As the 2016 Summer Olympics come to an end in Rio, the Cushman & Wakefield Research team has directed our eyes away from the TV screen to focus on the performance of Raleigh-Durham’s office submarkets. The Downtown Durham and Six Forks submarkets led the way during the first half of the year, outpacing their competition in Michael Phelps fashion.
Using the results from Q2 2016, we analyzed the performance of the Triangle’s 14 submarkets in three different categories:
Class A Vacancy
Downtown Durham’s razor thin 0.43% vacancy rate is a market-wide all time low, and a staggering difference from the overall Triangle Class A vacancy rate of 8.66%. The completed renovation of The Chesterfield in early 2017 will provide some relief for tenants looking for space, however, with no more office space slated to arrive until 2018, landlords will retain the upper-hand for the foreseeable future.
A handful of larger deals in recently delivered space at North Hills fueled net absorption of 102,087 SF in the Six Forks submarket, landing them a gold medal. With under construction product in North Hills already considerably preleased, we can expect to see the trend of positive absorption to continue. Six Forks provided 28% of the Triangle’s 1.1 million SF of net absorption over the past 12 months, and was the only submarket to medal in each category measured.
Class A Asking Rates
Downtown Durham led the market in asking rents, where limited supply and upscale, renovated space allowed landlords to charge an average of $29.15/SF per year for Class A space – a $4.61 premium over the Triangle average.
Note: Only submarkets with more than 2,000,000 SF of Class A space were taken into consideration.