The flight to quality continues to be a major theme, and tenants are seeking out areas like South End that have done a good job placemaking. The constraint on supply of new, highly amenitized buildings will continue to push rents and force tenants to carefully consider office utilization.
Conversely, product built prior to 2010 is suffering from record vacancy due to the lack of amenities and functional obsolescence. Tenants are still carefully evaluating space needs and are largely unwilling to commit to long term leases. Sublease availabilities have leveled off as tenants select plug & play space that requires limited or no capital investment. Owners who can deliver speculative suites will have the upper hand in competing for tenants, especially as the pipeline of viable sublease space moves off the market.
Overall, Charlotte’s economic fundamentals are stable, however elevated construction pricing and the strict lending environment require both Landlords and Tenants to get creative in structuring deal terms. Office landlords will continue to pursue credit tenants aggressively, and there are opportunities in the market for these tenants to secure favorable deal terms.
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