Raleigh August 2022 Key Take Aways
- RPN Guest Andy Lawrence is Principal and Architect at Olive Architecture, a Raleigh-based design firm focusing on hotel, retail and commercial. He has seven team members and currently works with Scott Hadley of Lee & Associates and Bohler.
- RPN Guest Jen Sisak has 30 years’ experience as an architect and is director of M Moser Associates, focusing on corporate commercial work. M Moser is a global firm HQ’ed in Hong Kong but has been in the local market for almost two years.
- Federal Reserve Bank of Richmond’s Matt Martin is concerned about inflation. Goods inflation is coming down while services inflation inches higher. It’s a hot labor market where wage inflation could be feeding overall inflation as opposed to commodity driven inflation. Central bank is moving on rates. He notes that we are not in a recession. Feds will do what it takes to get rid of inflation.
- Wells Fargo’s David Koehler sees a lift in credit spreads as he delivers proposals across asset classes. Credit spreads on investor RE are in the $165 to $295 range. There’s an urgency in borrowers getting ahead of loan maturities. His clients say supply chain and labor are challenges. Rich Walters provided 4 highlights: personal consumption is increasing at 1% pace annualized; there’s the possibility of a rate increase; labor and hiring are strong; and a mild recession is predicted Q1 2023.
- SINGH Development’s Avi Grewal completed a project with rents exceeding projections. He noted labor challenges. SINGH pushes into cores of Cary, Raleigh, and Morrisville despite lower returns. Avi said there’s a disconnect between state wanting growth and local governments being able to accommodate it. Avi led a group discussion of how the H-1B visa program is inhibiting existing talented professionals from securing jobs in the CRE industry.
- Mark McDonnell with AdVenture Development has an agreement with Selma that approvals must be done in 30 days. Firm’s biggest issue at Eastfield Crossing is sewer and water; he cannot get contractors to bid on the $8M project. Retailer and tenant interest is strong. Food Hall will open by end of month if ABC permit secured. Central road and utilities will be completed in 3-4 months. He is in the process of renegotiating tenant leases due to 30% increase in construction costs.
- Lee-Moore Capital’s Kevin Scanlon reported Vinfast closed last week. LMCC was invested in some of land. Large industrial user activity continues; activity on mid-size user (117K SF) has slowed. Lowes Food broke ground at Northwood Landing across from MOSAIC in Pittsboro. Retail leasing is sluggish; self-storage is strong with 95% occupancy rates. Two hotel investments will do distributions next quarter, so some rebound in that sector.
- Wyrick Robbins’ Anna McLamb reported refi’s have reduced due to interest rates and people’s appetite for opportunities changing. Taylor Emory is doing lease work and working with the M&A group. Eric Vernon’s working on development projects, including residential condos, mixed-use project, townhomes, and single-family homes.
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