Editor’s Note: In this new series, sponsored by commercial real estate firm JLL, WRAL TechWire will investigate the “Future of Work” in a series of reports that follow what’s happening in today’s economy, in the new world of work, where the region could see further growth and development, and on the future of the region, with in-depth looks at the office, industrial, and life science sectors.
RALEIGH – There’s an adage in real estate, used across the entire industry: location, location, location.
Right now, the Triangle is an in-demand location, across all segments of the market.
Residential home sale prices continue to increase in a highly competitive market.
And demand for life science facility space is high and increasing, as WRAL TechWire has previously reported.
“Demand for high-quality space is continuing to grow and has likely not hit its peak,” said Brett Cox, research manager at JLL, in an interview with WRAL TechWire.
Though the vacancy rate for office and flex space in the Triangle was 14.3 percent at the end of 2021, according to Cox, the price of leasing space increased by 4 percent year-over-year.
“Occupiers are continuing to evaluate mid- to long-term work dynamics with the introduction of hybrid work.” So even while vacancy sits around 14 percent, the location and the quality of office and flexible work space matters.
“Demand for office product is best described as demand for quality over quantity,” said Kimarie Ankenbrand, managing director and Raleigh lead at JLL. “Companies are recognizing that they can’t push people back into the office, they have to pull them.”
That’s why some companies have turned to strategies that include constructing or reimagining their work spaces and office environments to make them, in Ankenbrand’s phrasing, “commute-worthy.”
No silver bullet
Think of this marketplace as an arms race, said Ankenbrand. Companies are seeking access to unique and high-quality space that will cater to an excellent employee experience, and are willing to make the investment.
Pendo, for example, recently welcomed employees back in the office. But it was a new headquarters location in downtown Raleigh that the company had planned to open since prior to the onset of the global COVID pandemic, selected specifically to create the type of environment the company aims to cultivate.
Pendo’s CEO Todd Olson warned an audience in January that in today’s labor market, the reality is that companies won’t be able to fill every open role.
“How we’ve shifted our focus to think differently around talent,” said Olson at the January event. “You have to make sure you set yourself apart, you have to make sure you differentiate, because the reality is that there are a bunch of jobs that may go unfilled because you can’t find the talent to fill them.”
“There is no one silver bullet when it comes to the strategy that goes into a real estate decision right now,” said Ankenbrand. While some companies are expanding, others are right-sizing.
While some predicted that technology or technology-enabled companies would pull back from physical space commitments, across the United States, these companies have leased about 15.3 million square feet of space since the onset of the global pandemic, said Ankenbrand.
“Which is the opposite of what many predicted about the future of work for tech companies, we should be paying more attention to what companies are doing rather than saying,” added Ankenbrand.
This editorial package was produced with funding support from JLL and other partners. WRAL TechWire retains full editorial control of all content.
Special report: The Future of Work