The office market in Raleigh appeared to decelerate in 2Q 2016, absorbing only 154,458 SF of space, a 52% reduction from high demand seen in the quarterly average spanning the preceding two years. While some submarkets achieved record low vacancy rates, the overall vacancy rate increased to 14.5% from 12.3% in large part due to the introduction of the Glaxo Smith Kline (GSK) campus in RTP. The GSK space represents approximately 1.2 million square feet introduced to our data set. Without this space, the overall vacancy rate would have decreased by 20 basis points to 12.1%. It is important to note that many market experts downplay the impact the GSK space (similar to other historical [large] RTP-proper vacancies) on market statistics, as it is more likely to draw a corporate headquarters rather than draw from typical RTP-I40 demand.
The Downtown Durham submarket boasts the highest asking rent in the Triangle, with Class A space demanding $29.15 per square foot (psf), an 18.8% premium over the triangle average. Overall office rent increased by 4.3% year-over-year. We can expect this trend to continue in the overall market, especially with new and under construction office buildings in CBD and Midtown areas asking for rents in excess of $30.00 psf.
To learn more about how the office market is performing, view the full 2Q Marketbeat Report by clicking here.