Retail property values double in revaluation; double-digit percentage increases for offices
Published: March 22, 2011
Time posted: 1:12 pm
Tags: Andrew Jenkins, Chuck Hicks, Jim Plyler, Karnes Research Co., Piedmont Properties
Some Mecklenburg County retail property and office building owners are going to be coughing up a lot more in property taxes.
According to a Mecklenburg Times review of the county’s 2011 commercial property revaluation — the results of which were sent to property owners Monday — some retail properties throughout Charlotte more than doubled in value, while high-rise office towers in uptown Charlotte had double-digit percentage increases.
Last week, Chuck Hicks, the county’s revaluation manager, said retail properties were likely to see the largest increase in values of all commercial properties. The Meck Times’ review of a handful of retail properties is consistent with Hicks’ findings, showing values are way up since the county’s last revaluation in 2003.
A review of retail properties shows:
• A shopping center built in 2000 at 9010 Harris Corners Parkway in north Charlotte saw its value more than double, from $1.86 million to $4 million. The shopping center features 12,513 square feet.
• A shopping center built in 1968 at 325 E. Sugar Creek Road in northeast Charlotte saw its value nearly double, from $2 million to $3.6 million. The building features 83,416 square feet.
• A shopping center built in 1994 at 2328 Crown Center Drive in east Charlotte saw its value increase 43 percent, to $2.14 million from $1.49 million. The shopping center, built in 1994, sits on 2.3 acres and features 21,191 square feet of space.
• Also, a shopping center built in 1983 at 3501 S. Tryon St. in southwest Charlotte had a 23 percent increase in value, to $9.6 million from $7.8 million. The building features 18,024 square feet.
Andrew Jenkins, managing partner at Karnes Research Co., a Charlotte-based real estate research and consulting company, said retail properties have the lowest vacancy rates of any commercial property type in Mecklenburg County, so their values are more likely to increase compared with office or warehouse properties, where vacancy rates are higher and properties have less revenue per square foot.
Retail vacancy rates have increased overall, although they remain the lowest among commercial property types, he said.
At 10.6 percent in 2010, the county’s retail vacancy rate is much higher than the 4.9 percent in 2006, he said.
That has resulted in a modest decline in average asking rents in the region, he said, adding that the regional average rent for retail is $18.77 per square foot, which is down slightly from the high of $19.34 in 2009.
The county’s average occupancy rate for retail was 89.4 percent as of the end of 2010, Jenkins said.
Demand for retail space in the county was weak during 2010, with 567,172 square feet of space absorbed, which means taken off the market by being leased. In 2009, 22,654 square feet of net absorption was reported. During 2007 and 2008, net absorption levels were 1.05 million square feet and 1.08 million square feet, respectively.
Often, demand in the retail sector is driven by new construction, Jenkins said. During 2007 and 2008, new construction in the county for retail projects totaled 1.2 million square feet and 1.59 million square feet, respectively, he said. During 2009 and 2010, new retail construction in the county decreased to 672,301 square feet and 176,067 square feet, respectively.
Jim Plyler, a partner at Charlotte-based Piedmont Properties, a commercial real estate firm, said values for retail properties will see a larger increase than other properties, such as industrial and office, because retail is more about location than other sectors.
“Retailers thrive on their location,” he said. “If they have a bad location they will move or close when their lease is up, while the best retail locations remain relatively stable.”
A random sampling of office buildings in uptown Charlotte did not find as large of an increase in values as the retail properties The Meck Times reviewed:
• Bank of America Plaza, at 101 S. Tryon St., saw its value rise 80 percent, to $146.3 million from $81 million. The tower, built in 1973, features 866,810 square feet of space.
• Three Wachovia Center, a 1.35 million-square-foot high-rise built in 1999 at 401 S. Tryon St., had a 34 percent rise in value, to $173.9 million from $129.7 million.
• Hearst Tower, 214 N. Tryon St., had a 54 percent rise in value, to $226.8 million from $147.6 million. The property, built in 2001, has 1.6 million square feet of space.
• The high-rise at 525 N. Tryon St. saw its value increase 48 percent, to $81.3 million from $54.7 million. Built it 1998, it has 465,351 square feet of space.
• One Wachovia Center, at 301 S. College St., had a 38 percent increase in value, to $197.7 million from $143.3 million. It was built in 1987 and has 1.54 million square feet of space.
Hicks could not be reached for comment today. Calls to retail property owners were not returned. Some office building owners and managers could not be reached for comment or they said they had not yet seen the results of the 2011 revaluation and, therefore, could not comment.
For the first time, the assessor’s office used an income-based approach to determine values of commercial properties in the 2011 revaluation. That approach involved looking at how much in rent is being generated in geographical regions of the county, although the county did not look at rents being generated by specific properties.
To look up values on other properties, click here.
Editor Deon Roberts and staff writer Sam Boykin contributed to this story.