Raleigh’s RTP – Live, Work, Play

Triangle Commercial Bits and Pieces…

RTP Getting New Mixed Use Development

The largest research park in America is changing things.  Wait, that’s not right, America is changing things for the largest research park.  A new concept mixed use development is hitting the park!  Durham, NC is welcoming Beacon Properties Group and the mixed use development that will lay right along the busy 15-501 corridor looking to capitalize on new restaurants, variety of office space, hotel(s), and apartments.  It will be a walkable mixed us district and the first of it’s kind in the area!  Multifamily continues to expand in the Triangle market.  Just this week there are several on planning board agendas throughout the region including one on Rogers Branch in Wake Forest, NC.

North Carolina continues to grow quickly and remains on the top or near the top of many lists of best places to live and work!  This is a reflection of that very thing.

RTP Durham

View of RTP from the south

Featuring 57,000 square feet of retail and 25,200 square feet of office along with 17,000 square feet for restaurants and 300 apartment units, the project name, Oakridge will have major impact in our market.  The first of several?  We will see.

DOWNTOWN Raleigh By the Numbers….

While residential builders are helping change the face of the market near downtown Raleigh, it is the commercial impact that truly will drive the traffic to these homes!  What came first?  Chicken?  Egg?  Smoke?  Fire?   Residential?  Commercial?  Twenty nineteen has been a good year for Raleigh.  Hemp stores, cocktail lounges, new restaurants, new office space, etc…..  Here it is by the numbers according to the TBJ.

37 – Number of businesses closed since Jan 2018.

64 – Number of new businesses since Jan 2018.

15 – Number of storefronts closed in 2019.

20 – Number of new storefronts in 2019.  (We call that growth)

Triangle Rental Rates Up

The second quarter showed a boost in Triangle area office rental rates.  With the expansion of local businesses and the growth of outside companies coming in to the market, it appears that vacancy rates continue their decline.  Average Class A office rental rates climbed in the second quarter to $29 per square foot.  That is nearly a 40% increase from earlier in 2019.  Rates were holding steady over the previous year as well.  Again, we call this growth.  The economy continues to flourish!  Class A rates exceeded $32 per square foot in submarkets like downtown Durham, Six Forks/Falls of Neuse, and Raleigh.  Where would you expect the first over $40 per square foot to be recorded??  Yep, you guessed it, Kane Realty announced earlier that Tower IV at North Hills hit $41.50.

Trending up.  What goes up must come down…right?  Not in the near future experts say.  There are several proposed projects in downtown (remember the smoke versus fire thing earlier in this post?) that are likely to ask similar rental rates.

By the Numbers: 

7.5% = Class A vacancy rate across the region

3.1% = Class A vacancy rate in downtown Raleigh

Massive Development Project – Johnston County

Whew, this one took some time.  After a year plus of preparation, planning, designing, talking, drinking coffee, more talking, more planning…you get the idea…a new 470 plus acre mixed-use development in Johnston County has officially begun construction.

A 2.8 Million square foot project that will encompass the land running from exits 97 and 98 on I-95 near Selma.  Retail?  You want retail?  Okay, this feature a massive amount fo retail, restaurant, office medical space, hotels, senior living, residential development etc….A total of 1 Million square feet will be created.  Wow!  This isn’t your parent’s Johnston County!!!

Locals will enjoy a farmer’s market, farm to table dining options and other ways to make the residents and workers feel “grounded”.


What Are You Looking For?

Our team here at Kima Commercial would love to earn your business.  Whether you need land to build commercial space on, land for residential development, office, industrial, leasing, etc… our team stands ready and welcomes your business.  Our partners are all encompassing.  In other words there isn’t a commercial real estate team member we cannot bring to the table for you.  Meaning if you need a reputable commercial builder to build or do an upfit or just quote one for you, civil engineers, architects, inspectors, designers, etc…we can help.  Please feel free to visit us at one of our two offices.  We currently run our day to day operations for our commercial business out of the Brier Creek location in Raleigh and also have an office in Wake Forest.  We have sold all across the state of North Carolina and have resources across the country.

Downtown Durham Is Booming!

Downtown Durham Is Booming!

Downtown Durham is booming. Take a drive down any of the one ways that will confuse you and see the change happening. It’s all local, hip, and for the better. Businesses are lurking at the opportunity of opening up shop in one of the seven downtown districts. (Brightleaf, Warehouse, Central Park, City Center, American Tobacco, Government Services, and the Golden Belt)  Showing a client downtown Durham office space is something that someone who lives in Durham can easily take for granted. Getting to know the area and what is around it is truly something special that has its own little local flare of food, shops, and entertainment.

No matter where you are in the seven districts, one thing is highly probable. You won’t notice any major chain stores or restaurants. Downtown Durham may be one of the only places in America you won’t find a Starbucks in the heart of the city. Supporting local businesses is high on the Durhamites radar and the thriving Starbucks world with 28,218 locations has yet to make its way in. Instead, they are opting for more local coffee shops and sit down restaurants. For breakfast, I highly recommend Dames Chicken and Waffles. A truly southern style homemade waffle with different options and types of chicken to put on top. Moving on from breakfast, one could take in a great lunch at any of the locally sourced restaurants including: Tobacco Road, Tylers, Bull City Burger, and Bull Mcabes, just to name a few.

Thinking of skipping lunch and going straight for the after work drinks? Do you want to set up an office space where you know your co-workers are going to be able to walk to some great hangout spots? Look no further than downtown Durham. The new rooftop bar with a pool is a great local hangout that encompass’s many different activities from hanging out around the pool overlooking the city to morning yoga class. Another new change to Durham is the amount of locally brewed beer and ciders there are. From brewing in their own shop to bringing in from Asheville and around the state, you can be lucky to find anything from a light beer to dark and all in between. While at the breweries and pubs, you’ll never be bored. Board games and yard games are all over the place and you’ll be likely to find something different at every table or in every lot. From bocce ball to corn hole, to life sized jenga – they have it all.

Don’t just take the writers word for it however; take Forbes word as Durham is the #3 place in the nation where your paycheck stretches the furthest to enjoy these activities. Take Wallethub’s word that Durham is the #7 best sports cities where you can enjoy a Durham Bulls game who is continually on top of the AAA league. Another great source would be from Growella that Durham is #1 for millennials in the country!

So whether you are on the hunt for some of the 3.2 million square feet of office space or want to get in on the brand new 612,000 currently under construction or 230,000 announced office space. Let Kima Commercial help you find the perfect space for you and your employees to take your company to the next level through work and play.

With markets tightening up and driving up prices, you need a strong commercial team behind you when finding your next space. With over 40 years experience on the Kima Commercial team. Whether it is finding a space to fill or a lot to build on. Our rounded team can help you from start to finish.


To learn more about what’s happening in the commercial real estate world in the Raleigh, Durham and North Carolina markets do not hesitate to contact us at Kima Commercial, LLC.  Our team of Brokers, REALTORS® and staff are here to meet your real estate needs.

We look forward to working with you!

What Am I Renting? – Load Factors and Loss Factors

What Am I Renting? – Load Factors and Loss Factors

The way commercial real estate is priced and leased is often misunderstood due to matters of rentable square footage. Below is a brief discussing of Load Factors and Loss Factors to provide some insight into these critical components of office leasing. It looks at the way load and loss factors affect both Landlords and Tenants which is particularly helpful as a matter of insight.

renting load factors loss factorsLoad and loss factors both refer to the amount of space that you pay for but don’t occupy as a part of your commercial real estate lease. As defined by BOMA standards, most multi-tenant buildings have a mixture of usable space, which is the area inside your walls, and common area space, which is the shared parts of your building’s interior. Your rentable space, which includes both types of space, is what you pay for. Load and loss factors are different ways of describing that additional space.

Load and Loss Factors

The load or loss factor is equal to the percentage that gets tacked on to your space to account for your pro-rata share of the common area space. To understand how it works, take a floor with these measurements, based on BOMA standards:

Gross Measured Area: 10,000 square feet (100×100 square from the inside of the building wall)

Vertical Penetrations: 250 square feet (elevator shafts and stairwells)

Rentable Area: 9,750 square feet (gross measured areas less vertical penetrations)

Floor Usable Area: 8,300 square feet (located inside demising walls of suites)

Floor Common Area: 1,450 square feet (hallways, elevator lobbies, restrooms, supply room)

The two names, load and loss, are interchangeable, as is “core” in some parts of the country. Which one you use depends on your perspective. You might think of yourself as paying for your share of the “core” of the building. On the other hand, the common area might be a “load” on top of your additional rent. To your landlord, the space is a “loss” relative to the more valuable usable space. BOMA Standards typically refer to “load” factor as the preferred term.

The terms load, loss and core are interchanageable and depend entirely on perspective. A landlord’s loss factor will not mean the same to you as a tenant. The building’s loss or load factor is equal to the common area divided by the usable area: 1450 divided by 8,300. This gives a load factor of 17.47%. This means that a tenant would pay their actual usable space plus 17.47%. If a tenant takes up half the floor – 4,150 usable square feet, they would pay for an additional 725 square feet of space for a total of 4,875 rentable square feet.

Another Loss Factor

Some landlords will incorrectly refer to their vertical penetrations as a loss factor. In that instance, the term is used to refer to lost space relative to the building’s actual gross measured area. This term pops up periodically and is a good reminder that just because terms have a technical meaning under BOMA standards or real estate law doesn’t mean that the correct meaning is always used.

What’s My Factor?

Calculating your load, loss or core factor can be challenging, especially given the newest updates to BOMA standards. The factor used to be calculated on a floor by floor basis. Relatively efficient spaces on higher floors had low load factors while ground floors with expansive lobbies had very high load factors. Since tenants wouldn’t absorb the cost of the load on all floors, landlords would be forced to reduce the load factor they applied and lose space. Newer BOMA standards measure load factors across an entire building, making everyone pay for the common areas.

On occasion, Landlords may change the load and loss factors when they get a new tenant. There are two ways to protect yourself against this. The first is to request a space and building measurement that is tantamount with BOMA standards. The second is to always work with a commercial real estate expert that can protect your interests against a “creative” landlord. Make the most of your usable space.

At Kima Commercial, we’d be honored at the opportunity to help you with any of your commercial needs – whether that be purchasing, leasing, selling, or answering any questions you have. Give us a call at (919) 336-1700 and let us know how our experienced commercial team can help!

We look forward to working with you!

Understanding Capitalization Rates and Debt Coverage Ratios

Understanding Capitalization Rates and Debt Coverage Ratios

Capitalization Rates or “Cap Rates” and Debt Coverage Ratios or “DCRs” are highly effective and popular commercial real estate metrics that can be used for valuation analysis of real estate, property trends, and to help make purchasing decisions. Provided below is a basic overview of how Cap Rates and DCRs are utilized.

First, what is the definition of a cap rate and what is the formula for determining a cap rate? The definition of a cap rate is the ratio of Net Operating Income to the Asset Value. To obtain the cap rate, simply use the following formula: Cap Rate = annual net operating income/cost (or value). For example, if a property is on the market for $1,000,000 and the net operating income is $150,000, the cap rate is 15. Using another example where the net operating income is $7,000 and the property is listed for $100,000, the cap rate is 7.

cap rate definitionSo what can we learn from using cap rates and what do they tell us about a potential real estate investment? One thing we learn from the cap rate is the return on investment an investor can expect to earn on a purchase using all cash. The examples in the above paragraph would, therefore, yield returns of 15% and 7% respectively. Another thing a cap rate is helpful for is evaluating risk. For example, two equally sized office buildings in the same neighborhood can be evaluated for risk based upon cap rates, all other things being equal. The higher the cap rate between the buildings, the greater the risk premium. Investors often use cap rates to evaluate the risk of certain investments in making decisions about their portfolios.

Cap rates can also help to identify trends in a particular market over time. For instance, if cap rates are trending lower in a market over a period of a few years, the market is growing more competitive. Whereas, higher cap rates over the same period indicate less competition for that particular product. This, therefore, provides some insight into the performance of the particular markets over this time period. Utilizing this simple analysis can help to evaluate risk for the purchaser.

It is important to remember that cap rates are much more accurate an indicator of property performance when the source of Net Operating Income is relatively steady. A discounted cash flow analysis may need to be used when a Net Operating Income stream is complex and/or irregular.

Another example of important real estate investment metrics is the debt coverage ratio or DCR. Examples of how the DCR is utilized are outlined below.

The Debt Coverage Ratio (DCR) is used to determine the ability of an income stream from a property to pay its operating expenses and mortgage payments. Banks and investors will set a limit on their tolerance for this ratio and expect a particular project to remain at or above this ratio for the duration of the loan or investment term.

The larger the DCR the better the investment is covering its debt service. A DCR of 1 means that the investment is meeting its obligations to the bank or investor but with no free cash flow left over. Therefore, it is not unusual for a bank or investor to require a DCR of 1.25. This provides 25% of each dollar in excess of expenses as a cushion for the bank or investor. To calculate the DCR, simply add all operating expenses and debt service, including interest, and subtract them from gross revenue. This leaves Net Operating Income. An example of a DCR of 1.25 would be Net Operating Income of $150,000 on Debt Service of $120,000 ($150,000/$120,000 = 1.25). This simple calculation can be critical when pre-qualifying your investment to ensure you are heading down the correct path. As interest rate and amortization are functions of this ratio, these are important to consider when calculating your DCR.

Utilizing Cap Rates and Debt Coverage Ratios will often be the first things your commercial real estate broker will do for you when assisting you with your project. Therefore, it is important to utilize a professional when determining the best plan of action for your commercial sale or purchase.

We look forward to working with you!

Public Land Use Controls – How Your Project May Be Affected

Public Land Use Controls – How Your Project May Be Affected


Almost any commercial real estate project, large or small, may likely have Public Land Use Controls as a key component of successful navigation toward completion. Single Use Zoning, or Euclidean Zoning (taken from an early Supreme Court case involving the Village of Euclid, Ohio) has long been the basis of land use ordinances. In this type of land use control, areas of a jurisdiction are divided into residential, commercial, or industrial areas. These areas are known as zoning districts with each district having specific use guidelines and criteria for their development. Sometimes, navigating these guidelines can make or break the success of a project.

approved-29149_640The first step in navigating the zoning process is starting early in the development cycle to identify the implications of the subject zoning ordinance on the parcel or parcels of land contemplated to be developed or re-developed to a specific use. Your local zoning officer or planning staff member should be able to help get this process started by helping to identify the zoning district of the subject parcel, the permitted uses in that district, and the type of permit, if any, needed for the proposed use. Types of zoning permits include but are not limited to Special Use Permits, Conditional Use Permits, or simply a certificate of compliance that the subject land use in its current zoning district is allowed by right. Further, a developer may find themselves in a situation in which the proposed use is not allowed in the zoning district in which it is located. In this instance, the process of re-zoning a parcel of land may be the only option if the project is to go forward. Re-zoning a parcel is not to be taken lightly and will generally require a land-use attorney to become involved given the complexities of the process. These complexities include the nature of the zoning transition in the area, nearby uses, and public opinion toward the project. Such cases are usually heard by an elected body such as the City Council or Board of County Commissioners, depending on the jurisdiction. Their decision can often hinge on the matter of “Spot Zoning”.

Spot Zoning is the application of zoning to a specific parcel or parcels of land within a larger zoned area when the rezoning is usually at odds with a city’s master plan and current zoning restrictions. Spot zoning may be ruled invalid as an “arbitrary, capricious and unreasonable treatment” of a limited parcel of land by a local zoning ordinance. While zoning regulates the land use in whole districts, spot zoning makes unjustified exceptions for a parcel or parcels within a district.

The small size of the parcel is not the sole defining characteristic of a spot zone. Rather, the defining characteristic is the narrowness and unjustified nature of the benefit to the particular property owner, to the detriment of a general land use plan or public goals. The rezoning may provide unjustified special treatment that benefits a particular owner, while undermining the pre-existing rights and uses of adjacent property owners. This would be called an instance of spot zoning. On the other hand, a change in zoning for a small land area may not be a spot zone, if it is consistent with, and furthers the purposes of the general area plan.

When determining how zoning may affect your project, it is important to work directly with the local jurisdiction. Further, it may be of critical importance, in certain instances, to hire a land-use attorney to help navigate the process in order to increase the likelihood of the successful zoning of your project.

Please call us and let us know how we can assist you with any of your commercial real estate needs! From land to leasing to multi-family and commercial development – even design/build – we’d love the opportunity to help you with your commercial real estate needs!

Be sure to keep up with us on Facebook at Facebook.com/KimaCommercial to stay in the loop on what’s going on in the Raleigh/Durham area – and beyond – when it comes to commercial real estate, to see our featured listings and more! Call us today at (919) 336-1700!



Keller Williams Preferred Realty, 7751 Brier Creek Parkway, Suite 100, Raleigh, NC



We look forward to working with you!