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.

Economic Update

Economic Update

Commercial real estate is inextricably tied to economic factors, both local and beyond. Locally, it is clear things are still booming: the Raleigh-Durham area has been abuzz with news of Amazon and Apple potentially locating new offices here; a quick survey of local business journals and newspapers shows company after company bringing jobs to the area; awards for economic growth and innovation abound; and the crowds of people moving into the area have yet to subside.

Screen Shot 2018-08-05 at 3.00.47 PMTake a step further out, and there’s ample proof that our state as a whole is continuing to thrive. For just one example, the Economic Development Partnership of North Carolina (EDPNC), a nonprofit public-private partnership operating under contract with the NC Department of Commerce, reported on May 11, 2018 that North Carolina had been awarded the 2018 Prosperity Cup award for the third year in a row. EDPNC’s CEO, Christopher Chung, is quoted in the article as saying: “The fundamentals that have been drawing companies for a long time really haven’t changed much. These include a great quality of life, well-renowned educational institutions and population growth with a lot of people coming out of school or mid-career who are moving here with a job or in search of one, all of which deepens the talent pool.”

With the local and state economic booms still proliferating, we next look to the national arena, which we have been tracking and discussing for several months now in this blog. Since our last posting, the second quarter and June financial reports have been published. The highlights:

The US economy gained 213,000 jobs in June (multiple sources, mid-July 2018);
Unemployment claims dropped to 208,000 during the week ending July 14th, the lowest number since December 1969 (Fox News, 8/2/18);
The unemployment rate increased 0.2% to 4% in June, a small increase attributed to a “surge” of 600,000 previously non-job-seekers reentering the job market, reportedly to take advantage of economic growth (The Kiplinger Letter, 7/6/18; Hutchinson Family Offices, 7/16/18);
The Fed released its second .25% interest rate hike in June, as expected and previously discussed, and projected the expectation that it would raise rates twice more by the end of 2018, most likely in September and December (multiple sources, July 2018);
Stock market numbers were mixed at the end of the second quarter, with the Dow down 1.8% between January and June, the S&P 500 up 1.7% and the NASDAQ added 8.8% (Hutchinson Family Offices, 7/16/18).
The nation’s GDP for the second quarter grew by 4.1% (multiple sources, 7/27/18 – 8/1/18)
Wages and Salaries grew 2.8% over the previous 12-month period (Bureau of Labor Statistics, 8/1/18)
The effects of both enacted and potential tariffs are creating quite a bit of chatter, but conclusions are mixed and possibly premature at this time; still, they are being carefully monitored by nearly every political and financial source imaginable.

Taking everything into consideration, whether a company is relocating to the area from another part of the state or nation, expanding a current local company, moving from one part of the Triangle to another, or simply investing in the future through commercial real estate, it is clearly still a very good time for commercial real estate growth in the Raleigh-Durham area!

If you’re looking to move here to the Triangle, or are already here and looking to expand your reach with additional office, retail or other commercial space, we’d love the opportunity to help you. Please contact our experienced and knowledgeable team. You can call us directly at 919-336-1700. We look forward to hearing about you and your company, and learning about how we can help you!

We look forward to working with you!

LPL Prediction Update

LPL Prediction Update

A few weeks ago, we presented a summary of LPL’s predictions for the current bull market, looking at five indicators known as the “Five Forecasters”: the Conference Board’s Leading Economic Index (LEI), the US Treasury’s Yield Curve, market breadth, market valuation, and the Purchasing Managers’ Index (PMI). (Missed this blog? Check it out here!)

Today, we’d like to share with you an article we felt was a great complement to that summary. The article, written by AP Economics Writer Josh Boak, was shared by WRAL News just this morning, and can be found here.

lpl prediction updateAccording to Boak, the month of April saw a hiring increase of 164,000, which lowered the overall unemployment rate to 3.9 percent. This is, by the way, the lowest rate since December 2000. The unemployment rate for African-Americans—6.6 percent—is the lowest recorded since 1972.

As a result of the low unemployment rate, economic experts believe wage growth will begin to climb in the coming months. Why? As unemployment falls, there is a diminishing job pool of qualified workers, which means employers will be forced to hire at higher wages in order to attract the best employees, and some may even need to increase wages for current employees to ensure good employees aren’t tempted to look elsewhere. Boak quotes Andrew Chamberlain, chief economist at Glassdoor, as saying, “It’s just not sustainable for average pay growth to be so low in a labor market this tight.”

Boak makes sure to point out that 24,000 workers were hired in the manufacturing industry in April. Why? As noted in the previous blog, “ In the past, the peak of manufacturing has preceded recession by a period of nearly four years.” Thus, economists carefully watch trends related to manufacturing growth or decline, especially with respect to the trade and material tariffs that went into place recently. Boak’s inclusion shows manufacturing growth is still strong, and indicates speculative fears regarding the impact of the tariffs are not yet negatively impacting the industry.

Inflation, Boak reports, HAS increased slightly; however, this comes as no surprise, as many people expected the rate to begin creeping up once the economy showed stable recovery from the 2008 “financial crisis”. To follow the small increase in March, at least two more small increases are expected by the remainder of the year.

As we continue to watch these financial trends, we really don’t see commercial projects slowing noticeably. Interest rate increases may provide a bit of pause to a small segment of commercial investors, but the increases are slow and predictable enough that they will most likely not prove to be a negative impact on the industry for some time. It is still a great time for companies to look into building expansions and new land acquisitions.

We look forward to working with you!