The record breaking building sale volume from 2014 continued forward into the first quarter of 2015, with 11 sales totaling over $285 Million in 1Q15 alone. Investor activity also affected the office market and is one of the causes of increased rental rates across the Triangle.
Raleigh business owners and tenants will find interesting:
Downtown Raleigh Vacancy levels dropped below the record breaking numbers in 2014 with a new 6.5% vacancy in 1Q15.
Class A Rents rose to $22.11 psf for the Triangle, Downtown Raleigh averaged $26.41 psf, and Downtown Durham averaged $28.98 psf
The US 70/Glenwood Ave submarket posted the highest absorption of office space, with 59,954 SF in 1Q15, bringing to question a further tightening of opportunities for lease even in the suburbs.
How does this apply to business owners and tenants?
Activity is still strong for leasing and investors in the Triangle. Because of this, Raleigh is quickly becoming a overly tight market. Last year's trends of increased desire of companies to be downtown hasn't stopped; the CBD districts of Raleigh and Durhamare still posting the lowest vacancies and highest rents in the market.
But what has changed in 2015 is activity spreading throughout the market. Suburban submarkets in the Triangle, which are still posting double digit vacancy numbers, now claimed77% of the big lease dealscompleted in 1Q15! In office building sales, the suburban submarkets claimed 80% of 1Q15 deals!
What's the impact for current businesses and tenants? Suburban office buildings with good location concerning transit, quality construction and building amenities can still lure companies away from the CBD's for a cost saving in real estate.
This means that if your office is currently in a 3 or 5 year lease, don't expect your rental rate at renewal time to be as low as it is today. With increased activity comes lower vacancy and higher rental rates, something select Triangle suburbia markets will see in the near future.
As always, if you are looking to re-evaluate your current real estate situation, feel free to contact me, your Capital Compass!