Pressure keeps building in Charlotte and Triangle.

• Position: Brief Article

Karnes Research Co., a Charlotte-based market-research firm, analyzes the Charlotte and Raleigh-Durham commercial real-estate markets for property owners and developers. President Frank Warren, who focuses on Charlotte, and Vice President Michael Williams, who tracks the Triangle, discuss development in those markets.

BNC: How brisk was construction in Charlotte and the Triangle in 1999, compared with the previous year?

Williams: We had a busy year in the Triangle. Completions were double what they were in '98. In one quarter alone, just under 1 million square feet of office space were completed. For the year, about 2 million square feet of office space were completed. The year before, demand was about 1.4 million.

Warren: In the Charlotte office market, 3.6 million square feet were completed, a record for the city. In 1998, it was 2.6 million. In '99, we had a little over 4 million square feet started. The previous record was 2.8 million in 1997. This is in a market that today is 30.2 million square feet.

Why the growth spurt?

Warren: Our office-vacancy rates had reached a low of 6.3% marketwide in July '98. That's one of the lowest rates in the country. The downtown office vacancy rate hit a record low of 3% last October, one of the lowest, if not the lowest, in the country. It created demand for space and spurred a lot of activity downtown.

In what sector is construction heaviest -- warehouse, residential, office?

Warren: In Charlotte, for the last couple of years, it has been office and apartments. We've had a lot of industrial development, as well. The warehouse vacancy rate has been in the 10%-to-15% range. In 1998, just under 2 million square feet of multitenant warehouse space were completed. In '99, it was 1.4 million, so there's been a slowdown. Warehouse vacancy rates reached 10.2% in October, the lowest rate since April 1995. The record year for warehouse starts in Charlotte was 1994, when just over 2 million square feet were started.

Williams: In Raleigh, too, it's office space. The Raleigh-Durham area's growth is more decentralized -- it's not all happening in one place like it is in Mecklenburg County. It's in Research Triangle Park, a suburban market. There's also growth in Cary and North Raleigh. We have a lot of expansions under way -- major hospitals adding on -- and a few big construction projects, like the Centennial Campus at N.C. State and the U.S. Environmental Protection Agency's new campus in RTP. We have more...