Commercial real estate sales nationwide hit $543 billion last year, which is not far below 2007’s all-time peak of $573 billion. That mark may well be surpassed in 2016, as industry experts predict growth of nearly 7%.
The Charlotte commercial market is a major contributor to that growth. According to data from Cushman and Wakefield, commercial sales have already surpassed $904 million so far this year.
The count includes sales of office buildings, retail centers, hotels, apartments, industrial buildings and warehouses of $2.5 million or more. With a number of deals in the pipeline, there’s a good chance that sales in the Charlotte area may exceed last year’s total of $2.4 billion.
Charlotte’s commercial sales figures have seen steady growth in recent years, thanks to the area’s rate of job and population growth. Continued improvements bring the numbers ever closer to 2007’s all-time high of $2.52 billion.
A robust economy boosts investor confidence in the Charlotte area, where job growth rates of around 3% a year are well above the national average. New jobs mean more new residents, and Charlotte’s population has been growing by 1/5 to 2% annually for the last 5 years. Industry observers predict continued growth, which may be as high as 2.6% statewide this year.
This stable rate of growth both encourages local investment and attracts investors from across the country, as well as international funds. One Wells Fargo Center in uptown Charlotte sold to an LLC connected to a Nevada businessman for $284 million in March of this year, a new record for the area.
While Uptown is the site of many high-profile commercial deals, properties in other sectors and locations are in demand as well. Suburban properties, industrial space and “value-add” assets that might take some additional investment are also doing well. Investment in Charlotte CRE includes brisk activity in both development and renovation.
Charlotte Plaza, purchased last year by New York-based Rabina Properties, is set to undergo a $14 million renovation. The 645,000 square foot office property in Uptown will be modernized and rebranded in an effort expected to wrap up in 2018.
Other major commercial renovations underway in the city include South Tryon Square, which was recently purchased by an affiliate of Goldman Sachs as well as 400 South Tryon, which is adding a new lobby, fitness center, and retail space.
There has been some uncertainty in the industry around the effect House Bill 2 may have on participation in the Charlotte commercial market. The new law limits local nondiscrimination protections for LGBT people, and may have a negative impact on the city’s long-term growth. Despite the controversy surrounding the bill, which prompted PayPal to cancel a 400-job expansion in Charlotte, interest from investors continues to be high.
All of this is good news for CRE in Charlotte. Development of new properties, repurposing of existing city-center buildings, and an increase in mixed-use suburban spaces are all likely to continue at a brisk pace, bolstered by investors made confident by the area’s solid, steady growth.