Charlotte industrial development continues to slow

- In 2024, Charlotte’s industrial market has seen less than 7 million square feet (msf) under development, the lowest level since 2021. Since hitting record high levels in Q2 2023, the past six quarters have shown a slowdown of new inventory as the market corrects itself. With the 2022-2023 projects at approximately 6% pre-leased, the vacancy rate has climbed to a 10-year high of over 8%.

- Part of this development slowdown can be attributed to elevated construction costs. Crude oil prices are up 300% since 2020 (currently sitting at ~$70/barrel), but have leveled off since 2022, while steel prices have returned to late 2010s levels after a 2022 spike.

- Economic uncertainty and shifting tenant needs are leading to smaller leases, with nearly 70% of 2024 leases under 100k sf, reflecting tenant "right-sizing”. However, Avison Young’s Charlotte industrial team is tracking about 7.5 msf in active tenant demand, supporting future market confidence. With fewer projects underway and potentially favorable economic conditions in 2025, vacancy rates may drop as leasing activity stabilizes.