Market Reports

High Demand for Raleigh-Durham Multifamily Drives Record Sales Volume, Pricing

by John Nelson February 28, 2022

Raleigh-Durham is increasingly popping up at the top of shopping lists for multifamily investors, and buyer demand — coupled with strong rent growth — is resulting in record sale prices. As of this writing, 2021 is on pace to be one of the best years ever in terms of total transaction volume. As capital continues to flow into the market across the spectrum of investor groups from institutions to high net worth individuals, cap rates also have dropped into record territory. Just about every sale in the market is trading at a cap rate in the 3s, and even sub-3 percent in some cases. For example, Northmarq recently brokered the sale of the 489-unit Indigo Apartments in Morrisville on behalf of Blue Heron Asset Management. The asset sold for $121.9 million. The deal was one of the largest single-property multifamily sales in North Carolina in 2021, and the largest in Raleigh-Durham’s history upon closing. The property received multiple qualified offers before selling to Toronto-based Starlight Investments for $249,000 per unit, surpassing initial pricing guidance by nearly 20 percent. The phenomenon of lower return expectations and compressed cap rates is not unique to the Raleigh-Durham market. That trend is occurring throughout …

February 28, 2022

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Raleigh-Durham’s I-40/I-85 Corridor Emerges as Industrial Tour de Force

by John Nelson February 21, 2022

The I-40/I-85 Corridor is an emerging distribution area with a remarkably strong tenant mix between national manufacturers and distribution users, making it one of the most fundamentally sound corridors in the Sun Belt. The I-40/I-85 Corridor, squarely centered between the Triad (Greensboro, Winston-Salem and High Point) and the Triangle (Raleigh, Durham, Chapel Hill), is home to companies such as Walmart, Lidl, Ford, Kidde, Amazon, Chick-Fil-A, UPS, Lenovo, FedEx, Coca-Cola, among others. This corridor is seeing rapid expansion and is poised to be an epicenter of industrial activity in the region as the logistical significance of the area is attracting larger users and a growing amount of institutional capital. Recently, this submarket has seen significant demand from larger users leading speculative developers to plan large, Class A industrial parks. Historically, the market has been dominated by older manufacturing buildings. The newer development in the area is making these properties more obsolete due to their lower efficiencies, a phenomenon marking a larger shift in the composition of the emerging submarket. The industrial inventory’s makeup is continuing to evolve over time, marking the transition from smaller manufacturing properties to distribution and significantly larger manufacturing operations. Buildings currently under construction are average a footprint …

February 21, 2022

Market Reports North Carolina Office Southeast Southeast Market Reports

Corporate Expansions, Sales Highlight Hopeful Office Recovery for Triangle

by John Nelson February 14, 2022

The Raleigh-Durham region is experiencing increasing optimism despite the lingering impacts of COVID-19. While some reentry plans have been delayed and companies are still grappling with the way in which they will utilize office space moving forward, tenant demand is expected to rebound sharply in the first half of 2022. “We’ve seen an encouraging uptick in tenant activity since the second quarter of 2021, and we expect that trend to accelerate,” says Kathy Gigac, principal of Avison Young and a member of the firm’s Occupier Solutions Team. “Tenants seem ready to get back to some sense of normalcy.” Local economic fundamentals are sound, as reopening efforts and positive job growth have allowed Raleigh-Durham’s unemployment rate to recover from a pandemic high of 12 percent to 3.2 percent as of Sept. 2021. The region continues to witness major economic development wins with companies such as Google and Apple announcing plans to create thousands of new jobs. In its largest presence on the East Coast, Apple will invest $1 billion over a 10-year period to create a 3,000-job campus to eventually span 1 million square feet. In the most recent announcement from an office-using tenant, Fidelity Investments will add 1,500 jobs in …

February 14, 2022

Market Reports Mixed-Use North Carolina Retail Southeast Southeast Market Reports

Mixed-Use Projects, Mall Redevelopments Headline Triangle’s Retail Development Activity

by John Nelson February 7, 2022

The end of 2021 in Raleigh-Durham was marked by robust retail leasing and an increased level of investment sales in our suburbs and infill trade areas. Downtown Raleigh, Durham and Chapel Hill have lagged in activity, although each urban environment started to see a resurgence by mid-year, and notably Downtown Raleigh ended 2021 with record retail leasing activity. Population growth and major economic development announcements are driving these positive trends. Apple, Google, FujiFilm, several life sciences companies and most recently Toyota (just east of the Raleigh-Durham region) have highlighted economic expansion. Strong demand and a healthy retail construction pipeline have held retail vacancy to 7.1 percent despite headwinds from the COVID-19 pandemic. The healthy retail development pipeline includes several new mixed-use projects. Cary will see one of the largest active mixed-use projects in the Southeast deliver this year when Fenton opens in the spring. Hines and Columbia Development are currently finalizing the first phases of the project. Spread over 92 acres, Fenton will initially include retailers such as Pottery Barn, Williams-Sonoma and Superica, as well as apartments and office space. Over in Research Triangle Park (RTP), the Research Triangle Foundation and White Point Partners have announced Horseshoe at Hub RTP. …

February 7, 2022

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Charlotte’s Industrial Market Expected to Close Another Robust Year of Leasing

by John Nelson August 30, 2021

The Charlotte industrial market is seeing significant tenant demand and investment activity at mid-year 2021 as the market begins to return to normalcy after the disruption during the early days of the pandemic. Like many other Southeastern industrial markets, Charlotte saw a lag in activity through the second and third quarters of 2020. One year later, the impacts of the pandemic continue to burn off, creating an almost insatiable appetite for modern warehouse and distribution space. Since the start of the year, the market has seen a strong increase in overall activity as local economies continue to open up, employment levels rebound and businesses move forward with decisions about space utilization. Tenants in the e-commerce, consumer goods, retail and light manufacturing sectors are particularly active. While the market finished 2020 with nearly 5.3 million square feet of net absorption, a figure that outpaced 2019’s total of 2.7 million square feet and was on par with the nearly 5.4 million square feet absorbed in 2018, 2021 is expected to reach a net absorption for the calendar year that is equal or greater than 2020. Many tenants expanding in or entering the market are taking mid- to large blocks of space, a …

August 30, 2021

Data Centers Industrial Life Sciences Market Reports North Carolina Southeast Southeast Market Reports

Life Sciences Firms Dominate Activity in Raleigh-Durham’s Industrial Market

by John Nelson August 23, 2021

It seems as though we have recently seen significant weekly announcements about investment and job creation by major U.S. companies into the Research Triangle Park region, the area situated between the cities of Raleigh and Durham. For instance, tech titans Apple and Google declared plans to establish major engineering hubs in the region, adding heat to an already dynamic market. It is common knowledge that the Triangle area is respected for its large, highly educated workforce thanks to top-ranking colleges and universities, including Duke University, North Carolina State University and University of North Carolina at Chapel Hill. Wake Tech, North Carolina’s largest community college, also serves as a vital engine, providing the region’s workforce with STEM candidates. These institutions supply existing and expanding businesses with an impressive talent pool. Theses factors, along with a business-friendly economic climate, have grown the Research Triangle into one of the nation’s largest research centers. Although local headlines continue to buzz with real estate business news, the Raleigh-Durham industrial market has witnessed steady real estate investments from life sciences and R&D businesses for decades. Over the past 24 months, however, demand for life sciences space has had a dramatic impact on traditional flex/light industrial users …

August 23, 2021

Market Reports Multifamily North Carolina Southeast Southeast Market Reports

Charlotte’s South End Remains ‘Go-To’ Submarket for Young Renters

by John Nelson August 16, 2021

Charlotte’s South End district has firmly established itself as one of the most dynamic millennial urban submarkets in the Sun Belt. It is increasingly on par with the most thriving areas in other growth cities such as Atlanta, Austin and Nashville and is becoming a 24-hour neighborhood with dining, nightlife and high-end jobs. Charlotte is one of the few cities in the region that has both a true city center as well as a relevant mass transit system. The city’s LYNX Blue Line, which runs from Interstate 485 to the University of North Carolina at Charlotte’s main campus, has proven to be very meaningful for the local multifamily market. LYNX was the catalyst driving South End’s emergence and gives the neighborhood its own heartbeat as renters can commute to Uptown for work or UNC Charlotte for class. Developers are taking note with several apartment projects and mixed-use developments underway in the area, including Broadstone Queen City and Haven South End. As South End has grown into a more dynamic district, Charlotte is becoming an even more attractive destination for recent college grads who are looking to work in the city’s established financial sector, as well as for firms like Lending …

August 16, 2021

Market Reports North Carolina Office Southeast Southeast Market Reports

A City on the Rise: Charlotte Office Market Poised for Growth and Recovery

by John Nelson August 9, 2021

Last year posed many challenges for Charlotte’s office market, as companies continued to delay making decisions about their office space needs. In the fourth quarter, leasing velocity had slowed, with limited deal activity driven largely by lease expirations. But the city still scored several corporate relocations and expansions, faring well compared to other major cities throughout the country. Fast-forward to June 2021, and the light at the end of the tunnel is getting brighter as more occupants set re-entry plans for this fall. This is a transformative year for Charlotte. Commercial Café ranked the Queen City as No. 5 in the United States for the most anticipated office deliveries in 2021 with more than 4.1 million square feet delivering in the metro area this year. Uptown added to its skyline with the addition of 366,000 square feet at Legacy Union Two, the completion of the 742,000-square-foot Ally Charlotte Center, Honeywell’s 330,000-square-foot corporate headquarters delivering later this fall and the 156,415-square-foot FNB Tower delivering this summer. At the end of the first quarter, new construction in Uptown was more than 82 percent preleased. And as more tenants seek out highly amenitized and efficient space, new construction is expected to be the …

August 9, 2021

Affordable Housing Market Reports Multifamily North Carolina Seniors Housing Southeast Southeast Market Reports Student Housing

Triangle’s Apartment Demand Pushes to the Region’s Suburban Markets

by John Nelson March 8, 2021

The impacts of COVID-19 on the U.S. multifamily market vary significantly across metro areas. Not surprisingly, the nation’s denser gateway markets have been hardest hit, while secondary and tertiary markets have fared better. In a reversal of pre-pandemic trends, suburban locations have gained favor over urban submarkets from both renters and investors. As many employees continue to work from home, larger and more affordable units in suburban submarkets have become more appealing. Elevated construction costs are also a factor, driving garden-style development versus more costly podium construction. The Triangle’s suburban submarkets are experiencing the strongest construction activity, most notably in the North Cary/Morrisville submarket, where 1,784 units averaging over 1,000 square feet per unit are currently underway. As ongoing work-from-home arrangements prompt more tenants to consider living further from the Triangle’s primary employment centers, developers are increasingly willing to look at sites in outlying communities such as Wendell and Clayton. Demand is expected to return to the Triangle’s urban submarkets as employees return to the office and retailers and restaurants fully reopen, but the recovery in these areas is likely to be protracted. Solid footing The Triangle’s multifamily sector ended 2020 on relatively firm footing despite a tumultuous year. Both …

March 8, 2021

Market Reports North Carolina Restaurant Retail Southeast Southeast Market Reports

Raleigh-Durham Retail Bolstered By Grocery Growth, Offsetting Store Closures

by John Nelson March 1, 2021

This time last year, we were commenting on the changing retail market, but we were overall very optimistic about 2020. What a difference a year makes! Across the United States, 2020 brought us the closing of the following: 279 SteinMart stores; 1,100 Ann Taylor stores; 950 Pier 1 Imports stores; 350 Gap stores; 248 GNC stores; 145 A.C. Moore stores; 230 Tuesday Morning stores; and 178 Forever 21 stores. Additionally, Macy’s closed 29 stores in 2020 and expects to close another 45 in 2021. This trend of retail store closings will slow down in 2021, but it will not change. On the positive side, retailers such as Walmart, Target, The Home Depot, Lowe’s Home Improvement and Walgreens have seen positive sales numbers and continue to expand. In the supermarket sector, Kroger, Food Lion and Publix have had record numbers and, along with Aldi and Lidl, are expanding. In the Raleigh-Durham market, our 2020 vacancy rate has increased to 8.24 percent and rental rates have hovered in the $18 to $20 per square foot range, but those numbers are skewed due to rent concessions and abatements. Raleigh-Durham has approximately 86.6 million square feet of retail space with around 640,000 square feet …

March 1, 2021

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