Posted on July 21, 2014 by info4karnesco - Chapel Hill, Charlotte, Commercial Property Exchange, Construction Update, Development, Durham, Greensboro/Winston-Salem/High Point, KARNES Perspective, KARNES Tri-City Report, Raleigh, Retail, SiteIndex, Triad CIE, Triangle, Triangle CPE, Western NC, WNC CPE
A combined total of 144.8 million square feet of retail space was located within the Tri-City area at the end of 2013. With a retail inventory totaling approximately 60.7 million square feet, the Charlotte market was the largest of the three North Carolina retail markets, accounting for 42% of the retail inventory. The Triangle market ranked second with 46 million square feet of retail space, while the Triad maintained 38 million square feet of retail space. After declining to a historical low of 541,782 square feet in 2002, retail construction increased to nearly one million square feet in the Tri-City markets during 2013. New retail supply during 2013 was most pronounced in the Triangle region, where 693,982 square feet of new space was delivered. The Charlotte region ranked second with 231,680 square feet of new retail space completed during 2013, while the Triad region reported 38,000 square feet of new retail during 2013. Only the Charlotte region reported a continued decline in new construction from the level reported in 2012. While retail construction in the Tri-City area increased during 2013, the level of new supply remained well below the 2.6 million square feet averaged annually between 2008 and 2011.
The relatively low supply-side pressures from new construction allowed for vacancy rates to decrease in all of the Tri-City markets during 2013. At 8.0%, the Charlotte retail vacancy rate decreased 0.6% of a point during 2013 as net absorption totaling 494,986 square feet outpaced the 231,680 square feet of new supply. Despite the decrease, the Charlotte vacancy rate remained above the 6.9% reported in 2008. The Triangle retail vacancy rate decreased 0.4% of a point during 2013 as net demand totaling 849,391 square feet outpaced 693,982 square feet of new supply. The Triangle’s 2013 vacancy rate of 6.6% was the lowest of the Tri-City markets, but remained 0.1% of a point higher than the 6.5% reported in 2008. New retail supply totaling 38,000 square feet in the Triad market was outpaced by net demand totaling 386,123 square feet during 2013. As a result, the Triad retail vacancy rate decreased 0.9% of a point to 10.1% from the 11.0% reported at the end of 2012. Despite the decrease, the rate remained 0.5% of a point higher than the 9.6% reported at the end of 2010.
An Alabama-based investor has purchased the Golden Gate Shopping Center, located at 2208 Golden Gate Drive in Greensboro, and has begun renovations on the property. The center was built in 1960 and purchased from DDR Corp. for a little over $7 million in March of 2014. The new owners expect to spend around $4 million dollars on the redevelopment project, which could be completed by the 3rd quarter of 2014. The center, which is currently around 70% occupied, will also be renamed to The Village at Golden Gate. A 32,565-square-foot Food Lion and a 24,038-square-foot Staples anchor the 151,371-square-foot center, with new leases announced that include an antique shop and The Green Bean. In an effort to reduce competition, Food Lion also leased (but does not occupy) the 30,248-square-foot space vacated by Harris Teeter, but a new tenant is still being sought for the space.
The Village at Golden Gate is located in the Guilford – Northwest submarket, where the KARNES retail vacancy rate totaled 10.3% as of the fourth quarter of 2013. The vacancy rate in the submarket has decreased 2.9% points since the end of 2011 as net demand totaling 187,210 square feet outpaced 16,219 square feet of new supply. Retail rental rates in the submarket averaged $22.12 per square foot at the end of 2013.
Childress Klein began marketing 310,690 square feet of speculative warehouse space at Ridge Creek West I in response to the tightening warehouse market in the Charlotte region.
Construction of the new building is scheduled to begin the first week of April and should complete by the end of 2014. The building will feature a 30’ clear height, 52’ wide by 50’ deep column spacing and access to extensive on-site trailer storage that will be ideal for distributors and manufactures seeking easy access to I-77, I-485, Highway 49 and the Charlotte/Douglas International Airport.
Charlotte’s 2013-year-end vacancy rate was reported at 6.9% and was the lowest recorded warehouse vacancy rate since KARNES began tracking the market in 1988. Nearly 930,000 square feet of positive net demand was reported in the Southwest warehouse submarket through 2013 resulting in a 7.5% vacancy rate to end the year.
At 310,690 square feet, Ridge Creek West I will be the largest warehouse building under construction in the region. Steele Creek Commerce Park, also in the Southwest submarket, was the only speculative warehouse project under construction in the region at the end of 2013 and will total over 465,000 square feet when fully developed. Pre-leasing has been successful at Steele Creek Commerce Park as Building 1 (70,000 square feet) will be occupied by Kuehne & Nagel Inc. and half of the 70,000-square-foot Building 2 will be occupied by Huber + Suhner.
The Ridge Creek Distribution Center campus already boasts over 1 million square feet of distribution space but only 121,680 square feet was reported available in Ridge Creek Distribution Center IV nearing the end of the first quarter of 2014.
SouthPark Vacancy Trends 2009-3Q13
The 13-acre site that once housed the 284,000-square-foot Maersk Distribution Services building will now include two, 10-story office buildings totaling 480,000 square feet proposed by Lincoln Harris called Capitol Towers at Carnegie.
JLB SouthPark LLC, purchased the site for $21 million during the second quarter of 2012 and began demolition of the building in preparation for construction of up to 591 apartment units.
Lincoln Harris will purchase half of the site to build the speculative 240,000-square-foot buildings.
As of the third quarter of 2013, the SouthPark office submarket totaled nearly 4.25 million square feet with a vacant rate at 10.5%. The 86,754-square-foot Sharon Square office project that SunTrust Bank will anchor was the only office project under construction in the SouthPark submarket during the third quarter of 2013. When completed, Sharon Square will be the first standard office building delivered in SouthPark since One Piedmont Town Center and Two Piedmont Town Center, which have maintained nearly 100% occupancy levels since their completion in 2005/6.
With over 9,336 apartment units under construction during September 2013 in the Raleigh-Durham market, Novare Group and Beacon Partners have broken ground on Skyhouse Raleigh, a planned 23-story apartment building, in Downtown Raleigh. The project is on a fast track completion deadline and is slated to deliver 320-units within 12-months.
The Triangle apartment market continues to attract investors, with current construction levels the highest reported in any period since 1997. The Triangle area market reports, which are prepared by KARNES and made available online at www.aptxchange.com, cover market conditions including construction, vacancy, absorption, and rental trends. Below are a few highlights from the most recent report.
- A total of 105,477 units where surveyed during the Fall 2013 period.
- Over the six-month period ending in September 2013, a total of 2,866 units were completed
- A total of 9,336 units were under construction in the Triangle as of September 2013.
- The regional vacancy rate climbed 0.4% of a point to 5.9% from the reported March 2013 vacancy of 5.5%
- At $898, the Fall 2013 average weighted monthly rent for all apartment units in the Triangle was up $19 from the average reported in March 2013.
To find out more about the multifamily market in the Triangle Region, please visit us at www.aptxchange.com or by calling us at 800.879.7172.
Experienced Charlotte developer, David Furman, plans to build a 74,000-square-foot mixed use project at the corner of Camden and West Kingston Avenue in SouthEnd.
Centro Cityworks announced plans for 1616 CENTER that will be a 5 story building comprised of 23,080 square feet of retail on the first and second floors and 51,000 square feet of office space on third, fourth and fifth floors. Ligon CRE will handle leasing of the commercial space.
The project should be able to capitalize on the explosive growth of new apartment communities under construction and delivering through 2015 in the SouthEnd district including the 323-unit mixed-use apartment and retail project, Camden Gallery by Camden Property Trust, which was assembled and entitled by Centro Cityworks and Ligon CRE in 2012.
Posted on April 18, 2013 by info4karnesco - Charlotte, Commercial Property Exchange, Construction Update, Greensboro/Winston-Salem/High Point, In the News, Industrial, KARNES Perspective, Office, Raleigh, Retail, Triangle
Andrew Jenkins, managing partner of KARNES, was a speaker today at the Appraisal Institute 2013 Real Estate Valuation Conference, which took place in Charlotte. The panel event featured various industry experts including Mark Vitner (Senior Economist, Wells Fargo), Roger Cobb ( Broker, Selwyn Property Group), Jon Morris (Broker, Beacon Partners), and Henry Breaux (Broker, The Providence Group).
Mr. Jenkins’s discussion provided an insight into commercial market data, analysis and trends, from the largest regions across North Carolina.
Click here to download a PDF version of the presentation and read on for a transcript of the presentation’s key points:
Tri-City Market Overview
April 18, 2013
Presented by Andrew Jenkins, Managing Partner, KARNES
Tri-City Market Overview Introduction
- KARNES began producing the Tri-City Commercial Real Estate Market Report in 2012 in an effort to bring a standardized analysis method across the state.
- The intention of the report is to provide an annual review, at a high level, of the commercial markets in the three major NC regions.
After more than five years with no new office construction, the SouthPark submarket in Charlotte appears set to deliver its first new building during 2014. SouthPark, which is the Charlotte Region’s third largest suburban office market with just under 4.25 million square feet, has not seen new office construction since the third quarter of 2007, when the 125,000-square-foot CMC Morrocroft was completed.
SouthPark’s first new office property since CMC Morrocroft will be developed at Sharon Square, a mixed-use project developed by Pappas Properties which includes apartments and retail space anchored by Whole Foods. Pappas Properties plans to build a 105,500-square-foot office building that will be anchored by SunTrust Bank and is scheduled to be complete by mid 2014. SunTrust will consolidate its local operations into approximately 43,500 square feet at the Sharon Square office property.
A combined total of 143.6 million square feet of retail space is located within the Tri-City area. With a retail inventory totaling approximately 60.4 million square feet at the end of 2012, the Charlotte market is the largest of the three North Carolina retail markets, accounting for 42% of the retail inventory. The Triangle market ranked second with 45.4 million square feet of retail space, while the Triad maintained 37.8 million square feet of retail space. Retail construction continued to decline during 2012 as a combined total of 541,782 square feet of new retail space was completed in the Charlotte, Triangle, and Triad markets. This was the lowest level reported since Karnes began tracking the markets. New retail supply during 2012 was most pronounced in the Charlotte region, where 343,100 square feet of new space was delivered. The Triangle region ranked second with 166,138 square feet of new retail space completed during 2012, while the Triad region reported 32,544 square feet of new retail during 2012.
The reduced supply-side pressures allowed for vacancy rates to decrease in all of the Tri-City markets during 2012. At 8.6%, the Charlotte retail vacancy rate decreased 0.4% of a point during 2012 as net absorption totaling 371,754 square feet outpaced the 343,100 square feet of new supply. Despite the decrease, the Charlotte vacancy rate remained above the 8.4% reported in 2009 and the five-year low of 6.9% reported in 2008. The Triangle retail vacancy rate decreased 0.5% of a point during 2012 as net demand totaling 376,483 square feet outpaced 166,138 square feet of new supply. The Triangle’s 2012 vacancy rate of 7.0% was the lowest of the Tri-City markets, but remained 0.5% of a point higher than the 6.5% reported in 2008. New retail supply totaling 32,544 square feet in the Triad market was outpaced by net demand totaling 234,511 square feet during 2012. As a result, the Triad retail vacancy rate decreased 0.5% of a point to 11.0% from the 11.5% reported at the end of 2011. Despite the decrease, the rate remains 1.4% points higher than the 9.6% reported at the end of 2008.
At the end of 2012, the Tri-City markets contained a total of 105 million square feet of warehouse space and 34.8 million square feet of flex space. With 52.4 million square feet of warehouse space, the Triad market accounted for approximately 50% of the Tri-City warehouse space. The Charlotte warehouse market ranked second with 33.5 million square feet, while the Triangle market maintained 18.8 million square feet.
The 270,400 square feet of warehouse space completed in the Charlotte market during 2012 accounted for all of the new warehouse space completed among the Tri-City regions. For the Triangle and Triad markets, 2012 marked the third year in a row where no new warehouse space was delivered. The 270,400-square-foot Ridge Creek Distribution Center IV building in Charlotte was the only warehouse completion during 2012. The building, which was developed as a speculative warehouse project, completed with Averitt Express occupying 68,000 square feet. While new warehouse deliveries in the Charlotte market totaled nearly one million square feet between 2008 and 2012, the Triangle market reported only 412,940 square feet of new warehouse deliveries during the same period. New warehouse completions in the Triad market totaled 1.18 million square feet between 2008 and 2012, with all of the new construction occurring during 2008 and 2009.