Here’s Where the Commercial Market Is Headed Next
If you own or are considering investing in commercial real estate in the Charlotte area, 2025 brings a lot to watch and even more to plan for. The market is shifting fast. While parts of the sector, such as office space, are still recovering from the remote work revolution, others, particularly industrial sectors, are flourishing.
As Henderson Properties continues advising landlords across Charlotte and its growing metro, we’re seeing one truth play out again and again: adaptability is everything. Whether you own Uptown offices, suburban flex space, or retail strips in fast-growing areas, knowing the current trends can help you navigate risk and uncover opportunity.
The Office Market
Let’s be honest: Charlotte’s office market is facing some challenges right now. In 2025, about 25% of the city’s office spaces are still vacant, especially in Uptown Charlotte, which has been hit the hardest. The buildings that once housed corporate headquarters and lively startups are now offering generous lease concessions to attract tenants and remain top of people’s minds.
The culprit? Remote work. Hybrid models are now the norm, and companies are downsizing office footprints to cut costs. This “rightsizing” has created a supply glut, especially among Class B and older buildings without the amenities today’s tenants expect.
But it’s not all doom and gloom. High-end, well-located Class A spaces with modern amenities still attract tenants just more selectively. The race isn’t over, but the terms have changed. Smart landlords are rethinking space configurations, offering flexible lease terms, and investing in building upgrades to stay competitive.
If you own aging office inventory, now is the time to evaluate options. Upgrades are one route. However, increasingly, owners are considering full repurposing. Which brings us to…
Office-to-Residential Conversions
What was once a bold idea is now becoming common sense, especially in Charlotte. As office vacancies remain high and housing demand continues to climb, the city is embracing a new trend: converting outdated or underused office buildings into modern apartment communities.
Over 1,700 new rental units are soon to be available, transforming former office spaces into cozy homes. Exciting projects like the refurbishment of the old Duke Energy headquarters showcase this positive change. City officials are wholeheartedly supporting these efforts, seeing it as a wonderful opportunity to reduce empty buildings, provide more housing, and breathe new life into the city centers.
Here’s why office-to-residential conversions are gaining ground in Charlotte:
- Solves Two Problems at Once: Reduces excess office space while meeting the rising demand for housing
- City Support: Charlotte is streamlining zoning and permits for qualified adaptive reuse projects
- Faster Than Ground-Up Construction: Many conversions can be completed more quickly than building from scratch
- Strong ROI Potential: Residential rentals in Charlotte continue to perform well, with low vacancy and steady rent growth
- Exit Strategy for Underperforming Assets: Offers a way to reposition properties that may not rebound post-COVID
Industrial Is the New Darling
While offices struggle, industrial real estate is doing quite well. Charlotte remains a major logistics and distribution hub for the Southeast, and 2025 has only underscored its strength.
In Q1 alone, over 2.3 million square feet of industrial space was absorbed, pushing vacancy rates back down below 9% a positive sign after the construction surge of 2022–2023. Large leases of over 600,000 square feet are being signed again, led by manufacturing firms and e-commerce distributors.
Tenants are especially focused on well-located, last-mile distribution centers near major roadways. Flex spaces and mid-sized warehouses are also seeing strong demand from regional suppliers.
For landlords, this is a market where you can still find leverage. Rents are up modestly and expected to keep rising as long as supply remains tight. If you’ve been sitting on older warehouse stock, this might be the year to renovate or cash out.
Retail Isn’t Dead… It’s Getting Smarter
Charlotte’s retail sector has found its footing after a few uncertain years. Malls may be struggling in some parts of the country, but mixed-use and experiential retail is alive and well here.
Think brewery-anchored plazas in Matthews. Boutique fitness next to local coffee shops in Plaza Midwood. Walkable retail in developments like Optimist Hall. These aren’t just shopping centers… they’re community destinations.
Landlords who embrace this shift, curating service- and experience-based tenants, adding outdoor seating or event space, are thriving. Static strip malls with generic tenants? Not so much.
Another win: retail vacancy is well below office levels. The key is tenant mix. Restaurants, wellness providers, med spas, and even co-working pop-ups are taking the spots once held by big-box retailers. Flexibility is king.
At Henderson, we’re helping owners modernize older retail centers and attract the right tenant mix to meet evolving consumer demand.
What Landlords Should Be Doing Right Now
In 2025, commercial real estate in Charlotte requires more than autopilot. Market shifts mean landlords need to stay sharp, strategic, and responsive.
Take stock of your properties and ask: Are you meeting tenant needs? Are you positioned for what’s next?
Here’s where to focus:
- Office: Check occupancy, modernize where needed, and evaluate potential for conversion if leasing remains slow.
- Industrial: Lock in reliable tenants now and keep rates competitive while demand is high.
- Retail: Talk with tenants, adapt your mix, and lean into services and experiences that will last.
Your Partner in Commercial Performance
At Henderson, we don’t just track trends, we help landlords respond to them. From leasing support and market analysis to property management and redevelopment consultation, we partner with commercial property owners throughout the Charlotte region to maximize performance and minimize risk.
Whether you own one warehouse or a mixed-use portfolio, we can help you navigate what’s next. We know Charlotte. We know the tenants. And we know how to position your asset in the market, as it is no longer the same as it used to be.
Let’s talk strategy. Reach out for a commercial portfolio consultation and let’s build what’s next, together.
