Triangle Office Market Update – 2Q10

KARNES Triangle Office Market Overview - Source The KARNES Report

As of the second quarter of 2010, the KARNES Triangle office market totaled over 42.1 million square feet of for-lease buildings greater than 15,000 square feet in size. Approximately 7.9 million square feet, or 18.8%, of the office inventory was vacant during the second quarter. Two new office buildings totaling 62,225 square feet were delivered during the second quarter, while five existing buildings totaling 737,000 square feet were added to the Karnes inventory. Among the existing buildings added were the four buildings at Network Center, a 676,000-square-foot former Nortel office park. The park, which is home to Fidelity, added 456,745 square feet of vacant space to the I-40/RTP inventory when added.

At 18.8%, the Triangle’s second quarter 2010 vacancy rate was 0.5% points higher than the 18.3% reported in the first quarter of 2010. Although net absorption totaling 126,441 square feet during the quarter outpaced new completions totaling 62,225 square feet, the addition of 456,745 square feet of vacant space at the Network Center office park prevented potential improvements in the regional vacancy rate.

Net absorption during the second quarter of 2010, which totaled 126,441 square feet was primarily derived from strong leasing in West Wake, Northwest Wake and Northeast Wake, where a total of 136,755 square feet of positive net demand was reported. The largest new occupancy during the quarter was reported in the Northeast Wake submarket, where BB&T occupied 30,600 square feet at Highwoods Tower One.

After averaging over 1.7 million square feet of new office construction per year between 2007 and 2009, the Triangle office market is poised for a reprieve during 2010. A total of 148,725 square feet of new space was delivered during the first six months of 2010 and only 170,844 square feet in five projects was under construction as of the second quarter. Smaller sized projects and in diversified locations comprising the under construction inventory should mitigate supply-side pressures and allow for the absorption of excess vacant space during the remainder of 2010.

Read the Entire KARNES Report Office Online by joining the Triangle Commercial Property Exchange. Annual membership fees include access to the quarterly office, industrial and retail reports as well access to many additional member benefits including searching the entire property database, sending broadcast emails with wants/needs and listing availabilities, generating high quality property brochures, and much more.

The KARNES Triangle reports have been produced for 15 years and contain detailed information on vacancy, absorption, completion, and rental trends. The reports also include breakdowns by submarket as well as tenant activity details and development lists.

KARNES Launches Triangle CPE Version 3.0

August 8th, 2010

KARNES is pleased to announce the launch of a new version of the Triangle Commercial Property Exchange. With this upgrade, we have greatly enhanced many of the core functionalities of the Commercial Property Exchange which dramatically improves our members’ experience.

What’s New in Version 3.0

Enhanced Searching and Filtering Capabilities
Utilizing the latest in web technologies, CPE 3.0 streamlines searching to improve response and data delivery time and maximizes search efficiency to get the results you want fast.

• Searching – One easy platform allows you to search All Listing Methods (For Sale, For Lease, For Sublease) of All Status (Available, Under Contract, Closed Sold/Leased, Withdrawn).
• Results Display- Easily view summary level listing information, change search parameters, customize and sort display information, toggle to mapped results, save search or start a new search.
• Integrated Search Filter – Add, edit or remove search parameters to refine results and improve the way you locate listings.
• Quick Search – Enter keywords and unique property features to rapidly search the entire data set.
• Comp Searches – Sale and Lease Transactions are easily accessed from the Transaction History and Sold/Leased fields of the Main Search and Result Filter and easily viewed in results as an added display option.

Upgraded Map Results and Search Tools
CPE 3.0 integrates Google Maps, a leading online provider of mapping technologies, as its map service which improves geocoding accuracy, result load time, satellite and hybrid imagery, and polygon and radius search capabilities.

• Mapped Results – Search Results are automatically mapped, improving load time and allowing you to toggle between the summary listing details and mapped results.
• Map Search – Efficiently view mapped search results then narrow and expand search criteria with the integrated search filter to dynamically meet your search needs.
• Polygon Search – Create and define your own search area to capture the results you want.
• Radius Search – Define the distance and center of your search area to capture the results you want.

Improved Listing Delivery Methods
CPE 3.0 allows for quick and easy printing, emailing and creation of customized PDF reports of a single property, multiple properties from Search Results, and properties saved in Portfolios.

• Print Listing – One click will create a print version of the Property Overview of a single listing or Summary of multiple listings.
• Email Listing – Send an email with a link to the Property Overview of a single listing or Summary of multiple listings.
• Customized PDF Reports – Produce professional quality customized PDF brochures of single listings or multiple listings with integrated Report Headers, enhanced Brochure Formats, and user defined Brochure Styles.

Vacancy rate may grow as Blue Cross looks to save

July 15th, 2010
News & Observer

Blue Cross and Blue Shield of North Carolina’s decision to review its real estate portfolio as it looks to slash expenses is part of a worrisome trend for the local real estate market.

Like GlaxoSmithKline, Blue Cross is one of the larger and more stable employers in the Triangle, and one that wasn’t expected to be a major contributor to the region’s rising vacancy rate.

Blue Cross owns roughly 825,000 square feet of office space in Durham and Chapel Hill. The majority of that space is at the company’s 40-acre campus along U.S. 15-501 in Chapel Hill and its customer service center and campus buildings on University Drive.

The Triangle office vacancy rate was 18.3 percent in the first quarter, according to Karnes Research, a Raleigh firm that tracks commercial real estate trends. That’s the highest it’s been in more than a decade and nearly three percentage points higher than it was in the first quarter of 2009.

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Crown Realty adds to Imperial Center portfolio

July 12th, 2010
News & Observer .biz

After selling a distribution facility last fall, Crown Realty and Development has added to its portfolio in the Imperial Center business park near Research Triangle Park.

The Irvine, Calif. company paid $7.475 million for a 182,000-square-foot warehouse at 4400 Emperor Boulevard. The property is fully leased to Phoenix Telecom Solutions, which moved in in March.

The warehouse vacancy rate in the Interstate 40/RTP submarket was 11.4 percent at the end of the first quarter, according to Karnes Research of Raleigh, up from 9.9 percent during the first quarter of 2009.

The warehouse vacancy rate for the entire Triangle was 15.3 percent in the first quarter.  The I-40/RTP submarket contains about 50 percent of all in the industrial space in the Triangle.

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NY firm buys Research Tri-Center warehouses for $76.95 million

June 7th, 2010
News & Observer .biz

In the latest sign of investors strong appetite for high-profile commercial real estate in the Triangle, a private New York real estate investment firm has paid $76.95 million for the Research Tri-Center buildings in Durham, according to Durham County property records.
The Triangle warehouse vacancy rate was 15.3 percent in the first quarter, up from 9.8 percent during the same quarter a year ago, according to Karnes Research.
The warehouse vacancy rate in the I-40/RTP submarket stood at 11.4 percent in the first quarter, up from 9.9 percent a year ago.

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BofA grabs bigger piece of tower

May 28th, 2010
The Charlotte Business Journal

Bank of America Corp. has taken its new, 32-story uptown office tower off the market and plans to fill all but 5% of the space with its own employees…The bank had been marketing up to 267,000 square feet for lease through real estate firm Lincoln Harris. And it has leased about 30,000 square feet to tenants that include private-equity firm Pamlico Capital….

At the end of the first quarter, the vacancy rate in Charlotte’s uptown office market stood at 12%, up from 3.2% a year earlier and 8.8% at the end of 2009, according to Karnes Research Co. Andrew Jenkins, a managing partner at Karnes, had forecast uptown’s vacancy rate to exceed 13% with the delivery of 1 Bank of America. Barring any significant new vacancies uptown, the bank’s decision will keep the vacancy rate around 12%, he says.

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KARNES Launches Triad CIE Version 3.0

April 24th, 2010

KARNES is pleased to announce the launch of a new version of the Triad Commercial Information Exchange. With this upgrade, we have greatly enhanced many of the core functionalities of the Commercial Information Exchange which dramatically improves our members’ experience.

What’s New in Version 3.0

Enhanced Searching and Filtering Capabilities
Utilizing the latest in web technologies, CPE 3.0 streamlines searching to improve response and data delivery time and maximizes search efficiency to get the results you want fast.

• Searching – One easy platform allows you to search All Listing Methods (For Sale, For Lease, For Sublease) of All Status (Available, Under Contract, Closed Sold/Leased, Withdrawn).
• Results Display- Easily view summary level listing information, change search parameters, customize and sort display information, toggle to mapped results, save search or start a new search.
• Integrated Search Filter – Add, edit or remove search parameters to refine results and improve the way you locate listings.
• Quick Search – Enter keywords and unique property features to rapidly search the entire data set.
• Comp Searches – Sale and Lease Transactions are easily accessed from the Transaction History and Sold/Leased fields of the Main Search and Result Filter and easily viewed in results as an added display option.

Upgraded Map Results and Search Tools
CIE 3.0 integrates Google Maps, a leading online provider of mapping technologies, as its map service which improves geocoding accuracy, result load time, satellite and hybrid imagery, and polygon and radius search capabilities.

• Mapped Results – Search Results are automatically mapped, improving load time and allowing you to toggle between the summary listing details and mapped results.
• Map Search – Efficiently view mapped search results then narrow and expand search criteria with the integrated search filter to dynamically meet your search needs.
• Polygon Search – Create and define your own search area to capture the results you want.
• Radius Search – Define the distance and center of your search area to capture the results you want.

Improved Listing Delivery Methods
CIE 3.0 allows for quick and easy printing, emailing and creation of customized PDF reports of a single property, multiple properties from Search Results, and properties saved in Portfolios.

• Print Listing – One click will create a print version of the Property Overview of a single listing or Summary of multiple listings.
• Email Listing – Send an email with a link to the Property Overview of a single listing or Summary of multiple listings.
• Customized PDF Reports – Produce professional quality customized PDF brochures of single listings or multiple listings with integrated Report Headers, enhanced Brochure Formats, and user defined Brochure Styles.

Developer taps Clemmons for speculative office space

April 23rd, 2010
The Business Journal of the Greater Triad Area

A developer seeks to fill what he sees as a shortage in the market for affordable office space west of Winston-Salem with the construction of two office buildings on Commercial Park Court, just off Ramada Drive on the south side of I-40.

PTX Commercial has received two building permits worth a total of $1.8 million for the project. Davie Construction Co. is the general contractor. PTX President C.J. Sadosky Jr. said the larger of the two neighboring buildings will be 26,000 square feet and the smaller 6,000 square feet. The lay of the lot requires two separate structures rather than one larger one, he said. PTX will use some of the space itself and offer the rest for lease. He hopes to have the project completed in the fourth quarter of this year.

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Office shuffle: Tenants taking advantage as leases expire

April 23rd, 2010
The Business Journal of the Greater Triad Area

Office brokers around the Triad say their phones are ringing a bit more these days. While most of the calls are from companies in search of a better deal on a lease, brokers welcome the activity as the recession continues to take its toll on the office market. “They aren’t big deals, or even groups looking to open up new businesses, but companies looking for options,” says J.J. Joubran, executive broker for Essa Commercial Real Estate in Greensboro. And there are a lot of options to be had.
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Spaced out: Triad’s industrial market saturated, with Dell-uge to come

April 23rd, 2010
The Business Journal of the Greater Triad Area

When it comes to industrial space, the Triad is seriously overstocked. And things will likely get worse before they get better, with the potential for more than 1 million square feet of space to be vacated by year’s end as Dell Inc. closes its Winston-Salem plant and the ripples spread to its suppliers. At the end of 2009, the overall industrial vacancy for the Triad was 21.7 percent, up slightly from 21.2 percent a year earlier, according to the Karnes Industrial Report, compiled on behalf of the local Realtors associations. Brokers generally consider the market to be in fair balance when vacancy is between 8 percent and 12 percent.
Average rental rates slipped from $3.96 a square foot at the end of 2008 to $3.93 at the end of 2009, falling for the second straight quarter. Rates were at $4 a square foot before the recession.
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