The wave of new office space that will hit the Charlotte market this year could push up vacancy rates for a while, according to a new analysis of the market.
Developers are poised to deliver some 2.4 million square feet of new office space in 2017 across the Charlotte region. That’s more than 900,000 square feet more than last year, and the most since 2010.
New buildings such as the 640,000 square-foot 300 South Tryon and the 370,000 square-foot 615 South College are still seeking tenants to fill big chunks of space uptown.
“The surge in speculative space entering the market will temporarily push vacancy higher as these buildings stabilize and space vacated by tenants waits to be filled,” Marcus & Millichap wrote in their forecast. “Although the construction pipeline is expected to thin after this year, sizable demand for office space could quicken the timelines of some planned projects.”
Across the market, rents are expected to increase to an average of $22.84 per square foot, even though the vacancy rate is expected to increase 0.5 percent, to 11.8 percent. That’s because of Charlotte’s growing economy and strong demand for more space, especially from financial firms.
And that, Marcus & Millichap predicted, will power the next wave of planned new office buildings. So, stay tuned and watch for more news about projects like Lincoln Harris’ planned 30-story office tower at the former Observer site and Tryon Place, the Crescent Communities building planned across the street.