Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate...

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LEE & ASSOCIATES RALEIGH-DURHAM | 5430 WADE PARK AVENUE, SUITE 300 | RALEIGH, NC 27607 | LEERALEIGH.COM Q1 2020 RALEIGH-DURHAM

Transcript of Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate...

Page 1: Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate 6.20% 6.40% 6.40% 6.70% 7.60% Avg NNN Asking Rate $8.18/SF $8.14/SF $8.06/SF $7.94/SF

LEE & ASSOCIATES RALEIGH-DURHAM | 5430 WADE PARK AVENUE, SUITE 300 | RALEIGH, NC 27607 | LEERALEIGH.COM

Q1 2020RALEIGH-DURHAM

Page 2: Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate 6.20% 6.40% 6.40% 6.70% 7.60% Avg NNN Asking Rate $8.18/SF $8.14/SF $8.06/SF $7.94/SF

LEE & ASSOCIATES RALEIGH-DURHAM | 5430 WADE PARK AVENUE, SUITE 300 | RALEIGH, NC 27607 | LEERALEIGH.COM

Q1 2020 RALEIGH, NC

INDUSTRIAL MARKET OVERVIEWSCOTT HADLEY, Senior Director

The Raleigh Industrial Market has seen vacancy tick up almost a full percentage point without really knowing the effects from the COVID-19 impacts. The market had already showed some signs of slowing in its absorption of space and new space to the market not being leased as quickly as previous quarters. While interest and demand remain strong, the market will certainly show strain from the COVID-19 virus in the future quarters and it will be crucial to see if that negatively impacts current tenant leases, new leases and investor purchase interest in the market.

MARKET INDICATORS Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019

▼ Net Absorption 1,205,517 SF 1,846,979 SF 1,106,081 SF 1,375,701 SF 635,008 SF

▲ Vacancy Rate 3.10% 2.10% 1.90% 2.00% 2.70%

▲ Avg NNN Asking Rate $8.29/SF $8.25/SF $8.20/SF $8.06/SF $7.97/SF

▼ Under Construction 1,879,665 SF 2,232,768 SF 3,095,947 SF 2,735,558 SF 2,543,908 SF

▲ Inventory 89,014,781 SF 88,571,678 SF 87,541,058 SF 87,564,835 SF 87,383,985 SF

TOP LEASE TRANSACTIONS BY SF SIZE LANDLORD TENANT TENANT INDUSTRY

360 Spectrum DrKnightdale, NC 56,909 SF Trinity Partners Undisclosed -

203 Computer DrSmithfield, NC 41,500 SF Market St 1500 LLC Airflow Manufacturing

8005 Knightdale RdKnightdale, NC 25,200 SF Amour Enterprises Noda Brewing Co Business Services

TOP SALE TRANSACTIONS BY SF SIZE SALE PRICE BUYER / SELLER BUILDING CLASS

3006 Industrial DrRaleigh, NC 153,745 SF $12,587,641

$81.87/SFNorthside Investment Partners

Northside Midtown 3-Star Whse

8605 Ebenezer Church RdRaleigh, NC 142,730 SF $11,950,000

$83.72/SFLong Beverage

Qapla, LLC 4-Star Dist

1208-1228 Fron StRaleigh, NC 125,905 SF $10,732,715

$85.24/SFNorthside Investment Partners

Northside Midtown 3-Star Whse

NET ABSORPTION, NET DELIVERIES, & VACANCY UNDER CONSTRUCTION

LEE & ASSOCIATES RESEARCH

Page 3: Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate 6.20% 6.40% 6.40% 6.70% 7.60% Avg NNN Asking Rate $8.18/SF $8.14/SF $8.06/SF $7.94/SF

Q1 2020 DURHAM, NC

INDUSTRIAL MARKET OVERVIEWMARLENE SPRITZER, JD, CCIM, Senior Director

The Durham and Research Triangle are known for its large base of biotechnology, life science, and pharmaceutical companies. Current vacancy is 6.1% due to the strong demand for industrial space, however, it is most challenging to provide a forecast of the market impact of COVID-19. Logistics/warehouse properties have leased quickly as demand for shipping and e-commerce space increases. Investors have been active; the RTP Submarket accounted for a significant portion of sales volume, but sales activity will likely be more modest in the coming months. Prologis closed on the acquisition of Liberty Property Trust for $13 billion, including the assumption of debt. Prologis announced plans in 2019 to acquire all of Liberty Property Trust including several properties in Durham.

MARKET INDICATORS Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019

▼ Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF

▼ Vacancy Rate 6.20% 6.40% 6.40% 6.70% 7.60%

▲ Avg NNN Asking Rate $8.18/SF $8.14/SF $8.06/SF $7.94/SF $7.87/SF

▲ Under Construction 2,636,805 SF 2,042,390 SF 348,029 SF 100,178 SF 147,489 SF

◀ ► Inventory 43,782,893 SF 43,782,893 SF 43,750,454 SF 43,682,715 SF 43,635,404 SF

TOP LEASE TRANSACTIONS BY SF SIZE LANDLORD TENANT TENANT INDUSTRY

805 S Briggs AveDurham, NC 156,000 SF Scannell Properties North State Express Transportation

121 S LaSalle StDurham, NC 24,000 SF Rea Riddle Rd LLC Duke Business Services

2 Freedom CtRTP, NC 24,059 SF Blackstone Real Estate Fleet Feet Retailer/Wholesaler

TOP SALE TRANSACTIONS BY SF SIZE SALE PRICE BUYER / SELLER BUILDING CLASS

5827 S Miami BlvdMorrisville, NC 121,833 SF $19,344,000

$158.77/SFAlidade Capital

Crown Realty & Development 4-Star Flex & R&D

2210 E Pettigrew StDurham, NC 25,996 SF $2,500,000

$96.17/SFJ Arthur Gordon

Eastern Carolilna Organics 2-Star

4620 Industry LnDurham, NC 17,000 SF $1,650,000

$97.06/SFCimarron Holdings, LLC

4620 Industry Ln, LLC 2-Star

NET ABSORPTION, NET DELIVERIES, & VACANCY UNDER CONSTRUCTION

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SUBMARKETS

RALEIGH-DURHAM

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01 Downtown Raleigh

02 East Raleigh

03 West Raleigh

04 Northeast Wake Co.

05 US 1

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06 Six Forks/Falls of Neuse

07 Glenwood/Creedmoor

08 Cary

09 Southwest Wake Co.

10 Southeast Wake Co.

11 Johnston Co.

12 Franklin Co.

13 RTP/RDU

14 Research Triangle

15 South Durham

16 Downtown Durham

17 Orange Co.

18 Person Co.

19 Chatham Co.

LEE & ASSOCIATES RALEIGH-DURHAM | 5430 WADE PARK AVENUE, SUITE 300 | RALEIGH, NC 27607 | LEERALEIGH.COM

Page 5: Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate 6.20% 6.40% 6.40% 6.70% 7.60% Avg NNN Asking Rate $8.18/SF $8.14/SF $8.06/SF $7.94/SF

OUR PROMISE TO YOU:▶ COMMITMENT

▶ QUANTIFIABLE RESULTS

▶ FOCUS ON OBJECTIVES

▶ SEASONED AGENTS

▶ INDUSTRY LEADING TECHNOLOGY

WHAT SETS LEE APARTSince 1979, Lee & Associates has been attracting the best and brightest in the industry who share an entrepreneurial spirit and commitment to delivering world class service through local market expertise and state-of-the-art resources. Now a powerful national network of top professionals, the company enjoys its hard-earned reputation as a TOP TIER NATIONAL COMMERCIAL REAL ESTATE SERVICES PROVIDER.

Our structure makes our culture unique and attracts like-minded entrepreneurs who leverage their expertise to spur innovation and help Lee & Associates sustain a competitive advantage. AS OWNERS OF THE COMPANY THIS SEPARATES THEM APART FROM THEIR COMPETITION and creates one common goal; to provide seamless, consistent execution and value driven market-to-market services to their clients.

“Our relationship with Lee & Associateshas been a long and fruitful one. They haverepeatedly demonstrated why they are expertsin their local market as well as providing thebest in class brokerage for our company.”

- Mark D. Payne, PanattoniDevelopment Company, Inc.

Increase in85%

Transaction Volumeover 5 years

$13+Transaction Volume

(2017)

1,000+PROFESSIONALS

And GrowingNationwide

SERVICES & SPECIALTIES

RETAIL The proliferation of online retailing has triggered a transformation in the retail sector that we see as an opportunity. Retailers have adapted their brick-and-mortar platforms to include omnichannel retailing and “click and bricks” integration along with revised site requirements. Our retail specialists are at the leading edge of this transformation and understand your unique challenges. Our specialists will help you find a tenant/buyer, or the right location that optimizes market positioning, revenue growth, stability, and profitability.

DATA CENTERS Information Technology has become a mission-critical hub for every aspect of our clients’ revenue generating business. The data center requires 100% uptime, and needs to be efficient, scalable, and secure. Lee & Associates’ Data Center Advisory is dedicated to achieving these goals, while saving our clients time and money on their data center deployments.

CORPORATE SOLUTIONS At Lee & Associates we recognize the special needs of companies located in multiple markets, and we have specialists dedicated to meeting the unique challenges. We become your outsourced real estate department, and provide specialized services critical to the successful management of a portfolio of operating locations. Whether it’s finding a new location, renewing a lease, or keeping track of all your current leases, we can help.

SELF STORAGE The storage industry, like other niche property types, has undergone a period of rapid change. While many facilities are still family owned, institutional players have increased their stakes in the industry, presenting new challenges to local investors. At Lee & Associates we have dedicated specialists to help you evaluate acquisition opportunities, or position your property for sale at terms that maximize your investment yield.

VALUATION & CONSULTING Our appraisers provide comprehensive, accurate appraisals across all commercial property types throughout the United States and Canada. They have unrestricted access to commercial property specialists in our offices nationwide. Lee brokers on the front line track every transaction in the marketplace and are the perfect source for the latest market intelligence that is vital to accurate property valuation. Our appraisers use the latest technology and analytical tools to complete each assignment, so that you can be confident in the result.

PROPERTY MANAGEMENT Our full-service property management services and daily oversight of commercial space are focused on reducing the efforts of our clients and tenants. We realize the importance of always being available in order to keep your property maintained at the highest level of service.

OFFICE An unprecedented demographic shift in the workforce hasbusiness owners rethinking workspace design to attract those that will help their businesses grow and thrive. The office has become a home away from home, and a place to create and collaborate. Lee office specialists have the experience and knowledge to help you navigate this changing world.

INDUSTRIAL Industrial users are faced with new challenges every day,including changing regulations, international competition, new technologies, and a shortage of efficient, cost-effective space. Our experienced industrial professionals are specialists in their local marketplaces who can help you secure a property that optimizes the operation of your business.

LAND Lee & Associates’ team of professionals includes some of NorthAmerica's top Land brokers. Their expertise in land entitlement and disposition provides our clients with an extensive knowledge of local market conditions, as well as development trends, and regulatory issues.

INVESTMENT The successful underwriting of any investment property is directly related to the depth of knowledge regarding occupier market dynamics, a core strength of every Lee office. Our brokers are local specialists who utilize their hands-on experience and comprehensive suite of analytical tools to help you acquire or dispose of commercial real estate assets when the time is right.

SUPPLY CHAIN & LOGISTICS The enormous growth of big-box andonline retailing has been the catalyst for rapid logistics industry growth. Advances in materials handling technology and the construction of state-of-the-art facilities near intermodal hubs, has changed the way goods reach the consumer. Our dedicated logistics/supply chain specialists across the country speak your language and work together to get what you need when you need it.

MULTIFAMILY The multifamily investment market has experienced explosive growth in recent years. Demographic shifts and the re-urbanization and gentrification of neighborhoods across the country have put multifamily investment front and center. Safe, stable, more resilient to real estate cycles, and with their diversified tenant base, these factors make them a favorite among both institutional and private investors of all sizes. Lee & Associates has seasoned multifamily team, experts in their respective markets, who have the experience and track record to help you sort through their unique complexities.

SENIOR HOUSING & HEALTHCARE With the aging of the BabyBoomer generation, the largest in human history, comes a complex set of challenges for the senior housing and healthcare industry. That also means tremendous opportunity for investors and operators in the sector. Our Senior Housing/Healthcare specialists are trained and experienced in the sale and lease of specialized health-related facilities, including assisted living, skilled nursing and medical office properties.

Engaging the services of a qualified real estate professional is critical to the completion of a successful transaction, whether the transaction involves the acquisition, disposition, management, appraisal or leasing of commercial property. You can count on your local Lee & Associates professional to have the experience, knowledge and resources needed to meet the unique challenges of your transaction, and ensure that you

make the most informed decision possible.

Page 6: Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate 6.20% 6.40% 6.40% 6.70% 7.60% Avg NNN Asking Rate $8.18/SF $8.14/SF $8.06/SF $7.94/SF

LEE & ASSOCIATES RALEIGH-DURHAM | 5430 WADE PARK AVENUE, SUITE 300 | RALEIGH, NC 27607 | LEERALEIGH.COM

Moss Withers, SIOR, MBAPresident & Principal

Karah JenningsPrincipal

Jeremy LaughtonSenior Vice President

Property Management

Hayden ParkerDirector of

Property Management

Beth AubreyController

Property Mangement

Scott HadleySenior Director

Aldene “Dee” Creech Osborne, SIORSenior Director

Jake Plotkin, CCIMSenior Director

Will JudyBroker

Hunter Stewart, MBABroker

Russell Stewart, J.D.Broker

James Bailey, J.D.Broker

Brian FarmerSenior Director

H.E. “Tony” Withers, IIIVP of Business Development

Property Managment

Marlene Spritzer, J.D., CCIMSenior Director

Susan FultonDirector of Marketing

Jane JonesMarketing Coordinator

Michelle RhinoDirector of Operations

& Finance

Kate DuffyMarketing Associate

Ryan LawlerBroker

LEE & ASSOCIATES | RALEIGH-DURHAM

Page 7: Q1 2020...Net Absorption 777,645 SF 780,057 SF 1,299,875 SF 1,117,506 SF 666,336 SF Vacancy Rate 6.20% 6.40% 6.40% 6.70% 7.60% Avg NNN Asking Rate $8.18/SF $8.14/SF $8.06/SF $7.94/SF

The information and details contained herein have been obtained from third-party sources believed to be reliable, however, Lee & Associates has not independently verified its accuracy. Lee & Associates makes no representations, guarantees, or express or implied warranties of any kind regarding the accuracy or completeness of the information and details provided herein, including but not limited to, the implied warranty of suitability and fitness for a particular purpose. Interested parties should perform their own due diligence regarding the accuracy of the information. The information provided herein, including any sale or lease terms, is being provided subject to errors, omissions, changes of price or conditions, prior sale or lease, and withdrawal without notice. Third-party data sources: CoStar Group, Inc.

JAMES BAILEYBROKER

(336) [email protected]

BRIAN FARMERSENIOR DIRECTOR

(919) [email protected]

SCOTT HADLEYSENIOR DIRECTOR

(919) [email protected]

WILL JUDYBROKER

(919) [email protected]

RYAN LAWLERBROKER

(949) [email protected]

KARAH JENNINGS MCCONNELLPRINCIPAL

(919) [email protected]

OFFICE TEAM

WILL JUDYBROKER

(919) [email protected]

HUNTER STEWART, MBABROKER

(919) [email protected]

RETAIL TEAM

SCOTT HADLEYSENIOR DIRECTOR

(919) [email protected]

DEE CREECH OSBORNE, SIORBROKER

(919) [email protected]

WILL JUDYBROKER

(919) [email protected]

RYAN LAWLERBROKER

(949) [email protected]

JAKE PLOTKIN, CCIMSENIOR DIRECTOR

(919) [email protected]

RUSSELL STEWART, JDBROKER

(919) [email protected]

INDUSTRIAL/FLEX TEAM

SCOTT HADLEYSENIOR DIRECTOR

(919) [email protected]

KARAH JENNINGS MCCONNELLPRINCIPAL

(919) [email protected]

RUSSELL STEWART, JDBROKER

(919) [email protected]

MOSS WITHERS, SIOR, MBAPRESIDENT & PRINCIPAL

(919) [email protected]

LAND TEAM

BRIAN FARMERSENIOR DIRECTOR

(919) [email protected]

JAKE PLOTKIN, CCIMSENIOR DIRECTOR

(919) [email protected]

INVESTMENT TEAM

MOSS WITHERS, SIOR, MBAPRESIDENT & PRINCIPAL

(919) [email protected]

BRIAN FARMERSENIOR DIRECTOR

(919) [email protected]

KARAH JENNINGS MCCONNELLPRINCIPAL

(919) [email protected]

HEALTHCARE TEAM

MARLENE SPRITZER, JD, CCIMSENIOR DIRECTOR

(919) [email protected]

JAMES BAILEYBROKER

(336) [email protected]

MARLENE SPRITZER, JD, CCIMSENIOR DIRECTOR

(919) [email protected]

TENANT REP TEAM

MARLENE SPRITZER, JD, CCIMSENIOR DIRECTOR

(919) [email protected]

MARLENE SPRITZER, JD, CCIMSENIOR DIRECTOR

(919) [email protected]