Real estate outlook builds on new construction

By Dave Friedman



Demand is high, supply is low, and construction is desperately needed according to commercial real estate brokers in the Golden Crescent. A strong second half of 2014 provides great optimism for next year. Indeed, smaller, less capitalized businesses are being priced out of the most desirable areas.

It’s fast becoming a landlord’s market, brokers from Concord to Lake Norman said. Concessions are less liberal now than they were a year ago.

Gordon Allebach of G-Brokerage in Cornelius says that there is a strong need for Class A office space. He is generally able to find what his clients are searching for, but not necessarily at the price point they are expecting. Some small businesses are having to decide if their second or third choice of location is acceptable.

“It’s hard to keep up with the business,” said Allebach. “But, the market is tighter now. People are surprised how little is available and prices are not as flexible as they were. Fewer concessions are being made to businesses.”

In Kannapolis, an area hit very hard by the economic downturn, revitalization is increasingly apparent. Locus Real Estate President Ed McAfee points to Kannapolis City Hall coming out of the ground on the N.C. Research Campus, and Rowan-Cabarrus Community College moving their cosmetology program downtown as catalysts for growth. Extra infrastructure and foot traffic make the area more attractive.

“We have a group now looking at a 30,000 square foot facility for a retail business,” said McAfee. “They would never have looked at us two years ago. People are seeing the potential. This is an area of growth. It’s like the 77 corridor did over the last 10 years. A lot of DOT projects are taking place in Cabarrus County. They generate a lot of activity. It’s not a spike, or a bubble, we have steady growth.”

Because of rising prices and lack of availability, Sperry Van Ness Senior Adviser Barbara Brown has seen business shift to Charlotte. Five years ago businesses were being granted all sorts of concessions along with rates around $16 a square foot for Class A property. Now, by the lake, rates are running $20 a square foot or more, and there is not much wiggle room.

“People haven’t had the reality check that things have improved,” said Brown. “Prospective tenants are having a hard time. We desperately need new development up here. It’s a real problem. There are prospects out there, but particularly those in retail, what they can afford isn’t available.”

Experts agree that while it is still very difficult to get cash for projects, banks have begun to loosen up some of the requirements for speculative lending. Nevertheless, there’s a demand for more small retail space.

“We’re eliminating the mom and pop types,” said Brown. “Consignment stores, burger shops, beauty parlors. They can’t pay the rent.”