Economy
The Charlotte economy continued to expand, driven by employment growth in office-using job sectors. The Metro ranked fifth in job growth among U.S. markets tracked by Cushman & Wakefield Research, adding 20,600 jobs year-over-year (YOY), a 1.5% increase. Professional and business services (3.5%) and financial services (1.1%) recorded notable gains over that same period, reinforcing Charlotte’s position as a major U.S. financial hub.
Demand
New leasing activity slowed in Q3, totaling more than 558,000 square feet (sf), bringing the year-to-date (YTD) figure to 2.7 million square feet (msf). Following four consecutive quarters exceeding 1.0 msf, Q3 recorded the lowest quarterly leasing volume in ten quarters. Leasing activity was concentrated in Charlotte’s urban core submarkets—Central Business District (CBD)/Uptown and Midtown/South End—with nearly 140,000 sf inked in Q3, followed by the South/485 submarket at 106,155 sf. In the largest deal of the quarter, wood product manufacturer Huber Engineered Woods leased 51,500 sf, expanding and relocating from the University submarket to Savona Mill, an adaptive reuse development in FreeMoreWest. Despite the quarterly slowdown, the market remained active with more than 10 requirements exceeding 100,000 sf. Limited availability in the newest and highest-quality buildings has prompted some occupiers to consider older vintage Class A space as an interim solution while awaiting development.
Occupancy gains reached nearly 350,000 sf in Q3, the second-largest quarterly gain in five years, bringing YTD net absorption to nearly 638,000 sf, the highest annual pace in over five years. CBD/Uptown led all submarkets with more than 150,000 sf of quarterly occupancy gains, including American Express’nearly 98,000-sf move-in at Legacy Union – 6Hundred and Huntington National Bank’s 43,000-sf expansion on the top two floors of One South at the Plaza. The University submarket also recorded strong absorption as Mecklenburg County occupied nearly 98,000 sf at 10101 David Taylor Dr. Previously-signed leasing is anticipated to support further occupancy gains through 2026 and into 2027 as multiple larger tenants complete buildouts and move into their space.
Supply
Overall vacancy declined 80 basis points (bps) quarter-over-quarter (QOQ) and 250 bps YOY to 23.1%, extending the market’s recovery from its 25.9% peak in Q2 2025. Occupancy gains from leasing in previous quarters contributed to the decline as tenants completed their buildouts and occupied their spaces. The urban core submarkets recorded a three-year-low as vacancy declined to 20.2% overall, a 70-bp drop QOQ. The vacant supply of Charlotte’s trophy space, the top-tier assets comprising 15.2% of market inventory, continued to shrink further as it fell to just 3.9% in Q3, a 630-bp drop YOY, further limiting the available options in Charlotte’s premier offerings.
Two build-to-suit projects for AmWins and TowneBank began site work in SouthPark during Q3, ahead of anticipated vertical construction. Together, the projects will include 100,500 sf of additional space available for lease across multiple floors. While only one project is currently under construction, strong preleasing and demand for the newest assets are anticipated to move speculative projects forward even as headwinds from rising interest rates increase financing costs for developers.
Pricing
Average asking rental rates increased 0.5% QOQ to $35.45 per square foot (psf), while Class A rates rose by 1.3% to $39.55 psf. Tight trophy availability in Charlotte’s urban core continued to push asking rents higher, reaching record of $64.44 psf and commanding a 50.2% premium over other Class A assets in the urban core. As trophy vacancy is anticipated to shrink further, demand may shift toward other Class A buildings, supporting additional rent growth.
Investment Sales
Office sales activity was unabated in Q3 despite elevated vacancy higher financing costs. The largest transaction of the quarter was Beacon Partners’ $97.1M sale of The Station at LoSo, a two-building Midtown/South End portfolio developed in 2023 and 2024 to Corebridge Real Estate Investors and Crestlight Capital. The mixed-use project was 96.0% leased upon sale and provides strong retail activation and lite rail connectivity. Other notable transactions included Investicore’s $64.0M purchase of ThExhange, a 13-building Class B suburban office portfolio in the Airport submarket and Atrium Health’s $24.5M owner-user acquisition of the fully vacant Escent Research Park in the University submarket.
