Overall office vacancy rates in Charlotte rose to 17.3 percent from 13.2 percent in 2009, according to a report released by CB Richard Ellis.

Uptown saw the largest increase, thanks to the number of new office towers completed. The center city vacancy rate hit 8.2 percent in the fourth quarter, sharply up from 2.5 percent a year ago. The suburban vacancy rate is 22.8 percent.

The SouthPark submarket did slightly better in the fourth quarter. Its vacancy rate was 13.9 percent, down from 14.4 percent in the third quarter.

Adding to the gloom for the future, uptown's largest occupants - Bank of America Corp. and Wells Fargo & Co. - plan to consolidate their work forces, freeing up more available space. The two banks occupy about 50 percent of the center city.

Wells Fargo announced in December it will vacate about 500,000 square feet that it leases and consolidate employees in bank-owned buildings. Bank of America hasn't made any official announcements, but it is currently marketing more than 600,000 square feet of bank-owned space, including 267,000 square feet in the One Bank of America Center under construction.

The moves by the banks - combined with the Duke Energy Center and new Bank of America tower, which plan to open to tenants this year - could push uptown's vacancy rate up to 15 percent in 2010, according to CB Richard Ellis.

From an investment perspective , the market is dry, the report said, noting the lack of available financing.

"In addition, a large spread exists between buyers' and sellers' expectations of property value...," the report states. "The real estate world is carefully monitoring the large supply of distressed assets, waiting for properties to fall into default, foreclosure or bankruptcy."

Capital on the sidelines?

For people wondering when capital will start flowing back into the real estate market, Thomas Dennard, CEO of Charlotte-based Grandbridge Real Estate Capital, offered promising words this week.

Sort of.

"The smart money will find its way back to real estate. Period," Dennard told the standing-room-only crowd at The Westin Charlotte during the third commercial real estate outlook seminar presented by law firm Katten Muchin Rosenman and accounting firm Greer & Walker.

But, Dennard said, investors will seek out simple, straightforward deals, ideally those involving Class A properties. The amount will also be much less than in headier times.

"The market has no appetite for risk," he said.

Dennard, whose company is one of the nation's largest full-service commercial and multifamily mortgage banking companies, also had this advice for real estate owners grappling with financing shortfalls: "Keep your property current and keep it maintained," he said.

Fellow speaker Wells Fargo & Co. economist Mark Vitner said investors are sitting on the sidelines with money ready to invest. But they will continue to wait because of uncertainty surrounding the economy and politics.

That uncertainty will also keep companies hesitant about adding jobs, he said, noting that although the recession technically ended in June, we're not likely to feel like we're "back to normal" for at least a year, or maybe two.

"It's going to be a very long recovery process," he said.