Clutter who compiled the report.
"Markets like Atlanta operate consistently on a 10% vacancy, but that city has a much more aggressive development mindset and has much more speculative development than you have in Charlotte," the associate says.
The report notes the overall demand for office and industrial investment property has fallen off since its high point in 1998, but Charlotte may see a slight to modest strengthening of the markets as fundamentals remain strong and less new construction is planned.
With Charlotte's investment sales falling off in 2000 from previous years, it was no surprise to Clutter that December recorded the lowest office and industrial investment sales volume in six years. During December, the office market posted aggregate sales volume of $25.6 milion on 214,585 sf. The industrial market traded $6 million on 167,301 sf. In terms of both square footage and total consideration, these numbers mark the lowest December levels since 1994 for office and 1992 for industrial, the report shows.
According to the report, the overall Charlotte office market in all classes of space witnessed a 0.96% decline in rents during 2000. With the economy slowing both nationally and locally over the past year, rent growth has been weakening. The overall demand for office space has been affected by financial shortfalls in the banking and technology sectors.
In addition, Charlotte's numerous new construction projects have created a higher overall supply of office space, providing more options for would-be tenants.
"The marketwide vacancy in the office sector was up slightly to 7.65% at the end of the fourth quarter," Clutter says. "In the fall, we had reported 13.4% vacancy in all the markets and that dropped to 11.8% by the first of the year."
The Crownpoint/Matthews submarket achieved the highest office sales volume with 81,393 sf ($6.85 million) trading hands in two sales. The Southwest industrial market traded 149,220 sf ($5.2 million) through two sales of its own to achieve the highest mark in the industrial market.
Despite a market-wide decline in rents, Midtown, University, and Southpark lead the group of seven Charlotte submarkets recording positive rent growth in 2000. These markets all witnessed rising rents over the past year, as office users placed high demand on space.
In the University area, net absorption was 323,264 sf or 16.16% of its existing and new construction market base, while Midtown and Southpark followed with 13.54% and 13.11% absorption, respectively.
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