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We can see that the office vacancy rate for the overall market is quite high at 12.94%; however, this number does not include the substantial quantity of sublease space that is still available in the market.
On the leasing front, Clark Nexsen, a Virginia-based architecture firm with 11 offices in 4 states, leased 25,000 SF in Smoky Hollow. They are moving their office from Fayetteville Street and expanding.
For Class-A, the vacancy remained above 10% at 12.43%. This is the second quarter in a row where Class-A vacancy has been in the double digits.
If you look across the sub-markets, you will see a range in vacancy. Orange County has the highest sub-market vacancy at 20.27%. There are three sub-markets that are under 10% vacancy, and they are all in Raleigh: the Six Forks Road Corridor is at 5.48% vacancy, the Falls of Neuse Corridor is at 8.51% vacancy, and the US1/Capitol Boulevard Corridor at 9.80%.
The supply of industrial space is at an all-time low, with the overall market vacancy rate at 2.21%. A year ago, warehouse vacancy for the Triangle was 5.84%, and supply made a sharp decline in the following 12-months.
There’s currently 1.7 million square feet of warehouse under construction and an additional 700,000 of flex in the development pipeline.
If you look specifically to the RTP/I-40 Corridor, vacancy is at an astonishing 0%.
Looking at the retail market overview, the vacancy is down to almost where we started two years ago, and we are pre-pandemic vacancy. In 3Q 2019 the lowest point on the chart the market retail vacancy was at 6.77%. Vacancy peaked in first quarter 2021 but has crawled back down to where we now sit at 7.23%.
If you look at the notable industrial transactions, the values per square foot of those three buildings are between $165 per square foot and $178 per square foot. For the office transactions, two of the deals Corporate Center in West Raleigh and Beta Center I & II in the Glenwood Avenue corridor transacted below the range of the industrial assets. Corporate Center was $139 per square foot and Beta Center was $117 per square foot. Those two groups of assets aren’t comparable transactions as the asset ages, locations, and occupancy are different, but I think it is quite interesting that industrial assets have gotten so expensive that they command a higher price than certain office assets.
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