Driven by record supply deliveries and moderating demand, Charlotte-region industrial vacancy continued to rise, closing at 7.7 percent at the end of the second quarter, up from 7.3 percent at the end of the previous quarter.
The bulk of speculative deliveries have been in larger facilities (250,000 square feet and greater). At the same time, most of the pull-back in demand around the region has been from larger tenant requirements. The result is an environment where tenants with larger space requirements (over 100,000 square feet) have additional leverage to negotiate favorable terms with landlords.
Conversely, there has been limited delivery of smaller facilities while demand for 50,000 square feet space sizes and below remains robust. These occupiers are experiencing the same challenges of limited leverage and continued rising rates.
We expect these same trends for both larger and smaller tenants to continue through 2024.
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