Raleigh February 2021 – Key Take Aways
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• Anna McLamb, Wyrick Robbins: Continues to work on mergers and acquisitions and life sciences leasing, but now seeing more development deals and talking to lenders.
• Avi Grewal, SINGH Development: Senior housing leasing is difficult; expenses are high due to PPE. COVID vaccines receive good reception from residents, but not staff, complicating lease-up. Anticipates a slow-down in senior housing new construction. Construction pricing is increasing.
• Sean Noonan, Whiting-Turner Contracting Company: Construction economic forecaster predicts continued recovery in 2021, slow-down in 2022. Confirms construction costs will increase 4-5% overall. US supply chain needs to be strengthened. Expects NIH, EPA and USDA construction to be better funded under Biden. Mission critical will continue to grow, and retail to be reimagined, possibly to life science opportunities, like The Stitch in Morrisville.
• Steve Kerlin, Joe Starr, Terracon: Steve is a national key lead for Terracon’s solar practice. Solar market is impacted by steel increase. Joe indicated NCDOT projects are moving again. Mission critical data center market is active, with a shift from 3M SF sites to smaller data centers. Healthcare is strong, with big campuses and MOBs. Traditional multi-family is strong.
• Beth Harrelson, Spencer Wilson, First Horizon: Rates are low; her sources have new allocation of money in 2021. For long-term, fixed rate, nonrecourse debt, lenders are quoting 3.-3.5% if deal is high leverage; high 3’s to 4% if retail or office. Multi-family and industrial command a better rate. Spencer said the market is liquid from a lender and investor viewpoint.
• Matt Martin, Federal Reserve Bank of Richmond: Inflation is firming in 2021, but will not get worse.
• Jason Hall, Cherry Bekaert: NC is disallowing deductions on expenses paid with PPP money. New Markets tax credits are still a hot topic; he is also securing construction R&D tax credits.
• Paul Scott, CoStar Group: In office buildings 20K SF or larger, 587 properties with 1700 spaces are available; the high increase in vacancy should taper. Charlotte/Raleigh are in top 5 for rent growth.
• Hunter Stewart, Lee & Associates: Has heard Fuji and MyComputerCareer looking in Holly Springs.
• Tyson Strutzenberg, Trinity Capital Advisors: Firm is a developer, investor and sponsor for SE acquisition and development with $3.4B in 23M SF. Shifted to acquiring and developing industrial product early 2020; bought Duke Realty portfolio ($1B, 6.9M SF). Life Sciences has been “darling asset class” for institutional investments, resulting in record-high life science office transactions. Park Point, Southport and Venable Redevelopment are current project examples.
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