Raleigh-Durham News

Office Space Market in the Triangle Shows Signs of Stabilizing

Alcove Team ยท 8/17/23

Office Space Market in the Triangle Shows Signs of Stabilizing

The latest analysis by CBRE | Raleigh reveals that the office space market in the Triangle is still favorable for tenants, but there are signs of improvement as vacancy rates decrease and demand for Class A office space remains strong.

Why It Matters:

The state of the office space market has significant implications for businesses, employees, and real estate developers. Understanding the trends and changes in the market can help inform decisions about leasing, investment, and remote work policies.

The Details:

  • CBRE | Raleigh's 2023 Office MarketView for Q2 shows a decrease in direct vacancy by 40 basis points to 13.3% and overall vacancy by 20 basis points to 18.1%.

  • The Triangle commercial real estate market absorbed 199,930 sq.ft. of office space in Q2, compared to 212,000 sq.-ft. of negative absorption in Q1.

  • The availability of sublease space remained steady in Q2, with 4.4 million sq.ft. available, representing just over 8% of the overall inventory.

  • Class A properties - newer, feature-rich buildings in prime locations - continue to perform well, with increasing asking rents. These properties have amenities such as gyms, lounges, 24/7 security, and proximity to restaurants.

  • Different subregions have varied vacancy rates. For instance, Raleigh's
    Midtown     submarket had around 11% vacancy, while South Durham had about 23.7%.

What else

Duke University has a unique approach where Individual departments can set their own remote work policies. Scott Selig, a university representative, predicts that tech giants like Google, Meta, Apple, and others will drive Durham's next redevelopment phase.

Conclusion:

The Triangle office market continues to evolve in the post-pandemic era, with a clear preference for quality spaces and Class A properties. As uncertainties persist in the broader economic landscape, the Triangle remains an attractive destination for businesses. However, the region will need to adapt to changing demands and trends in the office space market.