The Raleigh-Durham market has anxiously awaited the delivery of the 2.16M square feet of inventory that is currently under construction. Increasing demand for Class A space has created a construction frenzy across the Triangle region, pushing pre-leasing percentages to record rates.
Raleigh business owners and tenants will find interesting:
The Triangle downtowns have been in such demand that year over year Class A rents increased 12.4%!
Triangle vacancies dropped 1.1% from 2Q16, coming in at a rate 7.7% of available space. Downtown Durham continues to sit below 2% with a2Q17 vacancy rate of 0.5%.
From October 2016 to May 2017, Wake County added 4,975 jobs in 64 new and expanding companies, creating a total investment of $236M. The unemployment rate dropped from 4.2% to 3.8% as of the end of May 2017. Raleigh has a projected population growth of over 73% through year 2044, outpacing cities such as Boston, Atlanta, Nashville and San Francisco.
How does this apply to business owners and tenants?
For tenants, large future deliveries are coming to completion in 2018/2019. This means that early renewals, even at 2-3 years out can be looked at for renegotiation or expansion into these new buildings. For future growth, this may be a smart move for most tenants as the Triangle is continuing to place on top destination lists, (expect national and global competition for new spaces as companies look to relocate to NC).
For growth stage and startup companies, the delivery of new coworking spaces has led to competition and a brief surplus of shared office space in the Triangle. HQ Raleigh is close to delivering two new spaces (Glenwood South and the Capital Club 16 building downtown) as well as expansion by the Loading Dock in Five Points and WeWorks in Raleigh and Durham. Use these expanded coworking options for short term leasing as your firm grow and/or early funding rounds are sought.