“First in Flight” is the state slogan of North Carolina — a nod to the town of Kitty Hawk, where the Wright Brothers’ made history with the first controlled, sustained flight of an engine-powered aircraft. You could say that the state continues its ascent as a key business hub for a number of professional industries.

A pivotal geographic location near the center of the Eastern seaboard, and prestigious universities, North Carolina sits only third behind Texas and Florida for growth, with its population increasing 11.9% between 2010 and 2022, according to USA Facts.

The office market in North Carolina, particularly in the cities of Charlotte and Raleigh, has shown resilience and adaptability in the face of economic flux brought by the pandemic, its aftermath, and the rise of remote work. Both cities have unique strengths and are home to thriving industries that drive demand for office space.

Charlotte’s Office Market Readies for Growth

Charlotte’s lead industries include financial services, healthcare, technology, energy, manufacturing and logistics, real estate and construction. According to the Colliers 2024 Q3 Charlotte Office Report, the Charlotte market entered a more stabilized period as of Q3 2024 after several years of volatility. The overall vacancy rate in Charlotte has remained within a 50-basis point range over the past year, indicating a balanced supply-and-demand dynamic.

Key statistics from Colliers include:

  • Asking rents have grown moderately, with the average full-service asking rental rate at $33.48 per square foot in the second quarter of 2023.
  • Construction has been subdued, with minimal deliveries between July and September 2024. Few projects are expected beyond 2025.

 

Charlotte is a major financial hub and is often referred to as the second-largest banking center in the United States after New York City, per Colliers. The financial services industry, including banking and insurance, is a significant driver of office space demand. Major companies like Bank of America and Wells Fargo have a substantial presence in the city. Moreover, the technology sector is growing, with companies like Red Ventures, a tech investment company, and LendingTree, a loan comparison website, expanding their footprints, according to the Newmark Charlotte Office Report.

Charlotte also has a robust infrastructure and a business-friendly environment. It has a thriving downtown and central business district, but it’s not overwhelmingly large, like New York, Los Angeles, or Chicago, and it’s significantly more affordable. The city’s well-developed transportation network, including the Charlotte Douglas International Airport, ensures easier travel. Charlotte’s diverse economy and skilled workforce also make it an attractive business destination.

KBS’ Carillon, at 227 West Trade Street, has 488,277 square feet of rentable space and is a distinctive part of the city’s skyline. Within a block of Main & Main in Uptown Charlotte, Carillon shares a courtyard with the Grand Bohemian Hotel, a brand-new luxury property. Carillon is a trophy-quality office tower that’s LEED Gold-certified.

The building is a showcase of museum-quality interiors and artwork, as well as a newly redesigned two‐story lobby featuring Italian Verona marble floors and an annual art installation; this year’s is a 40’ kinetic sculpture by world-renowned artist, Jean Tinguely. Carillon also boasts a first-class fitness center, state-of-the-art conference center, on-site childcare, a car wash, and a Morton’s Steakhouse.

Raleigh’s Talent Pool is Fueling Office Demand

Raleigh, as part of the Research Triangle, has a dynamic office market driven by its strong educational and research institutions, life sciences, healthcare, advanced manufacturing, and clean technology. What’s more, the greater Raleigh-Durham area has benefitted from low unemployment and the migration of a skilled population.

According to a CBRE report, the Raleigh-Durham office market vacancy rate ended Q3 2024 at 17.4%; the average asking rent for Class A office space ended at $32.76 per sq. ft.; and the average asking rent for Class B office space, $25.82 per sq. ft.

Compared to other tech hubs Raleigh is an attractive location for both businesses and employees. It’s strengths include a highly educated workforce, robust research and development ecosystem, and high quality of life. Its office market is heavily influenced by the technology and life sciences sectors, with major tech industry players that include IBM and Cisco.

Research Triangle Park, one of the most prominent high-tech research and development parks in the United States, is home to North Carolina State University, Duke University, and the University of North Carolina at Chapel Hill — renowned education institutions that foster innovation and attract tech companies because of the talent pool.

KBS’ Bank of America Tower at 4242 Six Forks Road is an 18-story Class-A and mixed-used office building with 300,342 square feet of rentable space. Located in midtown Raleigh, it’s LEED-Gold Certified and offers a unique combination of live, work, shop, play, and stay. Two renowned restaurants are on the ground floor — the Capital Grille and Stir, and the building offers a state-of-the-art conference center.

Both Charlotte and Raleigh have distinct advantages that make them attractive office markets. Charlotte’s financial services sector and strategic location position it as a major business hub, while Raleigh’s technology and life sciences sectors, supported by a strong educational infrastructure, drive its office market. Low unemployment will also make the future outlook for the office markets in Charlotte and Raleigh positive.

Despite the positive outlook, both markets face challenges. In Charlotte, the expiration of pre-pandemic leases and the consolidation of office space by major companies could impact vacancy rates, as cited in the Colliers report. In Raleigh, the high vacancy rate across all asset classes indicates a need for continued economic growth to absorb the available space.

Both cities offer a favorable business environment, a skilled workforce, and a high quality of life, making them attractive destinations for companies seeking office space. As the markets continue to evolve, the focus will be on balancing supply and demand, addressing challenges, and leveraging each city’s unique strengths to drive future growth.

Please visit KBS.com/Insights to learn more.