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 markstraetplace. We believe this collection of data provides us with information pertinent to a successful tegy for the disposition of assets owned or controlled by our clients.

2018 Forecast and Category Summaries

2018 Investor Outlook for Land

  • Wake County residential land continues to be “on fire”
  • Western Wake County is the jewel
  • All surrounding submarkets are active
  • Up and coming areas include Rolesville, Chatham County, Franklin County and Angier
  • Suburban Downtown areas continue to be active to include Holly Springs, Apex and Cary
  • Demand for retail land has cooled
  • Well located retail corners still see buyer activity, but fringe locations get minimal interest. 
  • Industrial land cost continues to rise

2018 Investor Outlook for Income Property

  • While cap rates for investment properties reached historic lows, pricing is leveling off and the majority of demand remains for higher quality assets. 
  • Money is available, but core properties remain hard to find. 
  • Industrial sector remains in favor, office and retail are softening.
  • The overall sentiment in the market is that we are in the late stages of the current real estate cycle.  
  • Research shows that the spread between asking and closed cap rates has widened across all asset classes.
  • Property owners are attempting to sell assets in the current market to take advantage of the historically low cap rate environment, regardless of asset quality, which is shifting the market from a seller’s market to a neutral market.
  • Cap rates will continue to trend upward following interest rate hikes and we can expect another solid year ahead.

Summary:  NAI Carolantic’s research showed area-wide vacancy in the office category declined slightly from 11% in 2016 to 10% in 2017. The multipurpose category—which includes warehouse, industrial and flex space— remained at 9% in 2017. Shopping center vacancy increased slightly from 2% in 2016 to 3% in 2017.  The office category expects approximately 2.5 million square feet to be constructed in 2018, and multipurpose looks for 2.2 million square feet of new construction.  Shopping centers have 745,000 square feet underway, with most being built in the Cary/Morrisville submarket.
Absorption was generally positive in 2017 with the office category improving to 2% in 2017 up from 0 in 2016.  The multipurpose category held at 1% absorption for the second year in a row, while shopping centers dropped a point to end 2017 at 1%.
Multipurpose:  Overall, with approximately 2.2 million square feet of new construction underway, absorption is expected to remain positive into 2018. The Research Triangle submarket had the highest vacancy for warehouse/industrial space during 2017 at 14%.  This was an increase from 11% in 2016 and 6% in 2015.
Office:  As in the past several years, the Research Triangle submarket had the highest office vacancy at 15% though a slight decline from the 17% in 2016.  This equates to 3.1 million square feet of available space.  Downtown Raleigh vacancy dropped to 6% from a high of 11% in 2016.  Absorption in the overall office market improved from 0 to 2% in 2017.  Approximately 2.5 million square feet of office space is under construction with most occurring in the Downtown Durham submarket.
Shopping Centers:  All Shopping Center submarkets had low vacancy for 2017.  The Cary/Morrisville area expects to have the most new construction in 2018 with approximately 330,000 square feet.  Overall absorption dropped from 2% in 2016 to 1% in 2017. Construction will be steady as this category will continue to improve.  As we reported in early 2017, 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 2017, the Momentum Index rose with the increase in activity.  Approximately 25,000 units were sold in Wake County and inventory dropped to 2,853 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 2017 and vacancy actually dropped from 6.1% in 2016 to 5.4% in 2017.  Over 5,643 units are under construction with an additional 3,663 proposed according to Real Data Apartment Market Research Report. Barnes predicts vacancy will go to 6% in 2018 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 2017 was 70.4%, one of the highest in over 15 years. The average daily rate rose slightly to $103.38, also the highest level in over 15 years.  During 2017, seven hotels were built in Wake County, adding 911 rooms.  Thirteen more hotels are due to open in 2018 adding 1,157 rooms. 
Durham County had two hotels to open in 2017 adding 273 rooms. According to Shelly Green, President & CEO of the Durham Convention & Visitors Bureau, one more hotel is scheduled to open in 2018 adding another 113 rooms.