Charlotte Office Rents Reach Record Highs As New Jobs Flood The Market
As newcomers continue to flock to Charlotte, employers and investors are taking notice: More than 30,000 jobs were added in 2017, fueling an office boom as new construction and adaptive reuse projects thrived.
Office rents continued their climb in Q4, with central business district Class-A rents crossing $32.03/SF for the first time in Charlotte, according to a new office report by JLL.
“Simply put, employment drives real estate,” JLL Director of Research Paul Hendershot said.
Over the past five years, Charlotte has experienced faster employment growth then Dallas and Denver and over double that of Boston, Philadelphia, Chicago and Kansas City, he said. Unemployment dropped to 4.3% in Q4 from 5.3% a year ago.
The JLL report highlighted key leases in Q4, including RSM’s 36,357 SF at 300 South Tryon and WeWork’s expansion into 90K SF at 615 South College. The Midtown/South End areas saw almost 500K SF of new construction, including The Refinery, 300 West Summit and The RailYard. The Tompkins Hall adaptive reuse project is undergoing renovations in a former textile mill and will open with anchor tenant Duke Energy. The Hub at Waverly delivered 154K SF of office and the proposed Lincoln Harris Rea Farms development could bring close to 500K SF of Class-A office.
“Unprecedented levels of investment and employment growth has fostered a thriving commercial real estate market, outpacing the United States and our southeastern peers in terms of rental grown and new construction,” Hendershot said.
The report counted among Charlotte’s strengths in the office sector a low cost of doing business, accessibility to major cities via Charlotte Douglas International Airport, strong infrastructure and expanding transit options. Hendershot predicted that by the end of 2018, office rents could cross $41/SF in the urban core.
“Employment growth is also nurturing a diverse economy, while finance and energy still serve as the region’s calling cards. Fintech, healthcare and creative industries are realizing strong employment growth, reimagining the economic landscape,” he said.