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- Trinity Capital repurchased 440 South Church for $75.7M and plans $20M renovation.
- 440 South Church sits near mid‑40% occupancy while Charlotte’s office vacancy holds at 22.5%
- High vacancies force deep discounts, risk tax revenue loss if commercial values fall.
Charlotte office towers with high vacancy rates continue to sell for a discounted cost, attracting investors ready to make million-dollar changes to the space.
The latest building part of the growing trend is uptown Charlotte’s 440 South Church Street, the former Ally Center. But there’s an interesting twist to the sale. The building’s original developers decided to repurchase the tower.
Trinity Capital Advisors, along with New York-based Town Lane, purchased the building for over $75.7 million last week, according to Mecklenburg County records. The group bought the site from Epic Investment Partners, which originally spent over $108.7 million on the building in 2014.
The new sale price represents a 30% decrease from the prior one.
Trinity Capital helped construct and deliver the 15-story tower in 2009. “We knew the building had tremendous potential back then and believe there’s even more potential for it now,” Walker Collier, a managing partner at Trinity Capital, said in a news release.
The building’s potential includes a $20-million renovation. Trinity Capital and Town Lane intend to reposition the lobby, add hospitality lounges, upgrade the amenity experience and improve the retail presence, according to the release.
And Trinity Capital is hoping the upgrade appeals to new lessees, a trend seen in other office towers including 550 South and One Independence Center at 101 N. Tryon St.
Occupancy rates and discounts on Charlotte towers
As of now, 440 South Church is at about at mid-40% occupancy rate, according to Trinity Capital. That’s about average for older uptown buildings, Chu said.
Occupancy rates are one factor in determining an office building’s worth and profitability.
“If there’s a huge vacancy, the net operating income of a building will be very low and that causes the value of the asset to decrease,” said Yongqiang Chu, director of the Childress Klein Center for Real Estate at UNC Charlotte Belk College of Business.
Chu points out that 440 South Church’s net operating income was about $10 per square foot in 2022. That’s been reduced to a little over $5, Chu said.
That decrease in occupancy and income can also lead to defaulted loans. Take Charlotte Plaza at 201 South College. It sold in August for $70 million, a 56% decrease in its previous purchase price. That loan matured in 2023. And as of August, the building was about 32% occupied.
In May, 525 N. Tryon sold for $24 million, a significant markdown from the almost $100 million county appraisal value and the $60 million the previous owner paid for the site a decade ago. That building was about 46% occupied.
“It’s not surprising that these buildings are selling at deep discounts,” Chu said. “We’re probably going to see 30% to 40% vacancy rates on average for uptown towers for a while … It’s a trend happening across the U.S.”
Charlotte’s office vacancy rate
Here’s a broader look at the Charlotte office market:
The city’s office vacancy rate remained the same heading into the end of the year.
The rate sits at 22.5%, according to an October report from commercial real estate firm JLL. The rate has hovered in the 22% range since it’s peak of over 24% last summer.
The rate is above the national average, which sits at about 18.7%, according to a September National Office Report from real estate research firm Yardi Matrix.
One of the broad concerns with high vacancy rates is, again, property value. If property values decrease, it could lead to a loss in commercial property taxes. Charlotte and Mecklenburg County rely heavily on property taxes.
The city is expecting to see almost $495 million in property taxes, while the county is expecting $1.49 billion, according to the 2026 fiscal year budgets. That’s over half of the municipalities’ income stream.
It’s unclear how much comes from commercial properties but if office towers aren’t paying their share, municipalities may rely more heavily on residential taxes, Chu said.
But that’s a longer term issue, he said. And one that may never occur, especially as the city continues to grow in population and remains attractive to new businesses.
More people equals more taxes, and more businesses equals lower vacancy rates.
Charlotte’s high leasing activity and office construction
No red flags are being flown around Charlotte’s office vacancy rate. That’s mainly because office construction has completly slowed and leasing activity is high.
In Plaza Midwood, 150,000 square feet of office space opened at the Commonwealth development in August. For a short time, that was the last office space being constructed in the city.
But in September, the Queensbridge Collective project announced it was breaking ground on its 356,000 square foot office space in South End. Vacancy isn’t a problem there because North Carolina’s largest law firm, Moore and Van Allen PLLC, will anchor the space.
With less office space coming online, the other buildings will begin to fill up.
Building built in the last decade have less than 50,000 square feet of leasing space left, according to JLL. And those buildings are expected to be fully leased by the first quarter of next year.
The Charlotte metro area as a whole is also seeing high leasing activity.
Almost 1.2 million square feet of new leasing deals were completed in the third quarter of the year, according to an October Cushman & Wakefield reporting looking at the Charlotte region.
The leasing activity is fueled by big moves such as First Horizon Corp. becoming 110 East’s anchor tenant in South End, taking up over 88,000 square feet. And most recently, TD Bank expanding its is corporate footprint in Ballantyne.
Desiree Mathurin
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