Raleigh-Durham - Continental Capital...

Raleigh-DurhamOffice ObservationsQ4 2018

2

Office observations

Raleigh-Durham

1

2

3

Class A rents for Triangle office reach historic highs • Rent hikes are no longer exclusive to Trophy properties• The average asking rent for Class A assets nearly surpassed $29.00 p.s.f. FS, and is now $28.80 p.s.f. FS

4

5

6

Leasing activity surpassed pre-recession records by over 4.1 percent• Tenants are taking advantage of a hot real estate market• Available spaces over 20,000 square feet continue to shrink throughout Raleigh-Durham

Class A vacancy at less than 10.0 percent, tenant bumps are back• Landlords are negotiating with multiple tenants for the same space creating a sense of urgency• Thanks to a competitive marketplace, tenants are having to look further out in order to meet their wish-list space criteria

1.9 million square feet of office delivered in 2018• Recently finished product delivered 68.8% preleased• Coworking led the way in preleasing activity this year, accounting for more than 30.0% of all industry preleasing in the market

Absorption driven by tenant expansions, high pre-lease rates in new construction• LabCorp and Arch Capital’s expansions in the market accounted for over 300,000 square feet of positive absorption• Q4 2018 new construction projects delivered 75.8% preleased

Raleigh-Durham experiences record shattering year in sales • 68 buildings traded across the market, accounting for $1.9 billion dollars in transactions• The year rounded out with an average price of $224.67 p.s.f; Midtown Plaza sold for $365.65 p.s.f.

7Market forecast• Submarket asking rents and leverage forecast

3

$20.60$20.01 $20.06 $19.90 $19.72 $19.98

$21.49$20.53

$22.27

$24.18

$26.22

$22.51$22.01

$21.47 $21.84 $21.90 $22.15$23.21

$23.71

$25.02

$27.30

$28.80

$15.00

$17.00

$19.00

$21.00

$23.00

$25.00

$27.00

$29.00

$31.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Aver

age

aski

ng re

nt, f

ull s

ervi

ce

Total Class A

Direct average asking rents

Source: JLL Research

Average asking rents continue their steady climb; the total average asking rent finished the year out around $26.22 psf FS. The Class A average asking rent is $28.80 psf FS

Raleigh-Durham

4

Raleigh-Durham occupancy rate is 88.4 percent

Leasing activity in office market exceeding pre-recession peaks by 4.1 percent


70.0%

72.0%

74.0%

76.0%

78.0%

80.0%

82.0%

84.0%

86.0%

88.0%

90.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Occ

upan

cy ra

te, p

erce

nt

Percent leased rate

Raleigh-Durham* Includes Class A and B properties over 15,000 square feet. Excludes owner-occupied and medical-office assets.

88.4%

84.3%

5

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Leas

ing

activ

ity, s

quar

e fe

et

Leasing activity


Leasing activity in technology and life sciences sectors has boosted 2018 totals to 1.9 million square feet. Since the end of the recession, Raleigh-Durham has averaged 2.5 million square feet in annual leasing activity.

Raleigh-Durham

6

Class A large available blocks > 20,000 s.f.

Tenants looking for blocks of Class A space greater than 20,000 s.f. have limited options depending on their preferred submarket.

Source: JLL Research Raleigh-Durham

4

3

4

11

1 1

12

3

4

1

1

1

1

1

1

0

2

4

6

8

10

12

14

DowntownDurham

DowntownRaleigh

6 Forks / Fallsof Neuse

Cary Glenwood /Creedmoor

Orange County Route 1 RTP / RDU South Durham West Raleigh

Avai

labl

e bl

ocks

, >20

,000

s.f.

Existing Under construction

7

11.6%

9.4%

15.0%

6%

8%

10%

12%

14%

16%

18%

20%

22%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Tota

l vac

ancy

Total Class A Class B

Market vacancy rates


Recent deliveries in the Raleigh-Durham market have pushed the total vacancy rate up in 2018. Expect the vacancy rate to fall as new product is leased up.

Raleigh-Durham

8

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Squa

re fe

et

YTD total net absorption YTD completions

Net absorption and new deliveries

Raleigh-Durham rounded out 2018 with 902,519 square feet of positive net absorption, despite the 1.9 million square feet of new projects that delivered this year.


9

2018 wraps up with 1.9 million s.f. of new deliveries

North Hills Tower 4 broke ground this quarter, pushing the market’s development pipeline out to 2020.


0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000

Q4 2020Q3 2020Q2 2020Q1 2020Q4 2019Q3 2019Q2 2019Q1 2019Q4 2018Q3 2018Q2 2018Q1 2018Q4 2017Q3 2017Q2 2017Q1 2017

Expected delivery Completions by square footage Expected deliveries by square footage

* Includes Class A and B properties over 15,000 square feet. Excludes owner-occupied and medical-office assets.

North Hills Tower 4 is expected to add over 300,000 s.f. of

trophy product to the market.

10

Development activity

Source: JLL Research Raleigh-Durham* Includes Class A and B properties over 15,000 square feet. Excludes owner-occupied and medical-office assets.

2018 development pipeline activity

Total delivered (s.f.) 1.9 million s.f.

Preleased s.f. 1.3 million s.f.

Preleased % 68.8%

Number of projects 13

CBD projects

Suburban projects

Avg. floor plate (s.f.) 27,586 s.f.

Avg. number of stories 8

Average asking rent $31.28 p.s.f. FS

= delivered in 2018

1.9 million square feet delivered in 2018. An additional 2.1 million square feet is presently under construction / renovation. Raleigh-Durham is expected to surpass 50.0 million square feet in Q1 2019.

= 1.0 million square feet

11

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Preleasing activity

Coworking Finance & Insurance Technology Legal services Engineering Life sciences Other

Percent of preleasing by industry

Coworking dominated the preleasing scene in 2018 thanks to leases from WeWork and Spaces across the market.

Source: JLL Research Raleigh-Durham* Includes leases signed in 2018 while properties were under development.

12

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Squa

re fe

et

Annual sales total, s.f.

Historic sales volume

More than 8.6 million square feet of office product has traded in the Raleigh-Durham market in 2018, exceeding 2017’s sales volume of 6.4 million square feet. 2018 marks Raleigh-Durham’s most active sales period since the end of the recession.

Source: JLL Research Raleigh-Durham* Includes office sales of Class A and B assets totaling 50,000 square feet or greater.

13

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

2013 2014 2015 2016 2017 2018

Annual sales total, $

Historic sales volume

In 2018, properties across the market and of all different asset classes sold. Owner turnover was not limited to the suburbs; the Wells Fargo Capitol Center in Downtown Raleigh traded for $317.73 p.s.f.


$ 1.9 B

$ 827.7 M

$ 622.9 M$ 766.5 M

$ 607.2 M

$ 294.5 M

14

Top sales, price per square foot


Midtown PlazaTotal portfolio sale price: $127.0 MTotal portfolio size: 329,314 s.f.Average price: $365.65 p.s.f.Seller: Kane Realty, KBS Realty AdvisorsBuyer: Lionstone Investments

Perimeter FiveTotal portfolio sale price: $74.2 MTotal portfolio size: 264,450 s.f.Average price: $280.58 p.s.f.Seller: Starwood Capital GroupBuyer: Capri EGM

Wells Fargo Capitol CenterTotal portfolio sale price: $173.0 MTotal portfolio size: 544,483 s.f.Average price: $317.73 p.s.f.Seller: Highbrook InvestorsBuyer: Preferred Apartment Communities

Perimeter Park – 6 buildingsTotal portfolio sale price: $314.0 MTotal portfolio size: 1.2 M s.f.Average price: $269.66 p.s.f.Seller: Starwood CapitalBuyer: Ascendas-Singbridge

7001 & 8001 Development Dr.Total portfolio sale price: $135.3 MTotal portfolio size: 459,845 s.f.Average price: $294.23 p.s.f.Seller: Arzan WealthBuyer: Sentinel Real Estate Corp.

Centennial CampusTotal portfolio sale price: $172.1 MTotal portfolio size: 610,887 s.f.Average price: $281.73 p.s.f.Seller: Mayfield Gentry Realty AdvisorsBuyer: TPG, Parkway Property Investment

Crescent Lakeside I & IITotal portfolio sale price: $68.3 MTotal portfolio size: 255,442 s.f.Average price: $267.25 p.s.f.Seller: Capital AssociatesBuyer: HLM Realty

1 2

5

4

6 7

Venable Center – 3 buildingsTotal portfolio sale price: $26.8 MTotal portfolio size: 87,416 s.f.Average price: $306.57 p.s.f.Seller: Federal CapitalBuyer: Wheelock Street Capital, Trinity Capital Advisors, SLI Capital

8

3

15Source: JLL Research Raleigh-Durham

Forecast remains positive for landlords

* Includes Class A and B over 15,000 square feet. Excludes owner-occupied and medical-office assets

$27.70

$26.98

$32.55

$31.70

$16.02

$24.39

$17.50

$29.68

$21.42

$23.55

$25.39

$17.75

$27.91

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00

6 Forks / Falls of Neuse

Cary

Downtown Durham

Downtown Raleigh

East Raleigh

Glenwood / Creedmoor

North Durham

Orange County

Route 1

RTP / RDU

South Durham

Southwest Wake

West Raleigh

Average direct asking rent, total ($ p.s.f.)

Steady demand for Raleigh-Durham product plus falling vacancy rates has put upward pressure on asking rents across all submarkets

16

Property clock

Market conditions in Raleigh-Durham are decidedly landlord favorable. New construction set to deliver with low preleasing rates will help ease the pressure on vacancy rates.


Peakingphase

Fallingphase

Risingphase

BottomingphaseGlenwood / Creedmoor,

Route 1, South Durham

Orange County

Six Forks / Falls of Neuse,West Raleigh

Downtown Durham

Cary

Downtown Raleigh

Raleigh-Durham

RTP / RDU

© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of JLL and shall be kept confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof.

Ashley Rogers

Senior Research Analyst +1 919 424 8172 [email protected]

Office Observations

© 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

Q4 2018

Raleigh-DurhamOffice Insight

In a year dominated by the rise of coworking across the country, Raleigh-Durham was no exception. Spaces launched their first office in DowntownRaleigh at The Dillon, and WeWork opened their doors at One City Center inDowntown Durham. And the growth continues. Of the 550,000 square feet ofpreleasing deals signed in 2018, coworking was the number one industry,accounting for 33.2 percent of preleasing activity. While the largest leaseswere in urban properties, Spaces’ commitments to Crabtree Terrace inGlenwood / Creedmoor and The Station at East 54 in Orange County showinterest in the suburbs. Capital Bank and IAT Insurance Group pushed financeand insurance into second place, accounting for 20.3 percent of preleasingactivity. Technology came in third, totaling 16.2 percent. Together, these threeindustries account for nearly 70.0 percent of preleasing activity.

Commercial sales activity in the market struck a high-note this year, reachinga total of $1.9 billion. The average price per square foot was $224.67 at theend of 2018, exceeding 2015’s high of $195.58 p.s.f. Thanks to theseextraordinary prices, asking rents are increasing in recently sold properties.The Venture buildings on Centennial Campus are among those seeingincreases, with rents jumping 16.8 percent in year-over-year comparisons.

OutlookGrowth is the name of the game in Raleigh-Durham. The market's officeinventory has grown by 6.3 million square feet since 2010, a 14.5 percentincrease. Despite the 1.9 million square feet of new deliveries this year, 2.1million square feet remain in the development pipeline. The developmentpipeline is already 30.6 percent preleased. Asking rents continue to climb; thetotal average asking rent increased 8.4 percent in year-over-yearcomparisons. Thanks to strong demand from growing industry, Raleigh-Durham’s fundamentals remain strong heading into 2019.

Fundamentals ForecastYTD net absorption 902,519 s.f. ▲Under construction 2,090,730 s.f. ▼Total vacancy 11.6% ▶Average asking rent (gross) $26.22 p.s.f. ▲Concessions Stable ▶

0

500,000

1,000,000

1,500,000

2,000,000

2015 2016 2017 2018

Supply and demand (s.f.) Net absorptionDeliveries

Coworking is #1 driver of preleasing activity in 2018

11.9%

12.6%

10.7%

11.6%

2015 2016 2017 2018

Total vacancy

$10.00

$15.00

$20.00

$25.00

$30.00

2015 2016 2017 2018

Average asking rents ($/s.f.) Class AClass B

For more information, contact: Ashley Rogers | [email protected]

• Class A average asking rents creep ever closer to $30.00 ps.f. FS, finishing the year out at $28.80 p.s.f. FS.

• 2018 completions delivered 68.8 percent preleased, on par with 2017 projects that delivered 66.6 percent preleased. In total, 550,000 square feet of preleasing deals were signed in 2018.

• 68 office buildings traded in 2018, totaling $1.9 billion in total sales volume.

Q4 2018

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

2014 2015 2016 2017 2018

Absorption vs Completions

Net absorption Construction Completions

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2014 2015 2016 2017 2018

Class A Rent vs Vacancy

Class A rent Class A vacancy

Downtown DurhamConstruction boom continues in Downtown Durham

Quick Stats Q4 2018

Inventory (s.f.) (percent of total market)

4,064,125 (8.2%)

Total vacancy 7.0%

Direct vacancy 6.9%

YTD total net absorption (s.f.) 616,526

Under development 224,000

YTD completions (s.f.) 829,905

Overall average asking rent $32.55

Class A average asking rent $33.09

Class B average asking rent $31.01

• Downtown Durham, an urban submarket in Raleigh-Durham, continues to be one of the hottest construction spots in the market. The submarket’s popularity among start-ups and technology tenants have fueled the growth seen in recent years.

• In 2018, more than 800,000 square feet of new Class A product delivered in Downtown Durham. New completions delivered 67.8 percent preleased thanks to high demand in the CBD. Projects include: Durham ID North and South, Mill No. 1, and One City Center.

• Vacancy rates in Downtown Durham are expected to fall as new construction is leased up. Class A asking rents, which have increased 32.1 percent since 2014, will continue to rise.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

Downtown Durham

Raleigh-Durham

Q4 2018

0

100,000

200,000

300,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

20.0%

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2014 2015 2016 2017 2018



Downtown RaleighBuild it, and they will come

Quick Stats Q4 2018


3,911,791 (7.9%)

Total vacancy 5.1%

Direct vacancy 5.1%







• Downtown Raleigh, the home of North Carolina’s state capitol, saw robust activity in 2018. Asking rents are on the rise, increasing 15.4 percent since 2014.

• Despite the uptick in vacancy in Q2, high levels of activity at The Dillon have since pushed Downtown Raleigh’s Class A vacancy rate to its lowest point in five years. Arch Capital took down over 100,000 square feet at The Dillon, proving that, once delivered, appetite for new product is strong in the CBD.

• FNB Tower is already 61.3 percent preleased. Once delivered, available blocks of space are expected to lease quickly. Tenants interested in new construction will have to turn their attention to the 887,000 square feet of proposed development.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

Downtown Raleigh

Raleigh-Durham

Q4 2018

0

100,000

200,000

300,000

400,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2014 2015 2016 2017 2018



6 Forks / Falls of Neuse Trophy product in 6 Forks / Falls of Neuse increases submarket bifurcation

Quick Stats Q4 2018


6,265,998 (12.6%)

Total vacancy 10.0%

Direct vacancy 9.6%



YTD completions (s.f.) 0




• The 6 Forks / Falls of Neuse submarket is located in north Raleigh and contains 6.3 million square feet of office. The average Class A asking rent is up 15.9 percent thanks to the concentration of Trophy product located in the North Hills micromarket.

• North Hills Tower 4 broke ground in the fourth quarter of 2018, joining the growing club of buildings with average asking rents in the high $30’s p.s.f. IAT Insurance signed a lease for 61,000 square feet.

• With an additional 330,000 square feet of Trophy product in the pipeline, the 6 Forks / Falls of Neuse submarket is expected to become increasingly bifurcated.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

6 Forks / Falls of Neuse

Raleigh-Durham

Q4 2018

0

100,000

200,000

300,000

400,000

500,000

600,000

2014 2015 2016 2017 YTD 2018



0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

$10.00

$15.00

$20.00

$25.00

$30.00

2014 2015 2016 2017 2018



CarySuburban submarket maintains powerhouse status thanks to high growth

Quick Stats Q4 2018


6,181,603(12.4%)

Total vacancy 9.0%

Direct vacancy 8.7%







• Centrally located in the Raleigh-Durham market along I-40, the Cary submarket has become a centralized location for suburban campuses, including SAS’s global headquarters and MetLife’s Global Technology Campus.

• In a year dominated by sales activity, Cary did not disappoint. Nearly 1.7 million square feet of office traded in 2018. Crescent Lakeside I and II sold for $267.25 p.s.f., the eighth highest price per square foot in the market.

• Since 2010, Cary has added over 900,000 square feet of office. The last eight years’ worth of deliveries accounts for 14.6 percent of the submarket’s total inventory. The greatest inventory spike occurred in 2015 when MetLife’s two office buildings delivered. In 2019, a third building will be added to the campus.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

Cary

Raleigh-Durham

Q4 2018

0

50,000

100,000

150,000

200,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

$10.00

$15.00

$20.00

$25.00

$30.00

2014 2015 2016 2017 2018



Glenwood / CreedmoorCoworking leads leasing activity in Glenwood / Creedmoor

Quick Stats Q4 2018


1,859,290 (3.7%)

Total vacancy 3.7%

Direct vacancy 3.5%







• Coworking continues its rapid expansion across the nation, impacting suburban submarkets as well as urban ones. Spaces signed the largest lease in the Glenwood / Creedmoor submarket in 2018, adding 32,000 square feet.

• Class A asking rents this quarter experienced a 9.2percent increase in year-over-year comparisons as landlords look to capitalize on the tight submarket.

• Class A vacancy in Glenwood / Creedmoor finished another year at less than 5.0 percent. Crabtree Terrace, presently under construction, will offer temporary relief to the tight submarket once delivered in 2019.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

Glenwood / Creedmoor

Raleigh-Durham

Q4 2018

-50,000

0

50,000

100,000

150,000

200,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

20.0%

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2014 2015 2016 2017 2018



Orange CountyThe Parkline project brings new opportunity to Orange County

Quick Stats Q4 2018


1,626,630 (3.3%)

Total vacancy 11.1%

Direct vacancy 10.4%







• Orange County, home to UNC Chapel Hill, contains 1.6 million square feet of office, accounting for 3.3 percent of Raleigh-Durham’s total inventory.

• Renovations started on The Parkline this quarter. Formerly the headquarters of Blue Cross Blue Shield NC, the building will add 210,000 square feet of Class A product to Orange County’s inventory. In addition to its unique architecture, The Parkline boasts larger than average floor plates that would easily accommodate larger tenants on a single floor.

• Despite an increase in vacancy rates, the Class A average asking rent increased from $29.14 p.s.f. FS to $29.88 p.s.f. full service.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

Orange County

Raleigh-Durham

Q4 2018

-40,000

-20,000

0

20,000

40,000

60,000

80,000

100,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

20.0%

$10.00

$15.00

$20.00

$25.00

$30.00

2014 2015 2016 2017 2018



Route 1Class A availabilities increasingly limited in Route 1

Quick Stats Q4 2018


2,002,661(4.0%)

Total vacancy 4.9%

Direct vacancy 4.9%


Under development 0





• The Route 1 submarket contains 2.0 million square feet of office product, accounting for 4.9 percent of Raleigh-Durham’s inventory.

• Vacancy remained stable at yearend 2018 for Class A product at 4.1 percent. The Class A asking rent remained stable in year-over-year comparisons, hovering around $24.90 p.s.f. full service.

• Class A availabilities remain limited in the Route 1 submarket, where only 32,608 square feet is vacant. A limited development pipeline has led to an increasingly tight submarket.

Peakingphase

Fallingphase

Risingphase

BottomingphaseRoute 1

Raleigh-Durham

Q4 2018

-200,000

0

200,000

400,000

600,000

800,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

$15.00

$20.00

$25.00

$30.00

2014 2015 2016 2017 2018



RTP / RDU Development active in Raleigh-Durham’s largest submarket

Quick Stats Q4 2018


13,881,111 (27.9%)

Total vacancy 20.8%

Direct vacancy 19.6%

YTD total net absorption (s.f.) (50,511)






• RTP / RDU, short for Research Triangle Park and Raleigh-Durham International Airport, benefits from its central location in the Raleigh-Durham market.

• Often considered the submarket that kickstarted the Raleigh-Durham market, more than 520,000 square feet of new construction delivered in 2018. Over 350,000 square feet is under development in RTP / RDU, including Perimeter Six and Triangle 54.

• After an extremely active sales year, Perimeter Park has new owners. Perimeter Five, home to Syneos, traded to Capri EGM for $280.58 p.s.f. in the fourth quarter. Earlier in the year, a portfolio of six buildings in the park sold to Ascendas-Singbridge for $269.66 p.s.f.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

RTP / RDU

Raleigh-Durham

Q4 2018

South Durham South Durham strategically positioned for growth

Quick Stats Q4 2018


2,777,648(5.6%)

Total vacancy 10.1%

Direct vacancy 9.4%

YTD total net absorption (s.f.) (55,591)

Under development 0





• South Durham’s location adjacent to the Research Triangle Park and access to Downtown Durham make it ideal for tenants looking to attract talent from across the Raleigh-Durham market.

• The Class A asking rent this quarter is $26.26 per square foot, slightly lower compared to 2017. The vacancy rate has increased, and is now 12.5 percent.

• Looking forward, the vacancy rate in the submarket is expected to rise once Rho vacates its space at Quadrangle V and relocates into its new headquarters in RTP / RDU.

Raleigh-Durham

Peakingphase

Fallingphase

Risingphase

BottomingphaseSouth

Durham -100,000

-50,000

0

50,000

100,000

150,000

200,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

$10.00

$15.00

$20.00

$25.00

$30.00

2014 2015 2016 2017 2018



Q4 2018

West Raleigh

0

100,000

200,000

300,000

400,000

500,000

2014 2015 2016 2017 2018



0.0%

5.0%

10.0%

15.0%

$10.00

$15.00

$20.00

$25.00

$30.00

2014 2015 2016 2017 2018



West Raleigh Recent activity shows popularity of West Raleigh submarket

Quick Stats Q4 2018


5,990,438 (12.0%)

Total vacancy 7.0%

Direct vacancy 6.6%







• The West Raleigh submarket has experienced significant growth over the past few years thanks to its proximity to Downtown Raleigh and to N.C. State University’s Centennial Campus.

• More than 1.2 million square feet of office traded in the West Raleigh submarket in 2018. The average price per square foot was $230.67 p.s.f. Buildings sold include: Westchase I-III, Palisades I-II, and a six building portfolio on NC State’s Centennial Campus.

• Wade V broke ground in the fourth quarter of 2018. The 210,000 square foot project is going 100.0 percent spec, and is expected to deliver at the end of 2019.

Peakingphase

Fallingphase

Risingphase

Bottomingphase

Raleigh-Durham

Q4 2018

North Durham

Orange County

Glenwood/Creedmoor

South Durham

DowntownDurham

RTP/RDU

Cary

SW WakeCounty

East Raleigh

WestRaleigh

Route 1

6 ForksFalls ofNeuse

I-40

U-64

I-440

U-70

I-40

U-1

U-70

I-40

I-440

I-95

U-264

U-70

U-64

I-95

I-95

I-40

I-40

N-540

I-85

DowntownRaleigh

Office submarket map

0 3 6 9 12Miles

Chapel Hill

Durham

Raleigh

Raleigh-Durham

Raleigh-Durham | Q4 2018

JLL Research Report

Office Statistics

ClassInventory

(s.f.)

Total net

absorption

(s.f.)

YTD total

net

absorption

(s.f.)

YTD total net

absorption

(% of stock)

Direct

vacancy (%)

Total

vacancy

(%)

Average

direct asking

rent ($ p.s.f.)

YTD

Completions

(s.f.)

Under

Development

(s.f.)

Downtown Durham Totals 4,064,125 441,717 616,526 15.2% 6.9% 7.0% $32.55 829,905 224,000Downtown Raleigh Totals 3,911,791 113,135 234,727 6.0% 5.1% 5.1% $31.70 227,000 150,000CBD Totals 7,975,916 554,852 851,253 10.7% 6.0% 6.1% $32.26 1,056,905 374,0006 Forks / Falls of Neuse Totals 6,265,998 -24,201 45,193 0.7% 9.6% 10.0% $27.70 0 328,600Cary Totals 6,181,603 157,647 27,476 0.4% 8.7% 9.0% $26.98 150,000 219,000East Raleigh Totals 579,113 0 14,998 2.6% 3.7% 3.7% $16.02 0 0Glenwood / Creedmoor Totals 1,859,290 3,226 11,514 0.6% 3.5% 3.7% $24.39 0 168,000North Durham Totals 471,127 7,520 -54,646 -11.6% 31.3% 31.3% $17.50 0 0Orange County Totals 1,626,630 5,719 7,102 0.4% 10.4% 11.1% $29.68 47,678 210,000Route 1 Totals 2,002,662 20,931 21,270 1.1% 4.9% 4.9% $21.42 0 0RTP / RDU Totals 13,881,111 302,877 -50,511 -0.4% 19.6% 20.8% $23.55 577,218 354,308South Durham Totals 2,777,648 20,579 -55,591 -2.0% 9.4% 10.1% $25.39 0 0Southwest Wake County Totals 153,368 -1,991 -445 -0.3% 2.3% 2.3% $17.75 0 0West Raleigh Totals 5,990,438 77,699 84,906 1.4% 6.6% 7.0% $27.91 90,000 436,822Suburban Totals 41,788,988 570,006 51,266 0.1% 12.0% 12.6% $25.33 864,896 1,716,730Raleigh-Durham Totals 49,764,904 1,124,858 902,519 1.8% 11.1% 11.6% $26.22 1,921,801 2,090,730

Downtown Durham A 2,975,468 446,518 454,618 15.3% 8.1% 8.3% $33.09 646,070 224,000Downtown Raleigh A 2,972,673 116,690 243,612 8.2% 5.6% 5.6% $32.38 227,000 150,000CBD A 5,948,141 563,208 698,230 11.7% 6.8% 6.9% $32.82 873,070 374,0006 Forks / Falls of Neuse A 3,578,114 -27,943 73,468 2.1% 11.6% 12.1% $30.68 0 328,600Cary A 3,992,082 106,505 67,094 1.7% 10.7% 10.7% $27.70 150,000 219,000Glenwood / Creedmoor A 1,239,447 -2,090 -8,429 -0.7% 3.3% 3.5% $27.21 0 168,000Orange County A 1,179,587 3,077 -7,773 -0.7% 13.5% 14.3% $29.88 47,678 210,000Route 1 A 795,336 0 2,235 0.3% 4.1% 4.1% $24.90 0 0RTP / RDU A 7,618,543 280,618 183,726 2.4% 8.4% 10.0% $25.39 520,881 354,308South Durham A 1,683,526 16,415 -49,146 -2.9% 11.4% 12.5% $26.26 0 0West Raleigh A 4,191,705 76,070 86,843 2.1% 7.7% 8.1% $28.53 90,000 436,822Suburban A 24,278,340 452,652 348,018 1.4% 9.2% 10.0% $27.94 808,559 1,716,730Raleigh-Durham A 30,226,481 1,015,860 1,046,248 3.5% 8.7% 9.4% $28.80 1,681,629 2,090,730

Downtown Durham B 1,088,657 -4,801 161,908 14.9% 3.7% 3.7% $31.01 183,835 0Downtown Raleigh B 939,118 -3,555 -8,885 -0.9% 3.7% 3.7% $26.26 0 0CBD B 2,027,775 -8,356 153,023 7.5% 3.7% 3.7% $30.15 183,835 06 Forks / Falls of Neuse B 2,687,884 3,742 -28,275 -1.1% 7.0% 7.1% $21.58 0 0Cary B 2,189,521 51,142 -39,618 -1.8% 5.0% 5.8% $23.77 0 0East Raleigh B 579,113 0 14,998 2.6% 3.7% 3.7% $16.02 0 0Glenwood / Creedmoor B 619,843 5,316 19,943 3.2% 4.0% 4.0% $20.09 0 0North Durham B 471,127 7,520 -54,646 -11.6% 31.3% 31.3% $17.50 0 0Orange County B 447,043 2,642 14,875 3.3% 2.5% 2.5% $23.14 0 0Route 1 B 1,207,326 20,931 19,035 1.6% 5.4% 5.4% $19.95 0 0RTP / RDU B 6,262,568 22,259 -234,237 -3.7% 33.3% 33.9% $22.72 56,337 0South Durham B 1,094,122 4,164 -6,445 -0.6% 6.4% 6.4% $22.54 0 0Southwest Wake County B 153,368 -1,991 -445 -0.3% 2.3% 2.3% $17.75 0 0West Raleigh B 1,798,733 1,629 -1,937 -0.1% 4.0% 4.4% $25.50 0 0Suburban B 17,510,648 117,354 -296,752 -1.7% 16.0% 16.3% $22.18 56,337 0Raleigh-Durham B 19,538,423 108,998 -143,729 -0.7% 14.7% 15.0% $22.69 240,172 0

Ashley Rogers | Senior Research Analyst

5420 Wade Park Blvd, Raleigh, NC 27607 | tel + 1 919 424 8172 | [email protected]

© 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

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