“The Charlotte regional industrial market remains strong, with rental rates coasting at historic highs and sale prices continuing to increase. Solid absorption and low vacancy continues to fuel speculative development. Vacancy rates should increase in the short term, but demand remains high and should keep pace with the rapid speculative construction. E-commerce is fueling industrial fundamentals, and there continues to be new development in the large/bulk warehouses throughout the Charlotte metropolitan statistical area (MSA). However, the supply of industrial buildings for sale remains low, therefore finding inventory for interested clients wishing to purchase remains a challenge. The Charlotte economy is showing no signs of slowing down. Charlotte has gained over 34,200 jobs year over year and is expected to stay on this path for the foreseeable future.”Greg Copps, SIOR – Managing Partner | Charlotte

Key Strengths:

The Charlotte industrial market continues to post robust fundamentals in the age of e-commerce because of the large population concentration surrounding the market. Over 30 million people live within 250 miles of the market’s core — which is more than the Los Angeles region — and this number is expected to grow by 5% in the next five years. The metro area also continues to grow, with over three million people living within 50 miles of the core, an impressive 11% increase compared with 2010. This population growth has made the market popular with regional industrial occupiers and ripe for final mile distribution expansion.

Logistics Driver:

Located at a strategic point on the East Coast between major ports and inland cities, the Charlotte region provides easy access to the bulk of the United States’ population. Transportation assets include Charlotte Douglas International Airport; the intersection of two major interstate highways; an inland terminal operated by the North Carolina Ports Authority; Norfolk Southern’s state-of-the-art intermodal facility; and CSX’s recently launched direct rail service to the Port of Wilmington.

Charlotte is served by a highly efficient interstate system. Interstates 85 and 77 link Charlotte with the Northeast, Southeast and Midwest. Charlotte Douglas International Airport provides over 700 daily flights and serves over 44 million passengers annually. It is one of the top 50 cargo airports in the country and grew its cargo handling capabilities an impressive 23% the previous year. The Charlotte region’s Foreign Trade Zone #57, adjacent to the airport, is a catalyst for companies to improve their competitiveness and profitability in international trade. The North Carolina Ports Authority operates an inland terminal in Charlotte, linking port facilities in Wilmington with businesses in Charlotte.


The Charlotte industrial market, which totals 216 million square feet of existing space saw vacancy rates increase 110 basis points (BPS) in Q1 2018 to a healthy 5.4%. A large amount of new development, which is warranted in the market because of demand from e-commerce occupiers, was the major factor for the rise in vacancies. Despite this increase, the overall vacancy rate remains much lower than the market high rate of 13.1% in 2010.


During the first quarter of 2018, net absorption for Charlotte and surrounding counties was 790,294 square feet, an impressive 18.4% increase compared with the previous quarter. The Cabarrus County submarket made up the largest percentage of the positive absorption at 460,890 square feet, followed by the South submarket at 390,712 square feet and the Airport/West submarket at 138,390 square feet. Overall, the nearly 800,000 square feet occupied in Q1 2018 puts the market in line to finish the year with more occupancy gains than in 2017.

In Iredell County, Saddle Creek Logistics signed a lease to occupy a 301,000-square-foot speculative building just completed by a private developer. Additionally, SunCap Property Group has started on a 215,000-square-foot manufacturing facility for Tristone Flowtech USA within Mooresville Business Park East in Mooresville, NC. Another significant announcement for Iredell County was the decision by Cheney Brothers to expand their current operation in Statesville by an additional 160,000 square feet and adding 105 full-time jobs.


The lack of supply of available buildings within the Charlotte region continues to be the theme as Q1 2018 ended. It is becoming increasingly difficult for users to find available Class A and B facilities for purchase outside the core Charlotte Market. Therefore, speculative industrial construction and build-to-suit activity picked up steam during the quarter. Overall, under-construction product remained robust at 4.7 million square feet with an impressive 1.7 million square feet completing construction.

Large warehouse projects under construction in the first quarter included The Rockefeller Group’s Lakemont77 consisting of 370,000 square feet, Crescent Communities’ Black & Decker Building of 345,000 square feet and The Meritex Company’s 79,420-square-foot building at CLT Logistics Center.

Asking Rents:

In-line with the rest of the country, overall asking rental rates continue to ascend, finishing Q1 2018 at $5.26 per square feet per year, a 4.1% increase compared with the previous quarter, and an all-time high for the market. While in previous cycles record high asking rents could be a hindrance to demand, occupiers continue to absorb space because of the markets strategic location, which cuts transportation costs in reaching a large chunk of the American population.

Overall, demand continues to be high for industrial space, as evidenced by absorption throughout the year. E-commerce is fueling industrial fundamentals, and there continues to be new development in the large/bulk warehouses throughout the Charlotte MSA. However, the supply of industrial buildings for sale remains low, therefore finding inventory for interested clients wishing to purchase remains a challenge.

Investors continue to be challenged entering the Charlotte market given the amount of capital chasing quality deals. The first quarter of 2018 saw industrial sales volume exceed $152.7 million, totaling over 2,460,823 square feet at an average price of $62 per square foot (includes both warehouse and flex) and with a year to date average capitalization rate of 6.4%. One notable transaction is Ferncroft Capital’s purchase of 10701 Nations Ford Road located in the South submarket of Charlotte for $31,900,000 or $65 per square foot.

Historical Data

  Inventory Overall Vacancy Rate Overall Net Absorption New Supply (Construction) Under Construction Asking NNN Rental Rate (PSF/YR)
Q1 2018

  Overall Vacancy Rate Q1 2017 Overall Vacancy Rate Q1 2018 Asking NNN Rental Rate Q1 2017 Asking NNN Rental Rate Q1 2018
10,000-24,999 SF
25,000-49,999 SF
50,000-74,999 SF
75,000-99,999 SF
100,000-249,999 SF
250,000-499,999 SF
500,000 SF +

Source: Colliers International

For more insights, learn about the top 10 U.S. industrial emerging markets positioned to experience the most robust increases in demand from occupiers and owners. Read all the past market spotlights here and stay tuned for more Industrial Markets of the Month!