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Raleigh’s premier office properties among elite subset of assets favored by investors and tenants in post-recessionary flight to quality, says Jones Lang LaSalle
RALEIGH, March 13, 2013 — Lack of large blocks of available office space in the Downtown Raleigh submarket has begun to fuel rental rate increases and new office property development in 2013. A development period is approaching for the Downtown Raleigh office sector, according to Jones Lang LaSalle’s Spring 2013 Raleigh Skyline Review.
“Large tenants have few existing options to consider in Downtown Raleigh and will need to look at proposed development options if they want to settle in Raleigh’s CBD,” said Ross Howard, Carolinas Research Analyst at Jones Lang LaSalle.
According to the review, the office product in Downtown Raleigh did not experience the major inflation of vacancy rates during the recession like many skylines across the United States, remaining below 10.0 percent for the majority of economic recovery. While Progress Energy and RBC Bank used to be vested in the downtown submarket before their respective mergers in 2012, high-tech companies like Red Hat and Citrix have inked monumental leases, preventing Downtown Raleigh from having an influx of space and garnering attention for Raleigh’s Skyline as the central business hub in the Triangle.
In addition to vacancy rates dropping 130 basis points to 9.0 percent, an upward trend in Class A rental rates to $25.00 per square foot leads Jones Lang LaSalle’s researchers to speculate a return of developers to Raleigh in the short-term.
“We’ve already begun to see this come to fruition,” said Howard. “The redevelopment project at 227 Fayetteville Street is a prime example. Piggy-backing on the high-tech movement in the CBD, the project is aimed at giving local entrepreneurs innovative and creative space to call Raleigh’s Skyline their home.”
Jones Lang LaSalle’s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our 350 professional researchers track and analyze economic and property trends and forecast future conditions in over 70 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions. For greater detail on Jones Lang LaSalle’s research, visit the firm’s reports at: www.us.jll.com/research.About Jones Lang LaSalleJones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet. Its investment management business, LaSalle Investment Management, has $47.0 billion of real estate assets under management. For further information, visit www.jll.com.
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