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News release

RALEIGH, NC

Raleigh Skyline occupancy stable, strong need for new construction

JLL predicts increasingly landlord-friendly landscape as competition rises


RALEIGH, March 27, 2014 – Raleigh’s Skyline exhibited strong signs of growth in 2013 with an overall vacancy rate of 6.8 percent, falling 290 basis points from last year.  Multiple speculative projects that have been stalled in the planning phases are expected to finally break ground this year, according to JLL’s Spring 2014 Raleigh Skyline Review.  On a national scale, Raleigh is one of ten markets with vacancy rates in the single digits.

“Raleigh hasn’t seen a vacancy rate this low since 2008,” said Mehtab Randhawa, Raleigh Research Analyst at JLL.  “It’s expected to further decline based on increasing demand for space in an amenity-rich sector.”

According to the review, leasing activity was robust in 2013, recording nearly 92,210 square feet of positive absorption – nearly double that of 2012.  Despite the fact that market fundamentals have tightened, construction growth has remained limited, leading to landlord-favorable conditions.  Subsequently, tenants are looking to the greater CBD area for quality space.  The warehouse district has gained considerable traction, giving tenants the option to lease and renovate Class B product.  With Citrix’s announcement to occupy 130,000 square feet, the industrial sector of the CBD will revitalize.

As economic conditions continue to improve, absorption is expected to stem from mid-sized users.  New construction will bring more options for tenants, but leverage is likely to continue to remain with landlords for the foreseeable future.

“With the recent announcement of Charter Square breaking ground, we’re already seeing our predictions fulfilled,” said Randhawa.  “It will be included in next year’s Skyline set.”
For more JLL research resources on Raleigh-Durham, please visit our research page.

About JLL
JLL (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 $4 billion, JLL operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $47.6 billion of real estate assets under management. For further information, visit www.jll.com.