North Raleigh Submarket Summary • 10.1M square feet is 32.9% of the metro’s inventory of neighborhood and community shopping center space. • The ten-year period since Q3 2010 saw
Flex/R&D Market Overview R REIS/Moody’s Analytics data defines six distinct geographic submarkets for the Raleigh-Durham market. The study area is centrally located the North Wake submarket.
Asking Rents
Vacancy Rate
The asking rent for non-anchor and anchor properties was $23.07, with an effective rate of $19.09. By contrast the metro rent was $20.33. The Contract Rent Discount (CRD) has been -6.3% for non-anchor properties and -8.7% for anchor properties. Both types saw a -0.4% drop in rents. By the end of 2020 asking rents are expected to drop to $21.13 with effective rents at $16.77.
The vacancy rate was 7.2% as of Q3 2020, compared with 8.5% for the metro. This amount is 4.3% lower than the long-term average.
Inventory
1.4M sf for an annualized inventory growth of 1.5%, versus 0.9% for the metro.
Annual Absorption
The North Wake County submarket has 4.1 million SF of rental space which is spread across 32 buildings. This represents 24.7% of the metro’s inventory, and it is the 2nd largest submarket behind the Research Triangle Park (RTP).
The average annual absorption since Q3 2010 has been 28,800 SF for the submarket as opposed to 122,100 for the metro. With no projected construction for 2020 the absorption will be negative 95,000 SF for 2020. There is no forecasted absorption for 2021 or 2022, but 15,000 SF of product is projected to be delivered by the end of 2022. This will represent 20.3% of new construction in Raleigh-Durham.
• Non-Anchor
Market Conclusions
• Rent: $23.07 asking, $19.09 effective, -0.4% change, -6.3% Contract Rent Discount (CRD), 2.9 years term, 5.3 months free, $2.77 expenses; the metro rate is $20.33 • Vacancy: 7.9%, -40 bps • Absorption: the metro had annual absorption of 314,000 sf since Q3 2010; 12-month absorption in was 50,000 sf, 62.8% lower than the average rate of 134,500 sf since Q3 2010
The broader area is being supplied with retail. Any considerations for the neighborhood should be targeted to specific needs and gaps in service. REIS is tracking retail construction activity that will deliver 25,000 square feet to the submarket by the end of the year, and net total absorption will be negative 152,000 square feet. As a result, the vacancy rate will drift upward by 1.8 percentage points to 9.8%. During 2021 and 2022, developers are expected to deliver a total of 33,000 square feet of neighborhood and community shopping center space to the submarket amounting to 14.1% of the new construction introduced to Raleigh- Durham. Total employment growth during 2021 and 2022 is expected to average 3.2% annually, while household formations are anticipated to average an increase of 1.6% per year. Over the same period the metro absorption rate is expected to average negative 58,000 square feet per year. The North Raleigh submarket will capture 81.0% of this absorption. The submarket vacancy rate will finish 2021 at 11.6% and will decline 0.6 percentage points to 11.0% by year end 2022. Between now and year-end 2020 asking rents are expected to decline -3.3% to a level of $21.13, while effective rents will fall by -7.7% to $16.77.
FIGURE: 4.B.7
• 4,402,000 sf • 84 buildings
Study Area
4
4
• Anchor
• Rent: $23.07 asking, $19.09
effective, -0.4% change, -8.7% CRD, 6.1 years term, 4.5 months free, $3.09 expenses; the metro rate is $20.33
• Vacancy: 7.9%, -40 bps • Absorption:5,660,000 sf • 73 buildings
North Wake County Flex/R&D Submarket Credit: REIS/Moody’s Analytics and RKG Associates, Inc. 2020
Chapter 4: Appendix
Northeast Community Plan
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