We reported recently in the Beverly-Hanks 2016 EOY Market Report that 2016 was an interesting year for commercial real estate in Western North Carolina. And boy was that true!
Office. Industrial. Leasing. We saw the same trend across all categories: the number of transactions was down, the average sales price was up. Even so, overall vacancy in the four-county MSA dropped to below 3%.
Our numbers were confirmed recently by CoStar Group, who for 30 years have offered real estate firms comprehensive, objective, and reliable information about their regional markets. Here’s how CoStar broke down the three major commercial real estate sectors for the Asheville metro region in 2016.
Asheville’s Office Market
The Asheville office market ended 2016 with a vacancy rate of 2.9%. This compares to a US average of closer to 9.5%. The Asheville vacancy rate was down over the previous quarter, with net absorption totaling positive 127,439 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending the year at 17,927 square feet. Rental rates ended the fourth quarter at $16.06, a 1.9% increase over the previous quarter. A total of one building delivered to the market in the last quarter totaling 90,000 square feet, with no properties under construction at the end of the year.
NAI Beverly-Hanks Commercial scored big among the top office leases based on leased square footage. Of the top 40 transactions of 2016, NAI Beverly-Hanks served on 15 sides, including two in the top 10. NAI Beverly-Hanks represented both the tenant and landlord for the renewal of Tru Point Bank at 100 Executive Park, a 4,787-square-foot space in Asheville’s CBD.
Asheville’s Industrial Market
The Asheville industrial market ended the fourth quarter of 2016 with a vacancy rate of 2.0%. The vacancy rate was down 0.4% over the previous quarter, with net absorption totaling positive 153,554 square feet in the fourth quarter. Vacant sublease space remained unchanged in the quarter, which is to say there was none available. Rental rates ended the year at $5.36, an increase of 22.7% over the previous quarter, which was reported at $4.37 per square foot. A total of one building delivered to the market in the quarter totaling 50,000 square feet. An additional 668,500 square feet remains under construction.
NAI Beverly-Hanks Commercial scored well in the industrial market based on leased square footage, too. Of the top 40 transactions of 2016, NAI Beverly-Hanks served on six sides, 5 of which were in the top 10 leases. NAI Beverly-Hanks represented the tenant in the largest lease transaction of the year, Rexel’s renewal of 157 Asheland Avenue, a 106,434-square-foot space in downtown Asheville. NAI Beverly-Hanks also represented the leasing company for one of the top three under-construction properties of the year, a 45,000-square-foot building at 206 Vista Boulevard, scheduled to deliver in Q1 2017.
Asheville’s Retail Market
The Asheville retail market experienced a slight improvement in market conditions in Q4 2016. The vacancy rate went from 3.3% in Q3 to 3.0% at the close of the year. Net absorption was a positive 159,960 square feet, and vacant sublease space decreased by 22,000 square feet. Quoted rental rates decreased 2.0% from third quarter 2016 levels, ending at $14.14 per square foot per year. A total of two retail buildings with 81,885 square feet of retail space were delivered to the market in the quarter. An additional 56,995 square feet was still under construction at the end of the year.
In a sector where more than half of transaction sides went unrepresented, NAI Beverly-Hanks served on three sides of the top 20 retail leases of 2016. Based on leased square footage, NAI Beverly-Hanks’ largest transaction of the year was representing the landlord for the renewal of the US Postal Service at 107 Etowah Center Road, a 6,076-square-foot space in Etowah, NC, just west of Hendersonville.
About the CoStar Methodology
CoStar Statistics are calculated using CoStar Group’s database of existing, under construction, and under renovation buildings in each given metropolitan area. CoStar Group’s global database includes approximately 95.6 billion square feet of coverage in 4.4 million properties.