Raleigh May 2021 – Key Take Aways
• Spencer Wilson of First Horizon said rates aren’t too high. Activity is good: some clients are nervous about 1031s and people are pushing to get things done now. Interest rates are favorable; cap rates continue to compress. Beth Harrelson is working on retail, single-tenant and multi-tenant and MOBs; she is getting quotes in 3.5% range for long-term fixed, non-recourse loans. Some retail deals (small town, older center, less-desirable anchor) are hard to place.
• Anna McLamb of Wyrick Robbins has worked on purchase/sales, MOBs, and multi-family and assisted living loans and recently added two attorneys.
• Tom White of NC State University reported the largest commercial scale wind farm development would be designed, manufactured, installed and maintained in Huntersville, NC. Duke graduate students provided recommendations to name our region and modify our current bifurcated regional MSA. Dr. Mike Walden said pandemic recovery will accelerate robotics, AI and machine learning.
• Stephanie Sparrow of GFD Management Inc. has secured some new tenants and has tenants who still struggle, often market dependent. Tenants complain about labor shortages.
• Chris Carlson of Whiting-Turner Contracting Company faces low supply and high demand in construction. His firm hired 500 in 2020, with plans for 800 in 2021. He faces challenges with securing and paying for materials and guaranteeing client prices. Whiting-Turner hires exclusively out of universities for field/office personnel and has internship program (with 800 interns).
• Andrew Moriarty of Bohler Engineering is experiencing the same material shortage, so considering substitute solutions. He has difficulty filling middle-management positions from a local source.
• Marcus Acheson of Little Diversified Architectural Consulting reported activity is up, especially in the Life Sciences and in workplace interiors, including renovations and upfits.
• Joe Starr of Terracon Consultants, Inc. said that the renewable side is leading the way for the company. His firm struggles with labor. Steve Kerlin said UNC Healthcare is active. The high steel prices impact solar’s production side, creating a more competitive market for testing.
• Matt Martin of the Federal Reserve Bank of Richmond said we’re experiencing rapid acceleration as economy opens, with 6% growth in Q1, 10% growth in Q2 predicted. There is a general shortage in the lower-skilled end of workforce; unemployment benefits are holding back some workers.
• David Koehler of Wells Fargo sees clients with labor shortages (lumber, metal fabricators) invest in technology and automation. Loan demand is soft; portfolios in good shape in terms of credit quality; and balance sheets are strong.
• Vijay Shah of TradeMark Properties has 2 clients in 1031s looking for any property type for $4M or $12M. He’s working with Popeye’s in Concord area and Bojangles in the Triad.
• John Daly of Marcus & Millichap reported investor interest remains high. He is focused on tax implications of 1031 exchange being modified.
• Hunter Stewart of Lee & Associates reported the firm is building a 20K SF building at Kildaire and Walnut in Cary and interest in Northwood Landing and MOSAIC in Pittsboro is strong. Scott Hadley anticipates people will sell properties before tax changes. Residential developers continue to build in the Triangle’s outlying counties. Marlene reported vacancy in industrial is 3-4%. Lab space rental rates have increased 10% per year, currently at low-to-mid 30’s, triple-net, with TIs varying depend on condition of space. She reported 2.5M of sublease office space is back on the market.
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