Skip Ribbon Commands
Skip to main content

News release


Raleigh-Durham Skyline Rents Reach New Highs in 2016

JLL’s 2016 Skyline reveals that landlords still have upper hand in tight RDU office market

RALEIGH, July 20, 2016 – Rents for the office buildings that make up the Raleigh and Durham Skylines have jumped into record territory in 2016—an average of $28.38 per square foot. For all CBD properties, average rents have increased to $27 per square foot, an increase of more than 12 percent from a year earlier, when average rents stood at just over $24 per square foot. But JLL's 2016 Skyline shows that while those rents are expected to continue their growth trajectory for the next couple of years, rent growth nationally may be moderating, especially in high-growth markets that have recorded consistent rent appreciation over the last several years.

  • Skyline and trophy asset rents at near record highs; owners retain leverage due to limited stock
  • Rent growth expected to continue for time being

"Rents continue to increase in the Raleigh and Durham Skylines as the office market tightens with recent expansions," said Ashley Lewis, a senior research analyst with JLL in Raleigh. "With essentially no vacancy in downtown Durham, Skyline asking rents in the Durham CBD have increased more than 10 percent year over year. Similarly, downtown Raleigh rents continue to rise as the market tightens, even with trophy assets poised to deliver."

New construction commands a premium
Owners, especially those with Skyline properties currently under construction, still have the upper hand for now. Rents for those rising towers are hitting $33.50 per square foot, an 18 percent premium over average Skyline asking rents due to greater efficiencies inherent in such factors as layouts and operating costs.

Slight dip in investment volumes nationally
Skyline investment volumes fell slightly across the U.S. in 2015, due to strong demand and liquidity for Skyline assets earlier in the economic cycle as well as the generational nature of many acquisitions since the Global Financial Crisis. The scarcity of opportunities meant only 9.5 percent of the Skyline across North America traded in 2015, down from 10.7 percent in 2014.  However, the drop in investment volumes in the first quarter of 2016 was even more precipitous—down more than 72 percent in primary markets and nearly 47 percent in secondary markets.

Foreign investors now own more than 14 percent of the national Skyline, with Canadians and Germans claiming more than 60 percent of that total.  In 2015, those cross-border buyers remained focused on the biggest and the best—with more than 60 percent of those dollars targeting trophy assets.  And they haven't strayed far—planting nearly 94 percent of their investment dollars into primary markets such as New York ($4.6B), Boston ($1.4B) and Seattle-Bellevue ($700M).

This has caused a change in investment strategies across North America. Challenged by peak pricing and scarce investment opportunities, both foreign and domestic buyers will continue to be drawn to hot secondary markets where rent growth is still achievable and tenant demand will persist in the months to come. Many cities in the sunbelt region have benefitted from that interest.

What have you done for me lately?
Despite the rise in popularity of older creative buildings and fringe markets, assets within the Skyline are still the gold standard, but owners need to stay mindful they don't tarnish with complacency. In Raleigh, for example, Highwoods Properties recently completed $8.3 million in renovations to One City Plaza, formerly known as One Bank of America Plaza. The 17-story building now has a new facade, an upgraded and more spacious lobby and a modernized elevator system.

"With tech companies fighting for talent, landlords across the Triangle recognize they must invest in new and unique amenities and common area upgrades to provide their tenants with an edge for recruiting and retention," said John MacDonell, an Associate with JLL's Agency Leasing in Raleigh.

About the Skyline Review
Investors and tenants alike can access JLL's Skyline via a digital platform.  The fully interactive website will feature JLL's proprietary market insights regarding office supply, demand, rents, leverage and investment into 52 markets across the United States and Canada, with the ability to compare and contrast individual markets or multiples of markets as well as individual properties or portfolios.  In addition, the site will offer videos and infographics. All information will also be available via mobile access.

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. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $58.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit