IRR-Charlotte Mid-Year Viewpoint 2015 Local Market Report - Retail
The Charlotte retail market continues to be very active. Tanger outlets was delivered in 2014 and contains close to 400,000 square feet and is currently 97% occupied with 13,000 square feet availble. Over 600,000 square feet of space was completed in the second half of 2014 which included Tanger Outlets, a Walmart Neighborhood shopping center and a 150,000 square foot community center. The average rental rate for the Mecklenburg County market was $19.25 per square foot whils surrounding counties were $16.00 per square foot.
Net absorption totalled 511,000 square feet for the Charlotte MSA; however, one submarket had a negative 216,000 absorption rate due to Sears (91,000) closing at a Regional Mall and Target (98,000) square feet vacating space. The 98,000 square feet Target space is to be backfilled by two retailers, Gabe's and Conn's. Several Former Food Lion locations have been replaced by Publix, Whole Foods, and Fresh Market grocery chains. Publix began its entry into the Charlotte market backfilling two former Bi-Lo anchors in addition to the delivery of one new store. Publix will continue its expansion through 2014 and into 2015
Walmart has has several Neighborhood Markets under construction that opened in late 2014 and the first quarter 2015. Publix’s entry into the market is expected to have a positive effect on market rental rates for other retailers. The number of non-anchor retail lease transactions have also increased along with declining vacancy rates. According to Karnes and other market reports shopping center landlords are beginning to pull back on concessions as vacancy rates are expected to remain stable to declining while rental rates are expected to remain stable to increasing over the next five years. According to Karnes, the vacancy rate for the overall retail market has increased to 8.8% with neighborhood and community centers between 9.6% and 15%. The community center rate spiked as a result of the Gaston County market having a large negative net absorption. The majority of properties under construction into 2015 are grocery anchored neighborhood centers (78%) in five developments which can expect to have small shop expanding in the market as well as relocating. According to Karnes there was 7.5 Million square feet of proposed space at the end of 2014 with two announcements for large mixed use developments in 2015.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.