SOUTHEAST SNAPSHOT, AUGUST 2005

Raleigh Office Market

The Raleigh, North Carolina, market continues to improve, as evidenced by second quarter net absorption in the office segment of 366,000 square feet, according to the Second Quarter 2005 Highwoods Properties Quarterly Market Review, which tracks the activity of office and flex space within Raleigh and the surrounding markets. In addition, second quarter 2005 office vacancy of 11.8 percent is the lowest since the fourth quarter of 2001.

The total Triangle area, which encompasses the Raleigh, Cary, Chapel Hill, Durham and Research Triangle markets, experienced a robust 557,000 square feet of positive net absorption and a 14.2 percent overall vacancy rate, according to the report. This is a significant improvement from a year ago when vacancy was 16.5 percent. In addition, it’s the lowest vacancy since the first quarter of 2002 when vacancy was 14.1 percent.

A growing population and strong increase in employment in the Triangle area fuel the improved office climate. According the U.S. Census Bureau, the Triangle area has seen a surge in population since 2000. The Raleigh market alone has grown over 15 percent since 2000. In addition, according to the Bureau of Labor Statistics (BLS), Raleigh added 8,400 non-farm jobs in March 2005.

While office sector absorption continues, new starts will deliver approximately 637,945 rentable square feet to the market with 27 percent of that new construction pre-leased as of July. In addition, large upcoming expirations will impact the market as 2006 nears, specifically 180,612 square feet at a former Nortel training center at 901 Corporate Center Drive and 168,000 square feet at 4800 Falls of Neuse Road, which IBM has vacated early.

According to Tom Fritsch, leasing representative at Highwoods Properties, “These vacancies are significant in that the north Raleigh submarket hasn’t seen 30,000-square-foot floor plates available in many years. The majority of buildings in this area have been subdivided into smaller spaces over the past 10 years.” The large floor plates plus a 5.5 per thousand parking ratio are two of the unique features at 4800 North Park. “You just can’t find 168,000 square feet of contiguous office space with a 5.5 parking ratio in this market today without building something new,” said Fritsch.

Development in the Raleigh market is beginning to pick up as two developments at Brier Creek (Glenwood corridor), consisting of 90,000 square feet each, are scheduled for third quarter delivery. Also in the Glenwood corridor, Highwoods is developing GlenLake Four, a 158,000-square-foot, six-story, Class A office building located between Interstates 440 and 40. At the end of the second quarter, this submarket’s vacancy was 11 percent. In addition, 100,000 square feet at North Hills was delivered in April 2005 and is 90 percent leased.

In total, the Raleigh market continues to show signs of recovery with increased net absorption and historically low vacancy rates.



©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.




Search Property Listings


Requirements for
News Sections



City Highlights and Snapshots


Editorial Calendar



Today's Real Estate News