New Office Construction Thrives in Urban Cores
 

Gone are the days of companies expecting employees to come to them.  Today, forward thinking firms realize the need to offer dynamic live/work/play environments to attract top talent.  As a result, office projects are sprouting up in urban business districts across the Triangle in response to these trends.

There is a war for talent driving development activity in urban cores with dynamic mixed use environments.  Downtown Raleigh, North Hills and Downtown Durham, prime examples of these types of settings, are leading the way.  These three clusters encompass approximately 900,000 square feet of new construction currently underway, or 67% of all construction projects in the office sector throughout the Triangle market.  

Development activity generally reflects where leading industries are expanding, as well as the need for employers in a broad range of industries to offer a desirable live/work/play environment to attract top talent.   In addition, these clusters command an aggregate rent premium approximately 15%-20% higher than overall office market rents, justifying development activity in many of these submarkets amid rising construction costs.
 
Entire neighborhoods, such as American Tobacco and West Village in Downtown Durham, North Hills in Midtown Raleigh, and the Warehouse District in Downtown Raleigh, are being repurposed in response to these live/work/play trends to include new office space as well as retail, residential and hotel offerings. This urbanization trend, coupled with the tech and professional services sector growth is driving development activity.  There are six projects (Edison, Charter Square North Tower, The Dillon, North Hills Tower III, City Center and Durham ID) in the Triangle’s development pipeline totaling an excess of two million square feet located in urban clusters leading the next wave of construction in the Triangle. With limited availability of land in some of the urban areas, development activity has also picked up in suburban submarkets like West Raleigh (GlenLake and Wade) and the RTP/I40 Corridor (Perimeter Park, Forty540, and Arringdon) to meet the robust demand.  

Observing the continuing mixed use trend, it is clear that urbanization is here to stay.  Companies will continue to seek environments that offer the best opportunities to recruit and retain the best talent.   With a robust development pipeline and a thriving business environment, we believe that we are only in the early innings of urbanization taking hold in the Triangle.  

 

CONTACT US
Please contact us by email at heath.chapman@cbre-raleigh.com or don.shupe@cbre-raleigh.com or by phone at 919.831.8200 to obtain a CBRE Econometric Advisors Index Brief, as well as CBRE’s local 3Q 2015 Office MarketView Report. These reports provide key updates on vacancy levels, rental rates and employment trends within the Raleigh-Durham office market.
 

The commercial real estate office markets continue to rapidly evolve, and we make it our business to stay ahead of the curve. If you anticipate a change in your space requirements, have been contemplating a lease restructure, need an analysis of your current leased office portfolio or simply would like to set up a time to discuss our services in greater detail, please contact us.
 

We specialize in occupier services and are committed to delivering superior results for our clients.