Charlotte Office Market Faces High Vacancy Rates Despite Ongoing Developments

Charlotte Sees High Office Vacancies Amid Ongoing Developments

Charlotte, a city known for its booming economy and vibrant business landscape, is currently experiencing a notable shift in its office market. As of this week’s report, a staggering more than half of Charlotte’s largest office buildings have available space, raising questions about the future of work and tenant demand in the area.

Top Building Rankings

According to the latest data, the largest office buildings in the city have been ranked based on leasable square feet. At the very top is 550 South Tryon, boasting over 1.3 million square feet. The good news is that this building is fully leased, thanks to its owner-occupant, Wells Fargo & Co..

Just behind it is the Bank of America Corporate Center, which offers more than 1.2 million square feet of leasable space. This building is also fully leased and houses significant tenants, including Charlotte’s largest law firm, Moore & Van Allen. Exciting developments are on the horizon for Moore & Van Allen, as they are set to anchor a new mixed-use tower in the Carson & Tryon project located in South End.

Vacancies in the Market

Not all buildings, however, are enjoying the same level of occupancy. Duke Energy Plaza and One Wells Fargo are next on the list, each with about 1 million square feet of leasable space. While the Duke Energy Plaza is fully leased and owner-occupied by Duke Energy Corp., One Wells Fargo is facing a challenging situation, having a significant vacancy rate of 66%. The shift came earlier this year when Wells Fargo moved its employees from One Wells Fargo Center and Two Wells Fargo Center into its more popular offices at 550 South Tryon.

Vacancy Rates Rise

The broader Charlotte market hasn’t been immune to shifts in occupancy. The overall office vacancy rate for the third quarter has climbed to 22.5%, according to a report from a commercial real estate firm. This is a slight improvement from the nearly 25% vacancy rate noted in the second quarter, signaling a potential stabilization.

One major contributor to the recent increases includes the opening of 110 East, a brand-new 370,000-square-foot office tower in South End that welcomed its first tenants without any pre-leasing agreements. It seems that the influx of new buildings is having a tangible impact on vacancy rates.

New Developments on the Horizon

As Charlotte remains a hotspot for business, there are ongoing construction efforts that promise to reshape the office landscape. Currently, about 565,000 square feet of office space is under construction, including the Legacy Union 6Hundred, a 415,000-square-foot office tower set to open later this year. There’s also a new 150,000 square-foot office building underway in Plaza Midwood.

On the exciting front, Crescent Communities is gearing up to launch a 31-story mixed-use tower at 1102 S. Tryon St. in South End. They recently filed permits for the project, amounting to $126.3 million for various construction phases. It looks like Charlotte is not holding back when it comes to real estate development!

Market Activity

Interestingly, while vacancies seem high, there has also been movement in the market. Last quarter, 750,000 square feet of new deals, renewals, and expansions were signed, pushing the year-to-date absorption back into positive territory. This is a promising sign following a downturn in the second quarter, as tenants continue to explore their options in the office market.

In conclusion, the Charlotte office scene is in an interesting space—while vacancies are prevalent, new development projects suggest optimism for the future. As the city continues to grow and evolve, it will be fascinating to see how the office landscape transforms in the months and years ahead.