RALEIGH – Despite concerns of a slowing national economy, the Triangle’s commercial real estate market saw healthy, steady activity during the second quarter of 2022, a new report from CBRE|Raleigh found.
In addition to vacancy rates decreasing in the office market to 12.5% the average rental rates for Class A office space increased to $31.50 per square foot.
New construction continues to be active, as well, with about 1.8 million square feet of space currently underway, a CBRE|Raleigh statement notes. But that is down by about 50% compared to two years ago, when there were 3.7 million square feet underway, and also down from the prior quarter.
Sales of office property were “relatively light” during the quarter, the report notes. Still, there were large transactions that took place, including a portfolio at Gateway Centre selling for $74 million and Welltower buying an occupied building in the Six Forks Road submarket for $35 million.
And a NYC-based real estate investment firm bought five parcels in Raleigh’s warehouse district for nearly $21 million, and is zoned for mixed-use properties of up to 40 stories in height.
Still, commercial real estate market showing strength
“Despite a slow start in the beginning of the year, the Raleigh-Durham office market had a strong showing in the second quarter,” said CBRE|Raleigh Executive Vice President Brian Carr in a statement. “Areas such as our downtown markets and the RTP/I-40 Corridor are continuing to draw in interest from life science and tech users.”
The first phase of the Fenton development in Cary became available in the quarter, and future phases are still planned. There’s also development in process at 400H in downtown Raleigh and at a former JCPenny site in North Hills.
But the largest project that is in process at this time is the new headquarters facility for Bandwidth, which would add more than 530,000 square feet of space and is expected to be finished during the second quarter of 2023.
“Market activity remains slow and steady as decision makers continue to face re-occupancy uncertainty with the lingering effects of COVID-19 and potential economic downturn,” the report reads.
But Carr remains optimistic, noting that he and the firm “are encouraged for Raleigh-Durham’s future growth as market dynamics remain steady and a strong construction pipeline continues.”