The city of Charlotte has maintained a strong retail market, with smaller spaces proving to be especially competitive within the sector over the last year.

Charlotte ranked first among the top 43 U.S. retail markets with at least 100M SF of inventory in asking rent growth and overall investment performance, according to a recent CoStar report.

Brandon Svec, national director of retail analytics at CoStar Group, noted that several fundamentals combined in Charlotte’s retail rise.

“After coming in sixth place last year, Charlotte’s rise to the top was predicated on demographic tailwinds, a diversified economy, and a disciplined supply pipeline,” Svec said in a statement.

Retail rent growth in Charlotte averaged 7.4% last year, according to CoStar. Over the past 10 years, the city’s retail rents have increased 57%, compared to just 34% nationwide. 

Retail vacancy in Charlotte was just 2.9% in Q3 2025, marking three consecutive years below 3%, according to an Oct. 2025 Colliers report. 

The rumors of retail’s demise in the city turned out to be greatly exaggerated, said Clay Grubb, CEO of Grubb Properties.

“Retail had 10 brutal years, with everybody saying retail was dead,” Grubb said, speaking at the Bisnow Charlotte Commercial Real Estate Market Kickoff on Jan. 15. “But ever since coming out of Covid, the consumer has been very strong, and so the retail sector has been very strong.”

Smaller spaces were especially competitive for retail tenants, with vacancy in buildings under 10K SF at only 1.77%, Colliers reported. 

Converting the first floors of office buildings into spaces for retail tenants has proven to be a successful strategy in Charlotte, Grubb noted.

“They’re paying real rent and changing the images of office buildings, making the retail sector much healthier than we’ve seen in 15 years,” he said at the Bisnow event last week at the Union at West Station.

A recently released Transwestern Atlanta office report indicates that the sector is showing signs of life.
Absorption: Companies that have kicked the can for the last couple of years are finally starting to make real estate decisions, resulting in the first positive absorption quarter for the Atlanta market in over two years.

Vacancy: Atlanta always carries a high vacancy rate compared to other metros, even in good market conditions. The delivery of three vacant buildings totaling 869,524 SF contributed to an increase in the market’s direct vacancy of 40 basis points or 25%.  

Sublease Space: Sublease inventory has declined 4.2% over the last two quarters, with the completion of several large transactions.

Construction: The amount of space under construction has hit a 14-year low (for SF underway), partly due to leasing pessimism and high construction costs. 

According to Northmarq’s Single-Tenant Q1 2024 report, investment sales activity hit $11.2 billion, a 26% increase from the previous quarter. While the numbers reflect “a 4.5% decline compared to this time last year,” the Northmarq analysts note that the sector continues to perform consistently. “The first three months of 2024 put the market on a promising trajectory to surpass 2023’s total,” they added.

Investment sales volume by single-tenant asset type was as follows:

• Industrial — $4.03 billion

Cap Rate Increases

Northmarq reported that the average cap rate for the combined net-lease sector increased by 20 basis points (bps) to 6.5%. This represented “the highest average seen since mid-year 2015,” the analysts pointed out. While single-tenant office cap rates topped out at 6.81%, retail remained the lowest at 6.38%. Meanwhile, the industrial cap rate reached 6.55%, or 102 bps higher than the previous year.

“As buyers and sellers continue to adjust their pricing expectations in today’s market, further increases across all sectors should be expected as we move through 2024,” the analysts said.

Changes in Buyer Type

There’s also been a change in who’s buying these net lease properties.  During the past decade, private buyers have been prominent, making up between one-third and one-half of the activity in this sector. But during Q1 2024, public REITs became more active.

“With 36% of the overall single-tenant market, public REITs also dominated market share in the office and retail sectors,” the Northmarq report said. They weren’t as active on the industrial side, however. This doesn’t mean that private buyers are down and out, though.

Still, interest rates remain elevated. As a result, “some individual investors who aren’t being driven to act by a 1031 exchange might decide to rest on the sidelines for a little while longer,” Northmarq analysts said.