Future Cities
Emerging Industrial Markets: Charlotte
June 30, 2021
Charlotte’s relatively low cost of living and robust job market make it particularly attractive to millennials. With this has come increased consumption and e-commerce growth, resulting in the city’s strong distribution network attracting a diverse array of industrial users. Demand and development activity are expected to accelerate further due to strong market and economic fundamentals.
Demographics
Charlotte’s population of more than 3.1 million within 50 miles of the city center—23% in the important 18-to-34 age demographic—is expected to grow by 7.8% over the next five years. Steady population growth over the past decade has boosted the local economy and attracted industrial users.
Figure 1: Charlotte Population Analysis
Distance from Charlotte (miles)
Source: CBRE Location Intelligence.
Charlotte’s local warehouse labor force of 50,209 is expected to grow by 8.9% over the next 10 years, according to CBRE Labor Analytics. The average hourly wage for non-supervisory warehouse workers is $13.42, which is 4.6% lower than the national average.
Figure 2: Charlotte Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics.
Location Incentives
Over the past five years, there have been 108 economic incentive deals totaling $754 million at an average of $29,469 per new job in the Charlotte metropolitan area.1
According to CBRE’s Location Incentives Group, among the top incentive programs available in North Carolina is the Job Development Investment Grant (JDIG), which is a performance-based, discretionary incentive program that offers companies a cash grant to offset the cost of locating or expanding in North Carolina. JDIG grants are determined by weighing several factors, including project location, county economic conditions, net new jobs created, wages compared with the county average, capital investment and the company’s industry sector. The state recently extended the sunset date of this program to January 2030, reflecting a strong economic development commitment to job creation and business investment over the next nine years.
Another discretionary program available in North Carolina is the One North Carolina Fund (OneNC), which provides cash grants to expanding or relocating companies based on job creation, capital investment, location and economic impact. Funds must be used for the purchase or installation of equipment, building renovations or repairs, and/or construction or improvements to utility distribution lines or associated equipment. Local governments are required to provide incentive matches of OneNC funding.
Figure 3: Top Incentive Programs
Source: WAVTEQ.
Logistics Driver
Three major interstate highways (I-85, I-40 and I-77) pass through Charlotte, giving it easy access to other large metro areas like Atlanta, Nashville and Richmond. Charlotte Douglas International Airport (CLT) is the sixth busiest airport for operations and 10th busiest for travel in the U.S. CLT has an annual economic impact of $24.6 billion and continues to expand its air cargo capabilities. The growth of e-commerce has attracted a diverse array of major online retailers leasing warehouse space. Charlotte also benefits from favorable tax incentive programs, a welcoming business environment and a relatively low cost of living that has bolstered the size of its labor force. The favorable economic and demographic trends have piqued investors’ interest, with more than $1.4 billion in investment sales last year—an all-time record. Land pricing is competitive with surrounding markets, which has led to an increase in development activity.
Supply & Demand
Charlotte’s growing industrial market recorded 4.1 million sq. ft. of net absorption last year, 4.9% above the previous five-year average. In Q1 2021 alone, Charlotte had 842,596 sq. ft. of positive net absorption—a year-over-year increase of 41.1% and the highest Q1 total in 20 years.
Despite this strong demand, construction completions declined in Q1 to 216,275 sq. ft. However, 5.3 million sq. ft. of industrial space is currently under construction, with 41% preleased.
Although Charlotte has seen unprecedented expansion in the past decade, the market still has potential for more activity as demand from users and investors continues to grow. Development opportunities will continue to emerge, particularly in relatively underdeveloped areas in Gaston, Rowan and Lancaster counties.
Figure 4: Charlotte Historical Data
Note: Excluding Hamilton.
Source: CBRE Research, Q1 2021.
Note: Inventory significantly increased in 2017 due to an audit of the internal database.
Emerging Industrial Markets
Spotlighting markets across North America that offer demographic, logistics and incentives advantages for industrial investors and occupiers
