Market Reports

Industrial Deliveries in Charlotte Should Drop in 2020 as New Space is Absorbed

by Alex Tostado March 2, 2020

The Charlotte industrial market continues to see strong construction activity, as developers look to tap into demand for modern space. Approximately 12.7 million square feet has been delivered in the last two years, most notably in the Cabarrus County, Stateline and Airport/West submarkets. Overall construction in the pipeline jumped by 32 percent from third-quarter 2019 to fourth-quarter 2019, reaching 7.2 million square feet. As the first quarter of 2020 takes shape, this development expansion should continue, with an expected 7 million square feet of additional deliveries by year-end. Overall leasing activity in Cabarrus County was strong in 2019, with vacancy declining from 15 percent to 11 percent, which is notable given the 4 million square feet of construction seen in that submarket in the past two years. The Cabarrus County vacancy rate is set to decline significantly when two large deals, totaling more than 800,000 square feet, are factored into the statistics. Once Pactiv (441,000 square feet) and Reynolds (360,000 square feet) are incorporated into the research, the rate will decline to 5.7 percent, as we expected going into year-end. This activity will quickly tighten up the submarket and will open the door for new development. The recent high vacancy …

March 2, 2020

Market Reports North Carolina Retail Southeast Southeast Market Reports

New Wegmans, Drive Shack Headline Raleigh-Durham’s Attractive Retail Market

by Alex Tostado January 27, 2020

In Raleigh-Durham, there is approximately 58 million square feet of retail space with year-end vacancy at 4 percent. The consistently low vacancy has helped drive rental rates up to an average of $22 per square foot. The Raleigh area had approximately 460,000 square feet of retail space constructed in 2019 that was more than 80 percent preleased. The largest projects included the completion of Midtown East in the Wake Forest/Falls of Neuse Road submarket, which heralded the arrival of North Carolina’s first Wegmans store. This also marks Wegmans’ 100th U.S. store and set an opening day record with more than 30,000 shoppers. Wegmans expects to open five additional stores in the Triangle, including locations in Holly Springs, Wake Forest, Chapel Hill and two stores in Cary. Another large project was the new Publix supermarket that opened recently at Leesville Market near Interstate 540. And according to some sources, Hobby Lobby will be moving into the space formerly occupied by Toys ‘R’ Us in the Cary Crossroads Plaza. In Durham, Chapel Hill-based developer Beacon Properties Group is building a project called Oakridge directly off US 15-501. Tentative plans for the 108-acre property include a walkable mixed-use village with residential units, office …

January 27, 2020

Market Reports North Carolina Office Southeast Southeast Market Reports

Triangle’s Office Vacancy is up Due to New Supply, but Job Growth is in a Good Spot

by Alex Tostado January 20, 2020

The Raleigh-Durham region’s strong job growth is fueling sustained demand from tenants, keeping the office market firmly in favor of landlords despite a notable increase in construction activity in recent months. According to the Bureau of Labor Statistics, the region added 24,200 nonfarm payroll jobs between October 2018 and October 2019 for a growth rate of 2.5 percent. Unemployment rose slightly from 3 percent to just 3.1 percent during this time as nearly 36,000 people entered the local labor force. Raleigh-Durham continued to witness economic development wins in 2019 as well. Major job announcements came from office-using tenants such as Xerox (600 jobs), Q2 Solutions (700 jobs), Parexel (260 jobs), AmeriHealth Caritas (300 jobs) and HZO (500 jobs). In its recently published Emerging Trends in Real Estate report, the Urban Land Institute and PricewaterhouseCoopers (PwC) named Raleigh-Durham as the No. 2 market in the United States to watch for overall real estate prospects in 2020. The region’s quality of life, robust population and job growth and highly educated workforce are supporting sustained business expansion and healthy leasing fundamentals across all asset classes. Raleigh-Durham’s office market continues to experience the most landlord-favorable conditions since the dot-com boom in the late 1990s. …

January 20, 2020

Market Reports Multifamily North Carolina Southeast Southeast Market Reports

Population Gains, Transforming CBDs Drive Triangle’s Multifamily Market Forward

by Alex Tostado January 13, 2020

Today, the Triangle market is booming. The once sleepy Raleigh and Durham central business districts have been transformed with development pipelines exceeding $2.5 billion. Since 2009, Kane Realty’s North Hills, which has become our standard bearer for suburban mixed-use planning, has delivered an additional 1,100 multifamily units, 120,000 square feet of retail, 501 hotel keys and 1.1 million square feet of office space that is achieving top rental rates for the market. And there are more uses coming. There are 10 exciting mixed-use projects under construction as the Triangle continues to take amenities to the next level and increase its competitiveness. Multiple demand drivers The Triangle still feels like it’s in earlier innings with durable growth potential as evidenced by: • Explosive In-migration: 52 percent population growth since 2001, or 3.7 times the national average. • Balanced, Recession Resistant Factors: The market is a top 10 life sciences clusters and includes the largest research park in the United States with Research Triangle Park (RTP). Raleigh-Durham also has well-regarded university and hospital systems and state capital. • Highly Educated Workforce: There are more than 80,000 students enrolled at University of North Carolina at Chapel Hill, Duke University and North Carolina State …

January 13, 2020

Market Reports North Carolina Office Southeast Southeast Market Reports

Banking, Tech Employment Usher Charlotte’s Office Market Into the Future

by Taylor Williams August 20, 2019

The momentum of the Charlotte office market continued in the first quarter of 2019, as office rents rose for an eighth consecutive quarter and the city notched a major economic development win with the announcement that BB&T and SunTrust would merge, creating a new bank that will be headquartered in Charlotte. The news came on the heels of announcements late last year that Honeywell plans to relocate its corporate headquarters to the city and that LendingTree would expand its headquarters, creating 436 jobs over five years. The city’s economic strength has been fueled by a growing labor market that was led by the tech sector in 2018. Last fall, CompTIA’s 2018 Tech Town Index found that Charlotte is the No. 1 city for information technology workers when it comes to job opportunity and cost of living. At the time of the report, more than 44,000 IT jobs had been posted in Charlotte over the previous 12 months. That number is projected to grow by 11 percent over the next five years as Bank of America Corp., Wells Fargo & Co. and Ally Financial look to fill IT jobs at all levels. Office rental rates in Charlotte increased by 6.5 percent …

August 20, 2019

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Charlotte’s Industrial Market Is in Aggressive Expansion Mode

by Taylor Williams August 19, 2019

Charlotte has been in expansion mode for several years, due to population growth, excellent logistics infrastructure, low operating costs and low unionization rates. At the mid-point of 2019, the market continues to expand at a healthy rate and is growing outward into Cabarrus, York and Gaston counties. This expansion follows a strong 12-month period ending first-quarter 2019 when nearly 6 million square feet of new product was delivered. Now encompassing 322 million square feet of space, Charlotte is the second largest industrial market in the Southeast. Charlotte’s accessible location and low cost of doing business is attracting many e-commerce and logistics providers, as well as more traditional industrial businesses looking to expand or realign their space requirements. One common theme is consolidation of business units, which has been a significant benefit to the Charlotte market. Among the examples are J.J. Haines & Co. consolidating its Carolina warehousing operations from several Carolinas locations into a 500,000-square-foot distribution center in Cabarrus County and Staples consolidating from multiple Charlotte facilities into a 600,000-square-foot logistics center in south Charlotte. Driven by available land and access to key transportation routes, a look at the market’s growth patterns shows that development and leasing are extending up …

August 19, 2019

Industrial Market Reports North Carolina Southeast Southeast Market Reports

Charlotte’s Industrial Fundamentals Stay Strong in Face of New Supply Added

by Alex Tostado June 3, 2019

Charlotte’s industrial market continues to see strong momentum in early 2019, and with healthy rates of absorption and rental growth despite record levels of new development, it remains the preferred asset class in the Queen City among institutional investors. Industrial absorption totaled 5.2 million square feet in 2018, according to JLL research, making it the fourth consecutive year that the market has absorbed at least 4 million square feet. The demand for new space is driven in part by the growth of the Carolinas: North and South Carolina both ranked in the top 10 nationally for population growth over the past year, according to the U.S. Census Bureau, and Charlotte is well-situated geographically for distribution facilities that can cover both states. E-commerce, of course, has been another major driver of demand and development. During the fourth quarter, Amazon received construction permits for its fourth and largest distribution center in the Charlotte region, a 2.4-million-square-foot facility that will be located on 100 acres north of Charlotte Douglas International Airport. A separate 1.2 million-square-foot distribution facility for Amazon in nearby Kannapolis is expected to open this year. Industrial development continues to migrate to Charlotte’s surrounding counties, where land is more readily available …

June 3, 2019

Market Reports North Carolina Retail Southeast Southeast Market Reports

Raleigh-Durham’s Retail Market Reaches Healthy Supply-Demand Balance

by Alex Tostado March 25, 2019

The Raleigh and overall Triangle retail markets ended 2018 in a strong position with several large sites changing hands, urban growth booming in the downtowns, numerous suburban ground-up projects in the pipeline and traditional malls undergoing major transitions. The market is poised to see retail construction activity grow with a healthy balance of supply and demand, despite national brick-and-mortar retail industry challenges. The Triangle vacancy rate ended the year with a vacancy rate below 7 percent, which represents strong improvement from the end of 2017, even with accounting for the large-scale closing and downsizings in the Triangle. Positive absorption over the past year has included re-leasing 12 Kroger stores, two Gander Mountains, five hhgregg stores and several other significant box vacancies. Fierce grocery competition and continued pressure on “in-store” sales have caused retailers, owners and developers to rethink and recreate the retail experience and development landscape. Downtown urban centers Rapid multifamily and housing gentrification in the downtowns of Raleigh and Durham continue to push mixed-use and high-street retail. With residential and employment densification occurring, Raleigh has experienced several first-time retail events in 2018. Morgan Street Food Hall and Urban Outfitters opened in the Warehouse District, Publix is under construction on …

March 25, 2019

Industrial Market Reports North Carolina Southeast Southeast Market Reports

High Demand, Barriers to Entry Push Raleigh-Durham’s Industrial Rental Rates

by Alex Tostado March 18, 2019

The Raleigh-Durham industrial/flex market, totaling approximately 135 million square feet, continues to be strong with overall positive absorption. Absorption for industrial totaled 1.6 million square feet and flex was over 3 million square feet for 2018. Vacancy is trending lower, helping make the region a landlord and seller’s market. With increasing construction costs, lower vacancy and solid demand, the rental rates and sales prices are now the highest of any region in North Carolina. Our rental rate for new industrial product is currently in the mid to high $5 per square foot range and trending higher. Some developers and brokers speculate the Triangle may become a $6 per square foot market for institutional-grade warehouse space in 2019. Ground zero for the region’s warehouse market is in the general vicinity of Raleigh-Durham International Airport (RDU). Most distributors that locate here are delivering to the local market and need the central location and access to Interstate 40. The historical barriers to entry near the airport have been high land costs and lack of land not encumbered with wetland or easements. Another barrier to entry that has crept into the picture are some local municipalities desiring a “higher end” product than warehouse and …

March 18, 2019

Market Reports Multifamily North Carolina Southeast Southeast Market Reports

Is Raleigh’s Multifamily Market Still a Strong Investment?

by Alex Tostado March 5, 2019

The short answer: absolutely. You don’t need to be a savvy commercial real estate professional to notice the impact multifamily has on Raleigh’s urban landscape. Areas like North Hills/Midtown, Downtown and Hillsborough Street are typically at the forefront of everyone’s mind when they think of new Raleigh developments, but it’s not just Class A development in the city’s urban core that has seen a boom. Class B and C suburban product have seen the most significant rent growth through the cycle that continues to increase each quarter. Moreover, we are seeing new construction intensify along our suburban corridors. It’s also no secret that Raleigh has one of the healthiest economies in the country. The Milken Institute reported recently that Raleigh ranks No. 2 in the nation for creating and keeping quality jobs. Economic factors like wage and employment growth, quality of life, proximity to higher education and a bustling tech sector have created a perfect storm of dynamic economic activity. Much to their chagrin, Raleigh natives haven’t done a very good job of keeping this a secret, and the number of fresh new faces coming to the Triangle continues to rise. In fact, the Raleigh-Durham market grew by nearly 60,000 …

March 5, 2019

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