CBRE Q1 figures show Richmond industrial vacancy rose to 5.6% (+120 bps QoQ, +220 bps YoY); availability 6.2%; net absorption -207K SF (vs +629K SF Q1 2025). Despite weakness, avg asking rate climbed to $8.65 (+5.1% QoQ, +1.8% YoY). The supply story is the headline: under construction nearly quadrupled YoY from 3.0 MSF to 11.5 MSF, with Q1 deliveries at 1.4 MSF (vs just 104K Q4 2025). CBRE, JLL, Porter Q1 Report (Porter shows 8.31% for 40K+ SF excluding owner-user, vs CoStar 5.5%).
Richmond was the tight SE outlier as recently as Run #28 (May 8). The construction pipeline catching up to peers (Savannah 7.1 MSF, G/S 7.6%) signals the rent runway is closing. Expect 2H 2026 to test landlord pricing power as deliveries decompress occupancy below 94% for the first time since 2022.
For TCA: any Richmond Class B holdings should be pushed to sale or refi window now while $8.65 asks still hold. Avoid new spec starts in submarkets adjacent to the 11.5 MSF UC base unless under LOI. Reposition capital toward Charlotte sub-125K SF where vacancy 5.8% and rent at $10.63 remain supported by limited shallow-bay supply.
Trepp April 2026 report: overall CMBS delinquency 7.54% (down 1 bp from March; up 51 bps YoY). Office held at 11.69% (down 2 bps), multifamily 7.71% (up 56 bps), lodging 6.52% (down 79 bps), retail 6.31% (down 31 bps). Industrial rose 31 bps to 0.96% -- entirely due to one portfolio loan going 30-days delinquent. With maturity-distressed loans included, headline would be 9.06%. Trepp, MBA Newslink.
Industrial credit performance is still 7x better than next-cleanest property type (retail 6.31% vs 0.96%). This explains why CMBS lenders continue to price industrial conduit paper inside multifamily and office spreads despite vacancy rising into the 7% range nationally. The 31 bps move is noise from one borrower, not a trend signal.
For TCA and active borrowers in the SE: industrial debt remains the friendliest CRE financing market. Target 5/7/10-year fixed conduit takeouts on stabilized SE assets where 10Y is the rate-cap anchor; pricing will widen post-Memorial Day if 10Y holds above 4.45%. Watch which portfolio went delinquent -- may indicate a tertiary-market or older-vintage borrower.
Matthews Q1 2026 report on Charlotte's shallow-bay (sub-125K SF) segment: vacancy 5.8% (up from 4.3% YoY but well below broader market); asking rents $10.63/SF (vs $10.16 a year ago; peaked near $11 in late 2025); 2.2 MSF under construction (up modestly from 1.5 MSF); $176.9M Q1 transaction volume at $119/SF (up from $109 YoY). Negative 275K SF absorption signals short-term softening but fundamentals remain healthier than larger bulk segments. Matthews, Capital Analytics, ABC Carolinas brief.
Charlotte's two-speed market continues: bulk distribution softening while small-bay outperforms. The +$10/SF rent on shallow-bay vs sub-$8 on bulk creates a clear arbitrage. Post-2015 vintage absorbed 6.5 MSF positive in 2025; older stock saw net losses. ABC notes data-center backlog at 10.6 months in SE vs 8.3 for non-DC -- specialized work concentrating capital in Huntersville/Concord/Rock Hill.
For TCA acquisition pipeline: target post-2015 vintage, multi-tenant flex / shallow-bay 50-100K SF buildings in Concord/Huntersville/Rock Hill at sub-$120/SF basis. Avoid Class C product older than 2010 -- it is structurally bleeding tenants to new product even in a softening market.
The 11.5 MSF UC pipeline now exceeds Charlotte's 5.6 MSF 2025 deliveries on a market that is one-third the size. Watch for 1H 2026 negative absorption to extend; rent inflection likely Q3 2026 if demand does not catch up. Implication: SE industrial cap-rate dispersion widens, with Richmond pricing 50-75 bps inside Charlotte by year-end.
Northampton's 32-month length is the new benchmark. Combined with the General Assembly's downzoning constraints under the 2024 law, developers face a path-dependency problem: site-control without entitlement is now a 2-3 year carry in many target counties. Capital will rotate to entitled-already infill or to SC/VA jurisdictions.
0.96% industrial delinquency vs 6.31% retail (next cleanest) vs 11.69% office. The 7x credit-performance gap is not yet priced into A-quality industrial spreads, which still print 30-50 bps wide of pre-2022 levels. Refi window remains open through summer if 10Y does not break 4.60%.
Aggregating post-2015 vintage, 50-100K SF multi-tenant flex/light industrial buildings in Huntersville-Concord-Kannapolis-Rock Hill at $115-125/SF basis. Underwrite to 5.5-6.0% in-place cap, 4-5% rent growth, exit 5.5% in 2030. Limited supply pipeline (2.2 MSF total UC) provides downside protection vs bulk.
With 11.5 MSF UC, Class B owners face 12-18 month window before 2H 2026 deliveries pressure asks below current $8.65. Sale targets: 1995-2010 vintage bulk buildings on dock-high configurations vulnerable to newer Class A competition. Pricing buyers off Q1 2026 comps before market reads the supply data clearly.
CMBS industrial delinquency of 0.96% supports tight conduit spreads (~145-155 bps over 10Y for stabilized A-quality SE assets). Borrowers with 2026-2027 maturities should engage now -- a single hot CPI/jobs print could re-rate the 10Y back to 4.65%+ and widen spreads 20-30 bps. Refinance + cash-out window remains constructively open.