Raleigh November 2020 – Key Take Aways

• The rate environment had a little jump, up 25+ basis points, but it’s not creating significant activity.  Still seeing compression in credit spreads and decreased loan demand across the spectrum.  The impact of the election is to be decided, with no strong trends currently.
• Life sciences is a hot market, says the investors, brokers and service providers.  Triangle community college’s B-Tech programs produce talent for biomanufacturing jobs, which often need certification or 2-year degree.
• Mission critical, healthcare and federal sectors remain strong.  Conversions of malls, strip centers to small pharma or production facilities is happening.  Warehouse distribution space is busy.  Cold storage, supporting the food + beverage supply chain, needs rehab or replacement.  Local schools continue to build, including Wake County schools, NC State and Wake Tech.  Terracon’s Geotechnical group is active. The office market is slow.
• Vacancy factor for industrial is 3-4 percent, and 3M SF of new industrial product is coming online.  Existing flex/warehouse space is converting to Life Sciences use, for both R & D and manufacturing.   A Jones Sausage Rd/540 land tract is soon available for bio/life sciences development. Industrial market is pushing outside of Triangle, especially to Sanford.
• Lee & Associates continues work on a grocery-anchored development in RTP off Ellis Rd, with grocer, gas, coffee, Mexican QSR, medical and hotel.  Little Architects and Terracon Consultants are working on Carolina Yards, the transformation of the old Cary Towne Center.
• COVID causes issues for Whiting-Turner, who had carefully opened its 52 offices across the country; due to second/third surge, it is now closing its 52 offices for 4 weeks.
• Peter Byford and Whitney Ferguson discussed the New Markets Tax Credit (NMTC) program, first tax credit program to stimulate commercial investment in low-income communities (LIC).  It’s a competitive, private-public program that can provide 17 – 20% of project costs.  Community Development Entities (CDEs) find projects applicable to the program, with a focus on Job Creation and Community Services projects.  Project must be a NMTC-qualified census tract, have significant qualifiable community impact, demonstrate need for subsidized funds, and be ready to start.  OZ and NMTC monies can be used together.