CHARLOTTE, NC-Jackson, MS-based REIT EastGroup Properties enters the market with the acquisition of four distribution buildings with a total of 322,000 sf in the NorthPark Business Park for $19.5 million. The buildings were constructed in 1987 through 1989.

The multi-tenant properties are currently 93.4% leased to 18 customers and are projected to generate a 7% stabilized unleveraged cash yield at 95% occupancy. "This acquisition is our first in Charlotte and represents EastGroup's entry into our third new market over the past three years," says EastGroup President and CEO David Hoster. "As a growth Sunbelt market with a good industrial base, we believe Charlotte offers an excellent fit with our investment and operating strategies."

Hoster adds that the buildings are high-quality distribution properties in Charlotte's strongest industrial market. "The buildings give us a good base from which to expand our ownership in the market," Hoster says. "We currently have another 181,000 sf in three buildings under contract and expect to complete that acquisition in January."

With the acquisition, EastGroup enters an industrial market that has been experiencing strength. According to a Colliers Pinkard Q2 industrial market report, the latest data available, the vacancy rate in Charlotte dropped from 11.2% in the first quarter to 10.6% in the second quarter. The vacancy rate among warehouse space was 9.2%, with average rental rates of $3.65 per sf. "We expect the Charlotte industrial warehouse sector to move in a positive direction," the report states. "Leasing activity will remain high with approximately 20% of all industrial leases expiring in 2007."

EastGroup Properties vice president Chris Segrest tells GlobeSt.com that the company is targeting Charlotte because it's a high-growth area with above average population and job growth. "The rents look to be below market so we think there is room for rent growth," he says.

Segrest adds that the company plans to acquire two million sf of industrial space in the coming months. "We look to grow our presence in Charlotte pretty quickly," he says.