In this “Follow the Numbers” series, sponsored by CBRE Raleigh, WRAL TechWire will investigate local and national commercial real estate reports to better understand growth, trends, and outside interest in the Triangle and surrounding areas.


RESEARCH TRIANGLE PARK – While absorption rates for industrial real estate in the Triangle remain steadily positive, vacancy rates in the region rose noticeably during the third quarter of 2023, according to the most recent report by CBRE|Raleigh. Delivery of new properties to the market pushed overall vacancy to 5.3 percent, the region’s highest since 2015.

The vacancy rate was up 100 basis-points (bps), or one percentage point, from the prior quarter and 280 bps, or 2.8 percentage points, from Q3 2022. Construction deliveries totaled 1.3 million square-feet in the third quarter, CBRE|Raleigh found.

“We’ve had pretty steady delivery and absorption rates in recent years – even through COVID,” explains Ann-Stewart Patterson, executive vice president of CBRE|Raleigh. The firm is a joint venture among local principals and Dallas-based CBRE [NYSE: CBRE], a leading global real estate company. Patterson and her CBRE|Raleigh colleagues track commercial real estate across Chatham, Durham, Franklin, Granville, Johnston, Lee, Orange and Wake counties.

Tighter lending, pricier construction materials and rising labor costs are combining to slow new projects, which should keep any concerns about oversupply short-lived. “I think we’ll see our vacancy rates plateau or even improve by the second half of next year because we’re not having  as many deliveries,” Patterson says.

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Also taking some of the steam out of the region’s industrial real estate market were several closures. A July bankruptcy filing by Do Good Foods, a New Jersey closed-loop food processor that had only a year earlier announced plans for operations at Eastfield Business Park in Selma, resulted in the return of 135,000 sq.-ft. of leased space to the market. In Holly Springs, OFM vacated over a 128,000-sq.-ft. space on Tradition Trail. The company, which manufactured office furniture, ceased operating in June. Also, electronics manufacturer AMETEK handed back about 90,000 sq.-ft. of space at EastPoint, a prominent industrial facility in Knightdale.

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Those moves were offset by several newly signed leases. Two occurred in Mebane, where chainsaw maker STIHL entered into a ten-year lease for 266,200 sq.-ft. at Buckhorn II Industrial Park. That property is being developed by Al. Neyer, the Cincinnati-based commercial real estate developer. Not far away, medical supply company Medline leased nearly 249,000 square-feet to an undisclosed tenant at its $103 million distribution center -, which held its grand opening in October.

Net absorption totaled more than 493,000 square-feet during the third quarter, CBRE data showed. The region’s industrial market absorbed a total of 2.1 million square-feet over the first nine months of 2023.

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In the Town of Wake Forest, 64 percent of recently completed flexspace at Merritt Capital Business Park had been leased. Among the tenants there will be the Town’s police department, which is consolidating operations under a single roof. Developed by Baltimore-based Merritt Properties, the flex park sits just east of Capital Boulevard on the southern side of Wake Forest. Built across three phases, the $80 million park will ultimately span 452,000 square feet of space across six buildings. The property is among several Merritt Properties is developing in the Triangle.

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“Flexspace is poised to do well in this uncertain environment,” Patterson says. She notes that out-of-state developers like Al. Neyer and Merritt were once uncommon in the Triangle’s real estate market, which was long dominated by homegrown development names like Trinity Partners and Beacon Properties. “In the last seven years, we’ve had more institutional capital from outside our market looking to enter our market,” she explains. The region’s high barriers to entry discouraged outside developers, who lacked the knowledge and networks of North Carolina-based players. “People here already know the market,” Patterson says.

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A prominent California development company is investing in life sciences properties in Clayton. BioRealty Inc. plans to spend $27 million on a three-building campus on 67 acres at the junction of Ranch Road and Little Creek Church Road in the western Johnston County municipality. The Town-owned land is planned to be sold to BioRealty for $31,500 per acre.

Clayton is already home to two large biopharmaceutical manufacturers, Grifols and Novo Nordisk.

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“We’re sitting on about 3,500 life sciences jobs, with average wages somewhere around the $80,000 a year mark,” says Patrick Pierce, economic development director for the Town of Clayton. But the benefits of BioRealty’s project, which the company has dubbed “The Biome: Clayton,” will be spread across Johnston County, he says. “It builds upon the biopharma cluster that we have in the county and prepares us for additional investment,” Pierce says

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As of early December, BioRealty had not yet closed on its purchase of the site. “In Q1 of 2024 we should have the due diligence wrapped up and begin moving along in the development process,” says Pierce.

Headquartered in San Clemente, Cal., BioRealty will design, finance, build, operate and jointly market the park. “BioRealty is a prestigious national name in industrial real estate, and their experts see promise in our county and our capacity to attract biomanufacturing businesses and jobs,” Johnston County Commission Chair R.S. “Butch” Lawter said in a June news release after county and town boards approved local economic development incentives for The Biome: Clayton project.

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