Raleigh November 2022 Key Take Aways
- Cardinal Partners’ John Culbertson’s firm is real estate advisors, who created the Real Estate Canvas; their largest client is Mitsubishi Chemical. His partner Brian Gullette is a serial entrepreneur, who worked on Connection Technologies and multiple start-ups.
- Nick Leverett is Director of Market Analytics for THE Triangle for CoStar. He noted Class B and C offices are more occupied, but Class A (40% of market) is taking 65% of absorption; office leases are happening, but slower, smaller and fewer of them. The Triangle still has positive net absorption.
- CE Group’s Mark Ashness reported the single-family cycle has peaked; nationals are dropping positions in this market, specifically those with utility or jurisdiction issues. Job creation is still coming, so local market should be okay. Mark said we need technological breakthroughs on aggregate and asphalt to make construction more efficient and economical.
- Andrew Moriarty of Bohler Engineering said some developers plan to let the market come back to them, waiting 6-8 months until they see opportunities. Some large corporate clients are starting back up because they are self-financed and think construction costs will recede.
- Bohler Engineering’s Mark Fletcher said cold storage, advanced manufacturing, aerospace, vehicles, and component companies will continue. Data centers are 3-4 years behind on supply. Microsoft is expanding west of Charlotte with 500 acres; Apple gets busier in Raleigh.
- Joe Starr of Terracon reported proposal and project generation is good, including power generation, healthcare, telecom, transportation and retail/commercial. He added OEM + EV Battery plants continue to look at NC; EDPNC is looking for more megasites. He sees out-of-state REITs looking to reposition old shopping centers as mixed use developments. In Raleigh, BRT and transit-oriented development continues; healthcare systems move forward on capital investments.
- Olive Architecture’s Andy Lawrence said supply chain is affecting projects. Andy works on hospitality and restaurants. Hiring people is his biggest challenge.
- TradeMark Properties’ Vijay Shah is working with Mochinut, Vampire Penguin and Teriyaki Madness. Vijay is also working on hotel deals. He said a Salon Lofts concept is looking for 5-6K SF in N Raleigh; he has a Jazz Club looking for 4-6K SF with 12-14 ft ceilings in Charlotte and Raleigh.
- David Koehler of Wells Fargo said rising interest rates are slowing down clients, leading to lower leverage positions (65%) in most asset classes. For acquisitions, his clients include flex industrial, self-storage and hospitality; for construction, clients include build-to-suit and existing facility expansion. For commercial, foreign parent companies are investing more in their US companies.
- Lee & Associates’ Hunter Stewart reported on office: there’s 3.5M SF sublease today; 128 spaces over 3K SF; 40 spaces 10-15K SF. Many office leases to expire in 2024 and 2028. Chatham Park in Pittsboro sold 239 homes, with 85 under construction in 2022. Medical is leading MOSAIC and Northwood Landing’s leasing. Affordable and build-for-rent housing are still active.
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