2016 continued forward with last year's momentum and record numbers in both rental rates and available space in the Triangle. The CBDs (Central Business Districts) of both Raleigh and Durham reported the lowest vacancies in the market as well as some of the highest rental numbers.
Raleigh business owners and tenants will find interesting:
The Triangle vacancy rate sits at record low numbers, a whopping 8.0% of space is open for rent in the market.
Downtown Durham hit 2.2% vacant space in 1Q16, a drop of300 basis points from the previous quarter. Downtown Raleigh sat at 6.5% vacant space. Combined, the average CBD vacancy rate was 4.3% in 1Q16, almost HALF of the overall Triangle vacancy rate.
Class A Office space is the most in demand, 1Q16 absorbed over 430,000 SF of Class A space, (unlike 4Q15 where Class B space was most active)
Class A rental rates rose to $24.96 psf for 1Q16, a continual increase from the past 6 consecutive quarters.
How does this apply to business owners and tenants?
Investments are still strong and unemployment rates still low in the Triangle. This means more expanding companies and new hires for locals and relocating companies in the market. What becomes concerning for the start of 2016 is the lack of space for small AND large office users.
For tenants, historic low vacancies have yet to be offset by pending new office construction projects in Downtown Durham, Raleigh and North Raleigh. The market is undoubtedly in a landlord's favor. For big office users, you initially may have thought to be the top gun in town, but in 2016, there is so much competition for space, Landlord's are able to pick and play offers against each other for the best new pre-lease.
For immediate space, business owners are looking at increased sublease options and temp space to hold over until 2017 when most new office developments begin to open up.
For startup clients, coworking spaces continue to be the best bet for 1 yr or shorter lease terms. But moving fast and having an inside scoop on upcoming suites are a necessity this year because even coworking hubs are in a such a tight market! Give me a call to discuss the latest on expanded or upcoming suites at some of the Triangle's top startup hubs.