RPN Member John Daly of Marcus & Millichap reported activity on multi-family properties is good, with investor interest steady. The Triangle region is not seeing huge issues with collections, but he predicts deterioration in future months. Industrial investors are on the sidelines, but private investors are active. John is currently focused on new properties and one-off market deals.

Key Take Aways
Six months into COVID shutdown, members have a variety of office situations: majority remain WFH, some hybrid (going into office 1-2 days per week), and minority are in the office full-time. Some members started to resume in-person meetings, but with new protocols.
Incentives and credits for real estate are extremely complicated, with the IRS dropping more bonus depreciation rules this month. Consider Dawn, Cherry Bekaert a resource to navigate the complexity. Opportunity zones have cooled; there is tax benefit, but it is harder to capture.
In the last month, Investors Title has seen new hotel deals and an increase in 1031 activity in vacation towns/areas, like Morehead City, Kill Devil Hills and western NC.
Major hotel chains are outperforming cheaper hotel brands. Some leisure weekend travel is returning. Vijay reported an Apex Candlewood Suites has 60-70% occupancy due to construction-related users; Hampton Inn at Brier Creek saw 75-85% occupancy with weekend traffic.
Spec office remains hesitant. Conversations on distressed properties has started, but is minimal. David anticipates companies in large markets will review overall office space utilization.
Multi-family overall is strong. SINGH has a project with slow lease-up, rents lower than anticipated and concessions being offered. For multi-family, John Daly is focused on new property and one-off market deals. Senior housing has been hit hard, with a complete lending shut-down.
Terracon Consultants sees activity in logistics, power generation, healthcare, solar and strong retail groups, like Chick-Fil-A, Dollar General, Amazon and Lowe’s.
Little Architecture is working on UNC Urgent Care in MOSAIC at Chatham Park and Duke Human Vaccine Institute (DHVI) on the former GSK campus in RTP.
AdVenture Development is working on 135K SF spec office building and Providence Blvd in Eastfield Crossing in Selma; they’ve seen interest in the business park. Property is in an opportunity zone.
Residential activity in Chatham County includes The Cottages of Chatham Park, 800 – 1200 SF efficient single-family product, near downtown Pittsboro. Industrial activity in Lee County is strong.
Landlords continue to navigate through concession/abatement periods with retail tenants. Vijay says mom + pop can probably survive better than weak corporate chains; he anticipates an issue backfilling restaurant space in future months. Landlords would rather abate than have vacancy.
Lenders’ appetite for retail is significantly diminished. Even with established relationships, banks are seeking additional credit enhancements.