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Raleigh-Durham
Office Market
by John Kelly, Colliers Pinkard
Vacancy rates for Raleigh’s office market remain in a
stabilized range with supply and demand in good balance. "We
could see a modest uptick in vacancy rates this year as activity
has started 2001 at a slower pace," says John Kelly, executive
vice president/principal for Colliers Pinkard. Right now vacancy
rates are at 7.37 percent for office space and 8.22 percent
for flex space, he adds.
The majority of development is taking place near the Interstate
40 corridor, which remains the location of choice with additional
activity around the Crabtree Valley Mall and the Raleigh Entertainment
and Sports Arena. These areas are the most active due to their
proximity to the area’s major employers and highway accessibility
that enables recruitment of employees throughout the region.
"We are seeing developers plan and build projects that
include three to five buildings with interconnectivity, as opposed
to one-off-projects," says Kelly. "These multiple
building complexes are attracting the faster growth companies."
The market is also seeing increased build-out allowances of
$18 to $20 below a modified ceiling, and a higher level of finish
in the building common areas, according to Kelly.
One development of note is Venture Center/Centennial Campus
by Craig Davis Properties, a five-building, 487,000-square-foot
project currently underway. Lichtin Corp. is developing the
office portion of Arringdon, a 1.1 million-square-foot mixed-use
project. Lichtin will soon begin construction on the first 100,000-square-foot,
four-story office building. Other significant projects in the
area include Weston-CentreGreen and GlenLake, both developed
by Highwoods Properties; Crabtree Overlook developed by Duke-Weeks
Realty Corp.; Keystone Office Park developed by Keystone Development
Corp.; and Brier Creek by AAC Development, a new developer to
the area.
Other new developers in the Raleigh-Durham area are Dilweg Companies,
O&A Development and First Colony Property Co. According
to Kelly, there are no major tenants absorbing the majority
of Raleigh’s office space. "We had a number of large
transactions, but we have also had a broad base of expansion
by new and existing companies," he says.
"The I-40 corridor will remain the centerpiece of our market.
The west Raleigh areas near the Crabtree Valley Mall and the
Arena are up-and-coming extensions of this market area,"
says Kelly. "We are also seeing an uptick of sublease space
that may add 1.5 to 2 percent to the vacancy rate over the short
term."
©2001 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.
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