Q2 2014 | INDUSTRIAL

CHARLOTTE, NORTH CAROLINA

INDUSTRIAL MARKET REPORT

Low Vacancy, High Development

Leads to Landlords Market
The Charlotte industrial market experienced modest net absorption in the 2nd quarter of
2014; the vacancy rate continues to hover at 6.07%.
This quarters move-in activity was mostly dominated by tenants ranging between 40,000
60,000 SF with the largest lease being signed by 3D Systems for 200,978 SF at 700
Marine Drive.

MARKET INDICATORS

Since breaking ground in June 2013, Mississippi based developer East Group Properties
has delivered one 70,000 SF build-to suit facility for German logistics company Kuehne &
Nagel. Fast forward to the 2nd quarter of 2014 the developer has delivered two additional
buildings bringing Steele Creek Commerce Park to 248,800 SF, the park is 59% leased.

FORECAST

VACANCY

Greater Charlotte Region

ABSORPTION

Currently there is over 2 million SF of industrial development planned and under

construction, the largest amount since the beginning of Charlottes industrial market
recovery.

RENTAL RATE
CONSTRUCTION

The Cabarrus County, I-85 corridor, northeast of Mecklenburg County, has attracted
industrial speculative building by offering incentive packages to local developers. The
latest parks to break ground are Trinity Capital Advisors at International Business Park
and Childress Klein at Afton Ridge.

> The demand to shorten delivery

time of e-commerce products
will continue to attract third party
logistics to the southeast

CHARLOTTE INDUSTRIAL MARKET

> Single tenant free standing buildings

under 100k SF are in high demand
for purchase

3,000,000

20%

2,000,000

15%

1,000,000
10%
2014

2013

2012

2011

2010

2009

2008

2007

(1,000,000)

2006

0
2005

Square Feet

> In 2014 landlords have had the

ability to push warehouse and flex
rents

25%

4,000,000

2004

RELATIVE
TO PRIOR
QUARTER

0%

(2,000,000)
Absorption

www.colliers.com/charlotte

5%

Deliveries

Vacancy %

> Q2 2014 STATISTICS

132,467,250 SF
TOTAL MARKET INVENTORY

6.07%
OVERALL VACANCY RATE

4.87%
WAREHOUSE VACANCY RATE

RESEARCH & FORECAST REPORT | Q2 2014 | CHARLOTTE, NC

CHARLOTTE, NORTH CAROLINA INDUSTRIAL MARKET

Bldgs

Total
Inventory
Sq Ft

Direct
Vacant
Sq Ft

Direct
Vacancy
Rate

Sublease
Vacant
Sq Ft

Sublease
Vacancy
Rate

Total
Vacant
Sq Ft

Vacancy
Rate
Current

Vacancy
Rate
Prior Qtr

Net
Absorption
Current Qtr
SF

Net
Absorption
YTD SF

Net
New Supply
Current Qtr
SF

Net New
Supply
YTD SF

Under
Construction
Sq Ft

Avg
Rental
Rate

CENTRAL
280

8,838,701

498,374

5.64%

0.00%

498,374

5.64%

5.53%

FLEX

22

917,909

76,946

8.38%

0.00%

76,946

8.38%

8.38%

Total

302

9,756,610

575,320

5.90%

0.00%

575,320

5.90%

5.79%

(10,000)

(11,004)

147,452

172,747

$3.99

626

$8.65

$4.69

WAREHOUSE

(10,000)
0

(8,554)

$4.20

(2,450)

$16.81

$7.39

AIRPORT/WEST
243

12,469,810

588,019

4.72%

0.00%

588,019

4.72%

5.90%

FLEX

47

1,841,602

155,246

8.43%

0.00%

155,246

8.43%

8.28%

Total

290

14,311,412

743,265

5.19%

0.00%

743,265

5.19%

6.20%

144,640

173,373

447,013

78,319

107,200

WAREHOUSE

(2,812)

NORTH
194

16,100,116

522,580

3.25%

46,000

0.29%

568,580

3.53%

4.39%

212,324

FLEX

94

3,782,275

439,288

11.61%

8,100

0.21%

447,388

11.83%

11.97%

5,417

Total

288

19,882,391

961,868

4.84%

54,100

0.27%

1,015,968

5.11%

5.83%

217,741

409,563

78,319

107,200

WAREHOUSE

(37,450)

415,541
415,541

$4.76
$8.66
$5.54

NORTHWEST
222

13,505,475

776,702

5.75%

0.00%

776,702

5.75%

6.22%

62,945

89,151

FLEX

13

528,593

15,125

2.86%

0.00%

15,125

2.86%

3.43%

3,000

$5.96

Total

235

14,034,068

791,827

5.64%

0.00%

791,827

5.64%

6.11%

65,945

89,151

$4.01

WAREHOUSE

503

19,933,562

788,256

3.95%

0.00%

788,256

3.95%

3.66%

(58,653)

(8,042)

$4.32

FLEX
Total

98
601

3,782,132
23,715,694

506,082
1,294,338

13.38%
5.46%

0
0

0.00%
0.00%

506,082
1,294,338

13.38%
5.46%

13.71%
5.26%

12,516
(46,137)

91,243
83,201

$8.04
$4.89

WAREHOUSE

$4.00

EAST

SOUTH
WAREHOUSE

683

43,929,738

2,349,622

5.35%

20,160

0.05%

2,369,782

5.39%

5.63%

105,483

183,021

140,542

FLEX

190

6,837,337

1,239,811

18.13%

9,852

0.14%

1,249,663

18.28%

18.57%

20,044

56,861

108,800

Total

873

50,767,075

3,589,433

7.07%

30,012

0.06%

3,619,445

7.13%

7.38%

125,527

239,882

140,542

108,800

524,341

$4.12
$7.55
$4.87

CHARLOTTE TOTAL
2,125

114,777,402

5,523,553

4.81%

66,160

0.06%

5,589,713

4.87%

5.21%

459,551

875,336

78,319

247,742

FLEX

464

17,689,848

2,432,498

13.75%

17,952

0.10%

2,450,450

13.85%

14.07%

38,165

108,830

Total

2,589

132,467,250

7,956,051

6.01%

84,112

0.06%

8,040,163

6.07%

6.39%

497,716

984,166

78,319

247,742

WAREHOUSE

524,341

$4.23
$8.36
$4.94

QUARTERLY COMPARISON AND TOTALS

Q1-14

2,589

132,677,635

7,898,612

5.95%

314,412

0.2%

8,213,024

6.19%

6.44%

486,450

486,450

169,423

169,423

498,079

Q4-13

2,589

132,572,116

8,234,754

6.21%

426,577

0.3%

8,661,331

6.53%

7.65%

1,503,530

3,307,646

19,554

31,554

199,342

$4.76

Q3-13

2,584

132,103,407

9,828,229

7.44%

342,577

0.3%

10,170,806

7.70%

8.22%

704,842

1,804,116

12,000

12,000

109,554

$4.82

Q2-13

2,588

132,193,965

10,859,123

8.21%

320,800

0.2%

11,179,923

8.46%

9.10%

844,061

1,099,274

12,000

$4.82

Q1-13

2,588

132,174,406

11,647,284

8.81%

376,700

0.3%

12,023,984

9.10%

8.50%

275,352

275,352

46,000

46,000

12,000

$4.60

Q4-12

2,721

139,718,727

11,368,747

8.10%

437,923

0.3%

11,806,670

8.50%

9.00%

823,715

1,907,785

46,237

369,114

270,400

$4.75

9.2%

9.7%

Q3-12

2,716

138,447,289

12,075,139

8.7%

639,914

0.5%

12,715,053

Q2-12

2,713

139,546,710

13,320,871

9.5%

727,169

0.5%

14,048,040

Q1-12

2,712

140,432,884

13,155,044

9.40%

654,649

0.50%

13,809,693

9.80%

10.00%

265,776

265,776

102,421

102,421

220,456

$4.60

9.5%

581,184

0.40%

13,973,048

10.0%

9.9%

(8,290)

2,017,623

14,900

51,220

258,421

$4.43

13,351,718

9.5%

598,140

0.4%

13,653,964

9.9%

10.3%

937,898

2,108,235

36,320

36,320

29,900

$4.28

15,260,984

10.1%
10.9%

248,724
405,185

0.2%
0.3%

14,473,220
15,666,169

10.3%
11.2%

11.2%
#REF!

1,192,949
(22,612)

1,170,337
(22,612)

66,220
-

$4.27
$4.27

COMPARISON
LEASE RATES
Q4-11
2,710 OF140,330,463
13,391,864
Q3-11

2,709

140,315,563

Class
Existing
Buildings
Q2-11A & B
2,708
140,279,243
14,224,496
Q1-11

2,708

140,279,243

| COLLIERS INTERNATIONAL

1,084,070

64,456

102,421

472,637

$4.65

10.1%
9.7%
(464,342)
102,421
266,693
$4.65
The data tracked
is for Mecklenburg
County. The(157,144)
data does not reflect the activity
in the greater
Charlotte
Region.

$4.05

$3.25

AVERAGE
CURRENT
RATE

AVERAGE
CURRENT
RATE

CLASS A BULK BUILDINGS - Lease rates derived from a representative set of

newer tilt-up, concrete buildings averaging 250,000 SF with bulk ceiling height
and standard dock door configuration.

P. 2

709,880

$4.84

CLASS B WAREHOUSES - Lease rates derived from a representative set

of facilities from 50,000 SF to 150,000 SF with 20+ clear height and a
functional dock loading configuration.

INDUSTRIAL MARKET REPORT | Q2 2014 | CHARLOTTE, NC

The

2014 INDUSTRIAL LEASE & SALES TRANSACTIONS

PROPERTY

SUBMARKET

TENANT

SIZE (SF)

700 Marine Drive

York

3D Systems

200,978

500 Linkwood Road

York

Casual Cushion Corporation

181,000

1000 Bond Street

Airport

Exel

102,657

Shopton Ridge 30-C

Southwest

Gift Services

40,000

5109 W WT Harris Blvd.

Southwest

RTS Leasing, LLC

33,418

WAREHOUSE LEASES

SIZE (SF)

$ / SF
OR ACRE

YG-1

59,542

$50

North

Carolina Blue Skies Prop.

36,000

$81

1101 Carrier Dr.

Central

Discount Trophy & Co

37,600

$37

225 Mooresville Blvd.

North

Marrano Marc-Equity Corp.

51,200

$23

9900 Twin Lakes Pkwy.

North

PSI Control Solutions

33,690

$70

PROPERTY

SUBMARKET

BUYER

11001 Park Charlotte

Southwest

7295 West Winds Blvd.

1872 & 2021 Old Mountain Road- Colliers

International represented both the seller (Zimmer)
and purchaser (Nandina Properties III & IV, LLC)
with this transaction. The buildings were previously
used for the manufacturing, warehouse and
distribution of medical products.

INDUSTRIAL SALES

COMPANY

TYPE

PARK

SIZE
(SF)

STATUS

11001 Park Charlotte Road.- Colliers International

represented the seller in the sale of Hart Park,
located in the southwest submarket. The 59,542
SF building was bought by YG1 who manufacturers
cutting tools.

COMPLETED & UNDER CONSTRUCTION BUILDINGS

Beacon Partners

Bulk Distribution

InnerLoop - North

415,541

Under Construction

Childress Klein

Bulk Distribution

Ridge Creek West

310,960

Under Construction

Trinity Partners

Bulk Distribution

215 International Drive

277,235

Under Construction

Exeter Property Group Bulk Distribution

Gateway Distribution Park

110,000

Proposed

Childress Klein

Flex

Afton Ridge

360,000

Under Construction

The Silverman Group

Bulk Distribution

Concord Airport Park

550,000

Under Construction

EastGroup

Bulk Distribution

Steele Creek Comm. Park

178,800

Under Construction

Bold text indicates Colliers International transaction

UNDER CONSTRUCTION

3636 Taylorsville Highway- Colliers International

represented the seller (Nandina Properties
II, LLC) in the sale of a 168,631 SF facility to
FlexSol Packaging. The building will be used for
warehouse and distribution purposes.

Demand for Class A

space has outstripped
supply.
Five buildings are
currently under
construction.

GATEWAY PHASE IISouthwest

110,000 SF
Breaking Ground 4th Quarter 2014

P. 3

| COLLIERS INTERNATIONAL

INNERLOOP NORTH (2 BUILDINGS) North

415,541 SF
4th Quarter 2014 Delivery

Over 2 million SF of
industrial speculative
space planned.

225 Mooresville Blvd. - Colliers International

represented both the purchaser (Reger Holdings
LLC) and seller (Toyo Seal America Corporation) in
the sale of a 51,200 SF facility in Mooresville, NC.
Reger Holdings LLC purchased the building as an
investment and has retained Colliers International
for the leasing and management of the asset.

INDUSTRIAL MARKET REPORT | Q2 2014 | CHARLOTTE, NC

2ND QUARTER 2014 | Net Absorption by Submarket

2ND QUARTER 2014 | Vacant Space By Class

485 offices in
63 countries on
6 continents

250,000

CLASS A
871,852 SF

$2.1

management

100,000

Over 15,800 professionals

Class B

Class C
(100,000)

EAST

UNITED STATES:
SOUTH

(50,000)

NORTHWEST

NORTH

50,000

Class A

The second quarter saw several notable transactions of both core Class A and Class B/C product.
The Ridge Creek III transaction represents a modern Class A, 30 clear, ESFR building trade in
the premier submarket. At the other end of the spectrum, Charlotte Business Park in Chemway
is indicative of investor sentiment towards older vintage product. The most significant trade of
the quarter is the Sykes Industrial transaction, this marks the reentry of ProLogis to the Charlotte
market, adding another national operator to the growing population of institutional owners of
industrial properties.
SUBMARKET

TRANSACTION
VALUE

RSF

PRICE
CAP
PER RSF RATE

TENANCY

Distribution Center
Tremont Industrial
Park
Hart Park
Sykes Industrial
Building I & II
Ridge Creek III
Catawba
Distribution Center
Charlotte Business
Park
Northcross
Business Campus
Northwoods
Business Center

Charlotte

$25,500,000

346,500

$73.59

6.0%

Single

Charlotte

$10,000,000

43,780

$69.55

n/a

Multi

Charlotte

$2,975,000

56,320

$52.82

n/a

America Inc
Prologis

$69.49

n/a

Multi

Charlotte

$14,516,333

270,000

$53.76

7.0%

Single

Fort Mill

$18,000,000

478,000 $37.66

n/a

Multi

387,745

$27.14

8.0%

Huntersville

$7,950,000

80,000

$99.38

n/a

Charlotte

$12,600,000

206,321

$61.07

n/a

vestment Partners

(Flex)

252,206

$10,525,000

Carolina Capital InYG-1 Co Ltd; YG-1

$17,525,000

Charlotte

LaSalle

Multi

Charlotte

Multi
Multi
(Flex)
Single

EastGroup
Properties

Grant Miller
Vice President

Rob Speir
Vice President

Don Moss | SIOR | CCIM

Vice President

Justin Smith
Industrial Specialist

Adam Russ
Investment Services Group

301 S College Street | Suite 3350

Charlotte, NC 28202

Exeter Property

This market report is a research document of Colliers International.

Group

is made as to the accuracy thereof. Colliers International-Charlotte,

Equity Industrial
Partners

Information herein has been deemed reliable and no representation

Inc., and certain of its subsidiaries, is an independently owned and
operated business and a member firm of Colliers International
Property Consultants, an affiliation of independent companies with
over 485 offices throughout more than 63 countries worldwide.

Stockbridge
Exeter Property
Group

Bold text indicates Colliers International transaction

www.colliers.com/marketname

Lawrence Shaw | SIOR

Managing Partner

BUYER

INVESTMENT SALES
Twin Lakes

Charlotte Industrial Team

Greg Copps | SIOR
Managing Partner

Investment Highlights

PROPERTY NAME
ADDRESS

billion in annual revenue

Over 1.46 billion square feet under

AIRPORT/WEST

CLASS B
3,404,989 SF

150,000

CENTRAL

CLASS C
3,763,322 SF

Square Feet

200,000

Accelerating success.