Research

Since 1985, NAI Carolantic Realty, Inc. has continued to conduct the most comprehensive Triangle-wide commercial real estate survey. All aspects of the market are researched, and we present our findings to over 1,800 business leaders at our Annual Triangle Commercial Real Estate Conference held at the beginning of each year. Business professionals throughout the Triangle are provided with in-depth facts and figures on the current and future state of the market. Data is collected on office buildings, retail space, business parks, and industrial space. We track and publish data covering in excess of 265 million square feet of floor space from over 8,000+ buildings located throughout the Triangle. Existing space, vacancy rates, absorption, new construction, and planned construction are researched.

NAI Carolantic's Real Estate Conference further emphasizes the firm's position, knowledge, and experience in the marketplace. We believe this collection of data provides us with information pertinent to a successful strategy for the disposition of assets owned or controlled by our clients.


2017 Forecast and Category Summaries:

Highlights of Mr. Barnes’ commercial real estate presentation:

2017 Investor Outlook for Land

  • Growing demand for office and hotel sites in downtown and suburban areas
  • Suburban residential land continues to be in high demand
  • Northeast and East Wake County residential tracts are gaining more attention
  • Begin to see a slowdown in developer interest for multifamily land
  • Continued demand for well-located and well-priced warehouse land
  • Aggressive growth plans by grocery store chains will drive retail demand

2017 Investor Outlook for Income Property

  • Pricing starts to level off
  • Money is available, but core properties still hard to find
  • Continued interest in the 18-hour markets
  • Industrial sector remains in favor
  • Office investment slows in 2017
  • Cap rates trend upward following interest rate hikes
  • Another good year, just not as robust 

Summary: NAI Carolantic’s research showed area-wide vacancy in the office category increased from 10% in 2015 to 11% in 2016. Shopping center vacancy dropped slightly from 3% in 2015 to 2% in 2016. The multipurpose category which includes warehouse, industrial and flex space also saw a rise in vacancy from 8% in 2015 to 9% in 2016. The office category expects 2 million square feet to be constructed in 2017, and multipurpose looks for 1.2 million square feet of new construction. Shopping centers have 846,000 square feet underway with most being built in the Cary/Morrisville/Apex and North Raleigh/Wake Forest submarkets.

Absorption was generally positive in 2016 with the exception of the office category which dropped from 3% in 2015 to 0% in 2016. The multipurpose category dropped from 3% in 2015 to 1% in 2016. The shopping center category improved in 2016 going from 1% to end the year at 2% absorption.

Multipurpose: The Research Triangle submarket had the highest vacancy for warehouse/industrial space during 2016 at 11%. This was an increase from 6% the previous year. Overall, with approximately 1.2 million square feet of new construction underway, we expect absorption will remain positive into 2017.

Office: As in the past several years, the Research Triangle submarket had the highest office vacancy at 17%. This equates to 3.3 million square feet of available space. Downtown Raleigh remained at 11%. Absorption in the overall office market was flat. Approximately 2 million square feet of office space is under construction with most taking place in the Downtown Durham submarket.

Shopping Centers: All Shopping Center submarkets were under 4% vacancy for 2016. The Cary/Morrisville area as well as the North Raleigh/Wake Forest submarkets expects to have the most new construction in 2017 with approximately 613,000 square feet. Overall absorption improved going from 1% in 2015 to 2% in 2016. Construction will be steady as this category will continue to improve. As we reported in early 2016, the market remained healthy keeping vacancy low.

Single-Family Housing: The NAI Carolantic’s Housing Momentum Index considers the annual new and pre-owned sales volume, subtracting year-end Multiple Listing Service inventory to track sales momentum. Again in 2016, the Momentum Index rose with the increase in activity. Over 24,440 units were sold in Wake County and inventory dropped to 2,988 units…the lowest level since 1994. According to Barnes, actual home sales were the highest since 2007.

Multi-Family Market: The apartment market was very active in 2016 and vacancy actually dropped from 7.7% in 2015 to 6.1% in 2016. Over 6,733 units are under construction with an additional 5,151 proposed according to Real Data Apartment Market Research Report. Barnes predicts vacancy will go to 7% in 2017 indicating demand will not be able to keep up with supply.

Hotel Market: According to the Greater Raleigh Convention and Visitors Bureau, there has been an increased interest in building new hotels in the Raleigh area. Hotel occupancy in Wake County for 2016 was 71.2%, the highest in over ten years. The average daily rate rose slightly to $101.20, also the highest level in over ten years. During 2016, two hotels were built in Wake County, adding 189 rooms. Seven more hotels are due to open in 2017 to add an additional 915 rooms.

Durham County had two hotels to open in 2016 adding 171 rooms. According to Shelly Green, President & CEO of the Durham Convention & Visitors Bureau, three more hotels are scheduled to open in 2017 adding another 273 rooms.