Development

Commercial real estate sales near $1 billion in Charlotte so far this year

The One Wells Fargo Center (left), which sold for $284 million earlier this year.
The One Wells Fargo Center (left), which sold for $284 million earlier this year. dtfoster@charlotteobserver.com

Institutional sales of commercial real estate are approaching $1 billion for the year in Charlotte, putting the region on track for another solid year as demand stays strong.

Data from the Charlotte office of Cushman & Wakefield shows sales of commercial real estate (office buildings, warehouses, apartments, hotels, retail centers, industrial buildings) have hit $904 million locally so far this year. That figure includes all sales in the region of $2.5 million or more.

“What’s really driving, from my perspective, the bullishness on the investment sales market is the underlying fundamentals,” said Rob Cochran, senior managing director of Cushman & Wakefield. “That is giving everyone confidence in the market, and that is driving interest from the investors.”

The number of jobs in Charlotte is growing at a healthy 3 percent or so a year, above the national average, and population growth has been running between 1.5 and 2 percent a year for the region for the past five years, also above the average nationwide. With more people and more jobs coming to Charlotte each year, developers are confident building new apartments and offices, and investors are confident buying them.

Cushman & Wakefield currently has six properties on the market, totaling about 1 million square feet. It’s not just high-profile buildings such as One Wells Fargo Center uptown (which sold for a record-setting $284 million earlier this year) that are attracting strong interest. Suburban properties, industrial space and “value-add” assets that might take some additional investment are also doing well.

Their biggest on the market right now is the Flextronics Campus, a 445,806-square-foot office/manufacturing/warehouse facility in University City. Flextronics, the building’s sole tenant, plans to move out in the coming years, opening the campus for uses such as creative offices, a data center or high-tech manufacturing. The building has attracted interest from investors across the country.

One issue that’s not deterring investors yet: House Bill 2, the state’s new law limiting local nondiscrimination protections for LGBT people. Although it’s become a major political controversy and prompted PayPal to cancel a 400-job expansion in Charlotte, Cushman & Wakefield associate vice president Jared Londry said investors aren’t turning away.

“It’s coming up in the conversations,” said Londry. He said potential buyers are concerned about long-term impacts to Charlotte’s growth, but still want to buy in Charlotte. “Charlotte is still in high demand from an investment standpoint, despite some of the recent national headlines.”

“People are wondering if it’s going to be a real significant impact,” said Cochran.

Nationwide, commercial real estate sales hit $543 billion last year, just shy of the previous peak in 2007 of $573 billion. Cushman & Wakefield predicts 6.9 percent growth this year, which would take commercial real estate sales to $580 billion, a new peak.

Ely Portillo: 704-358-5041, @ESPortillo

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