RALEIGH, N.C., Jan. 23, 2019 /PRNewswire/ -- Most signs point to a good year ahead for the area's overall economy and commercial real estate markets, and the U.S. will win in a volatile 2019 economy because we are a country of innovators and reliable consumers.
Those were two of the messages delivered at the 34th Annual Triangle Commercial Real Estate Conference on January 17, 2019 to 1,600 attendees, including national and regional real estate developers and investors, as well as area business leaders, and community/government officials who gathered in Raleigh's PNC Arena. Hosted by NAI Carolantic Realty, the conference is considered the authoritative "state-of-the-market" report on the Triangle's real estate sector, and findings presented at the conference provide an important bellwether of the region's general economic vitality. The Conference theme was "Enriching the World Through Innovation."
"The overall market was healthy last year and will likely remain so in 2019 despite some concerns over rising interest rates which have not affected us yet," said Jimmy Barnes, SIOR, President of NAI Carolantic. Among statistics that Barnes cited for 2018: office rents continued an upward climb to record highs due to increased demand and construction costs. The retail market experienced negative absorption in three submarkets with only 172,000 square feet of positive absorption causing a slight uptick in the overall vacancy rate. The multipurpose (industrial/warehouse/flex) sector reported a historically low vacancy at approximately 7%. The Triangle apartment market still saw strong absorption and vacancy rates increased only slightly in 2018.
"In December there were concerns with the stock market, but real estate values continue to be strong and there is good activity within all product categories. The industrial sector is still leading the way, fueled in part by demand for products for the residential construction industry and same-day 'last mile' delivery requirements of E-commerce," said Barnes.
NAI Carolantic's research was based in part on a survey of over 287 million square feet of office, multipurpose and retail space comprising 8,800 buildings.
The Keynote Speaker Sarah Quinlan, Founder and Strategic Consultant with QAM and formerly Group Head of Market Insights and Senior Vice President at MasterCard gave her views on where the economy is going in the year ahead, and the factors that will fuel volatility, including a slow-down in global growth and continuing issues with trade tariffs.
"What isn't so volatile," she observed, "are the retail sales that currently fuel 70% of the U.S. GDP growth. In the strong holiday period just ended, sales were up 5.1%." Driving the strength of retail sales is what Quinlan called "The Experiential Economy." That includes fine dining, travel and entertainment.
In his market recap, Barnes noted the industrial sector continues to be the "bell of the ball" with increased rental rates and a strong tenant base. "There is little concern heading into 2019 with the amount of new construction in this sector as the industrial market has a long runway well into 2020 and 2021," said Barnes.
NAI Carolantic Realty Chairman Steve Stroud recounted some of the Triangle regions major contributions in medicine, analytics and energy-saving lighting technology. "Innovation is powered by creativity, bold leadership and by investment, and that certainly includes investment in real estate development," Stroud told the audience. "The Triangle is a leader in innovation, and I believe our community will continue to enrich the world in which we live. We embrace change and make it our own."
Sponsors for the NAI Carolantic Conference included Bobbitt Design Build; Celito.net; DMJ & Co., PLLC; JDavis; Manning, Fulton & Skinner, P.A.; TriSure; Wells Fargo and WithersRavenel.
2019 Forecast and Category Summaries:
2019 Investor Outlook for Land
- Central Business District land values are hitting a record high well over $100 prsf
- Current low office vacancy is driving interest in well-located, zoned office sites
- Retail land sales are slowing
- Ground zero industrial land sites are in high demand but are limited and expensive
- Industrial sites in outlining areas are getting attention
- Hotel developers are active and looking for well-located sites
- New residential developers continue to enter the market driving land prices up
- Zoned and entitled land is valued at a premium
- Many great opportunities in surrounding counties
2019 Investor Outlook for Income Property
- Investors face some challenges in 2019 with rising interest rates, higher construction costs, retailers downsizing and office co-working concerns
- The industrial market is the most attractive segment with rising rental rates, favorable landlord lease terms and low cap rates
- Regional retail malls and power centers are the least popular product type
- Smaller, local investors face challenges relative to achieving their desired returns
- Money is still available
- Despite new challenges, expect another strong year of transactions and sales volume
About NAI Carolantic
NAI Carolantic has played crucial backstage roles in helping guide the Triangle region's future—from the creation of the PNC Arena and the Carolina Hurricanes to the re-opening of Raleigh's Fayetteville Street to the development Crossroads Mall.
For more than 47 years, NAI Carolantic has been the leader in Triangle commercial real estate, and our annual commercial real estate conference has established us as the region's most authoritative source of verifiable market data on commercial real estate.
NAI Carolantic is the area's leading commercial real estate firm with sixteen brokers, a full-service property management division, as well as an experienced marketing and research division. Established in 1972, NAI Carolantic is an office of NAI Global, the world's premier organization of commercial real estate firms and one of the largest real estate service providers worldwide. NAI has over 7,000 real estate professionals in over 400 offices around the world with regional management, global infrastructure, best practices and technology to provide clients with consistent, quality results.
SOURCE NAI Carolantic Realty