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The Industrial market is hot across the state of NC. All metros are seeing shrinking vacancies and rising prices. Demand for flex/warehouse/office spaces continues to rise and inventories remain tight. While there are many projects under construction or in planning phase we don’t expect a this new inventory to have an impact on current market trends.
Much of the big-box vacancies are due to functional obsolescence with shorter ceiling heights, poor energy inefficiencies, and failure to meet corporate logistical needs. During the downturn very little product was added to the market fueling the inventory shortage. Across the state we have experienced 200 basis point increase in cap rates for solid performing properties. Vacancies are below 5% and quality sites are becoming sparse.
Carolina Commercial remains very bullish on the Industrial market and has identified exciting opportunities for investors. Industrial site selection, for both large and small projects continues to be one of our greatest strengths. Build to suit options also available.
There is no question among experts the retail market is moving online as big-box stores struggle nationwide and the regional malls struggle to compete with Amazon. Store-sizes are shrinking and tenants continue to place more demands on Landlords.
Who would have thought ten years ago that a shuttered Sears location within a regional mall would now be a school, church or elder-care. As the wealth gap between the upper class and lower class continues to widen the retail markets parallel the same trend. Discount retailers as Dollar General and Family Dollar remain strong, as are high-end retailers like Oscar de la Renta, Georgio Armani, and Chanel. Rents for these store locations remains sky-high. Wilmington is experiencing similar trends as we can help you find the perfect location within your budget.
Office: Of all asset categories Wilmington and other tertiary markets across the state remain lackluster. With a movement of employees working from home or satellite locations the traditional office model is definitively affecting vacancies. This same trend is increasing demand for co-work spaces allowing workers flexibility for space and budget needs on a short-term need. Across the state in larger metros like Charlotte and Raleigh, Research Triangle Park and Greensboro the Class A market is strengthening.
There is strong flight of investment capital to these opportunities as investors seek cash flow with upside potential as vacancies fall. However Class B-C properties remain stagnant as the mid-sized businesses remain timid to add W-2 employees. In Wilmington, NC, the vacancy factor for office remains above 20% with more product being added. Across the state the vacancy figures hover around 12%. There is an up-tick in office-condo’s as small businesses see the value of owning vs renting.
Owners choose to work closer to their residence. We remain a local leader in office Leasing and Sales, we also have development partners in our arsenal if you are seeking build-to- suit.
We know that banking and development is on the rebound when the banks begin lending on vacant land. Land prices have rebounded as home builders have re-entered the market with a vengeance. Much of the inventory from the downturn has been absorbed by investors and home-builders are seeking finished lots to keep up with demand. Lot prices for Single Family Homes has nearly doubled (or more!) in several areas over the past 24 months. Private lending remains and integral part of the home-building equations for smaller and even regionals. CCIP has access to capital and a portfolio of builders seeking lots. Site selection on all asset categories remains as one of our strongest strengths.
Multi Tenant & Apartments
The multi family apartment market is booming across the country. Industry experts claim the sector was under built during recessionary years. Vacancy rates are still single digits and cap rates continue to diminish for all asset classes particularly trophy and class A. In Wilmington and other tertiary markets across the state of North Carolina many residents are questioning where will all of these new residents come from? There are several thousand units recently added were under construction in southeastern North Carolina. One of our multifamily developer-clients recently completed a project in Leland, North Carolina. It was the fastest-leasing project they had ever constructed. However it appears the expansion phase of the multifamily sector may be coming to a close. Banks have tightened lending guidelines and are less bullish.