2019-09-06_DTZ戴德梁行_Industrial_Q1_2018_Raleigh-Durham_4页_530kb

Raleigh-Durham Industrial Market Q1 2018 Summary

Core Content Overview

The Q1 2018 report from Cushman & Wakefield provides an in-depth analysis of the industrial real estate market in the Raleigh-Durham (Triangle) region, including warehouse and flex markets. It highlights trends in vacancy rates, net absorption, rental rates, and investment activity, while also addressing broader economic indicators and future outlook.

Main Economic Trends

• Unemployment Rate: The Triangle's unemployment rate rose slightly to 4.0%, up from 3.6% in Q4 2017, but remains at or near full employment levels.
• Wage Growth: North Carolina ranked 9th in the U.S. for wage growth at 3.8%, as per a Business Insider report.
• Consumer Confidence: The University of Michigan's Index of Consumer Sentiment reached its highest level since 2004, indicating strong optimism about economic prospects.
• Economic Expansion: The U.S. economy entered its second-longest expansion since WWII, with Q1 2018 GDP at 2.3%, slightly slower than 2.9% in Q4 2017, but still robust in the Triangle region.
• Interest Rates: The Federal Reserve implemented a 25-bp rate hike in Q1 2018, with expectations of 2-3 more hikes in the year, raising concerns about inflation and investment decisions.

Warehouse Market Analysis

Key Indicators

Performance Highlights

• The warehouse market outperformed the previous quarter, with 405,800 sf of new deliveries and 371,941 sf of net absorption.
• Liberty Ridge III and TBC Industrial Lot 2 and 3A were 49.0% preleased, significantly boosting absorption.
• RTP/I-40 Corridor and Eastern Wake County were the top contributors to absorption, with 230,542 sf and 78,829 sf respectively.
• Overall warehouse vacancy increased slightly to 10.5%, driven by supply growth.
• Average asking rent rose slightly for the third quarter in a row, with RTP/I-40 Corridor and Eastern Wake County seeing 3.7% and 1.5% year-over-year increases.
• 442,800 sf of warehouse space is expected to deliver in the next quarter, providing relief for tenants.

Flex Market Analysis

Key Indicators

Performance Highlights

• The flex market showed improved performance, with 41,422 sf of net absorption and 9.1% vacancy.
• The RTP/I-40 Corridor was the main driver, with 97,536 sf of absorption and 9.4% vacancy.
• Vacancy has not fallen below 10.0% since 2001, but this quarter marked a notable decline.
• Average asking rent increased to $11.40 psf/year, with a 3.6% year-over-year growth.
• The presence of life science companies is contributing to higher rental rates, as they require more specialized space.

Investment Sales Activity

• Total Investment Sales: $86.5 million in Q1 2018, a slowdown from the $293 million sale of the Sentinel Data Center in Q1 2017.
• Market Trends: Investment activity remains strong and in line with the broader economy.
• Rental Rates: With low unemployment and increased corporate investment, inflation concerns are rising, which may influence future investment decisions.

Outlook and Concerns

• Warehouse Vacancy: As vacancy in the RTP/I-40 Corridor approaches historical lows, rental rates are expected to rise.
• Trade War Risks: Fears of a larger trade war with China could impact American manufacturing companies, particularly those reliant on Chinese exports.
• Construction Trends: New construction is expected to increase in the coming quarters, which may affect rental rates and tenant availability.

Key Lease Transactions Q1 2018

Key Sales Transactions Q1 2018

Industrial Submarkets

The report includes data on various submarkets, such as:

• Orange County
• North Durham
• Downtown Durham
• South Durham
• RTP / I-40 Corridor
• Cary
• Southern Wake County
• Eastern Wake County
• West Raleigh
• US70/Glenwood
• Six Forks Road
• Falls of Neuse Road
• US 1 / Capital Blvd
• Downtown Raleigh

Each submarket has specific details on total buildings, inventory, vacancy rates, net absorption, construction, and rental rates.

Conclusion

The Triangle industrial market, particularly the warehouse and flex sectors, showed positive momentum in Q1 2018. While warehouse vacancy slightly increased, net absorption and rental rates remained strong. The flex market saw a notable decrease in vacancy, driven by activity in the RTP/I-40 Corridor. Investment activity, though slower than previous years, remains robust, and the broader economic environment continues to support growth. However, rising interest rates, trade war concerns, and potential changes in construction could impact future performance.