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With so many people and businesses moving to the Queen City, why are there more office spaces than ever?
Local industry experts say a number of factors are driving the increase.
Chuck McShane, senior director of market analytics at real estate data company CoStar told WCNC Charlotte anchor and reporter Jane Monreal, the last time he has seen vacancy rates this high, was during the recession from 2007 to 2009.
"We've seen 60% of leases that were signed prior to the pandemic, had now expired," said McShane. "And then some large spaces that are still on longer leases, have made their intentions known. So, we know what to expect going forward."
He also noted the pandemic played a major part in how the office market looks right now.
"What we're going to see now is more of a battle for the second tier, or the best of the second tier office buildings, in Uptown in particular," McShane said. "So as less new office space comes online, we'll see more tenants considering older buildings, the best located older buildings, the older buildings that have the best amenities. And that's going to shake out over the next two to three years."
In the meantime, a number of architectural and construction firms are trying to hole up the high vacancy rates.
James LaBar, senior vice president of economic development for Charlotte Center City Partners, said the organization is tracking two factors when it comes to the city's growth.
One is the slowing down of new construction.
"Since the pandemic started, we've really paid attention to the work rhythms," said LaBar. "And what we see right now is, if you compare it to pre pandemic levels, we're around 75 to 80% back, of people coming into the office."
LaBar explained the organization realized that some of Uptown's vintage buildings still have some life in them.
"So we really started working on trying to elicit ideas about what other activities need to be in uptown, to make uptown stronger," LaBar said. "One solution that we saw was out of Seattle, and Seattle did a call for ideas where building owners and tenants and architectural firms volunteered their building to be studied. And so we took that and put a Charlotte spin on it, and made it a design competition."
The competition, held in 2023, granted the Brooklyn and Church Street project a $15,000 prize for first place with its design to convert the former Duke Energy headquarters.
Donna Council, Duke's senior vice president of administrative services, told WCNC Charlotte in 2022, the design fit with the company's own investment goals at a time when it was consolidating its assets.
Council said at the time, "We love the idea that they're going to sustainably reuse this property to develop into some luxury condos and retail space."
In addition to conversion projects, LaBar said there are other possibilities for existing vintage buildings.
"One of the things we anticipate, if construction costs remain high for new starts to start, we'll probably see more investments in existing buildings. And we're getting a strong sense of that now, with a number of buildings being upfitted or repositioned with modern offices," LaBar said. "Then we are hopeful and optimistic on the demand side, as Charlotte is still a very attractive place for companies, not only that are here to expand, but also companies in higher cost markets, especially looking for a good landing place with a solid talent base."
Contact Jane Monreal at jmonreal@wcnc.com and follow her on Facebook, X and Instagram.