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2022 Q4 Office Raleigh-Durham Report

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Activity Slows as More Sublease Space Hits the Market

Key Takeaways

  • Sublease space in the Raleigh-Durham office market maintains its upward trajectory with just over 3 million square feet available, an increase of 46% from 2.1 million square feet a year ago. This is 7.7% more sublease space available than last quarter’s 2.8 million square feet. 
  • Investment sales were at the forefront this quarter with Triangle Business Center, located on Stirrup Creek Dr, selling for $141 million and Northchase Office Park at 6601 Six Forks Rd selling for $48 million. 
  • The Federal Funds Effective rate rose two more times in the 4th quarter, landing at a target range of 4.25% to 4.5%. This marks the 7th interest rate increase on the year.

Like many office markets across the country, The Raleigh-Durham office market continued to soften with decreased leasing activity and higher vacancy rates. The vacancy rate rose by 61 basis points over the quarter, landing at 12.8%. Average asking rates remained flat over the quarter at $29.77 per square foot. Absorption fell to 263,603 square feet of negative absorption, a result of leases expiring with tenants choosing to downsize.

Sublease space continues to hit the market with just over 3 million square feet available, with examples such as IQVIA putting all 259,531 square feet from 4820 Emperor Blvd up for sublease. Higher interest rates and the question of a recession may impact tenants’ decision-making on whether to downsize and bring more blocks of sublease space to market. 

Overall, the Raleigh-Durham office market remains under a watchful eye as many markets across the country are experiencing similar trends in rising vacancy and slower developments. Despite high interest rates, consumer spending has not halted and the overall economic climate in 2023 is unknown.

 

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2022 Q4 Office Raleigh-Durham Report

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Ryan Toland

Executive Vice President, Occupier Services

Raleigh

As Executive Vice President, Ryan leads the Occupier Services team for Colliers Raleigh.  Ryan focuses on advising and representing corporations and office space users in their strategic real estate initiatives.  Ryan’s diverse client base spans a variety of industry sectors including: pharmaceutical, life science, software and technology, manufacturing, and professional services. Throughout his career, Ryan has been known for his methodical and analytical approach where he has been involved in hundreds of transactions of varying size and complexity.  In 2020 alone, Ryan negotiated over 400,000 square feet of lease transactions valued at approximately $50 million.

Prior to joining Colliers in 2021, Ryan was a Managing Director for Cushman & Wakefield for 7 years.  Previously, he served as Partner and Executive Director of Corporate Services at Synergy Commercial Advisors prior to their sale to Cassidy Turley. Additionally, Ryan opened and managed the Raleigh-Durham office of UGL Equis where he oversaw an office that ranked third nationally in overall profitability before merging with DTZ.

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