At the end of 2014, JLL Research introduced five office markets to keep an eye on for strong talent, affordable space and strong opportunity for investment. Each of those secondary markets, affectionately call the NERDS—Nashville, East Bay, Raleigh-Durham, Denver and Salt Lake City, continue to attract investors and occupiers alike. But according to Carolinas Property Management Regional Manager Nora Neilson, one NERDS market really stands out.
“Of the NERDS, Raleigh-Durham has proven especially appealing to both investors and occupiers for a variety of reasons. Raleigh-Durham and Chapel Hill anchor the Research Triangle, a very desirable area in which to do business due to the fact that many highly reputable universities surround it (e.g., North Carolina State University, Duke University and the University of North Carolina at Chapel Hill), creating an ideal location for firms seeking educated employees and ample research opportunities.”
In addition to a talented and educated employee base, Raleigh-Durham is known for its reasonable climate, affordable cost of living, family-friendly lifestyle and low cost of doing business. With the vast opportunities for careers (e.g., government, education, research, medicine, technology, banking), the 100,000+ students attending local universities rarely leave the area, and the local economy is protected from reliance upon one industry. The area also scores well as a city for veterans, small businesses, innovation and sustainability. For these reasons and more, Raleigh-Durham has emerged as one of the nation’s best places to live.
As a result, people have been moving there in droves. Companies interested in employing well-educated talent follow, demanding more office product and making it a good opportunity for real estate investors. The stats speak for themselves:
- Raleigh-Durham’s population has grown 46.0 percent since 2000 and 9.2 percent since 2010.
- Unemployment and office vacancy rates (4.4 percent and 11.9 percent, respectively) are expected to fall through 2016.
- Office investment sales in the Research Triangle hit an all-time record high in 2015
- 1,223,582 square feet of office space is currently under construction.
But as demand grows locally, so does pricing, and the window to catch Raleigh-Durham on the upswing is starting to narrow. As a result, competition for the limited number of commercial assets on the market has increased while many investors, both institutional and foreign, seek a safe place to invest.
As competition among investors increases, so does the demand for strategic third-party service providers. To meet the needs of an increasingly sophisticated investor clientele, property management firms must:
- Creatively deliver top service to tenants without increasing costs, helping to secure lease renewals
- Fully understand the market and competition and share that knowledge and expertise to clients
- Know what’s trading before it’s even on the market and alert clients of those opportunities
- Aggressively manage the bottom line
- Align your goals with those of the owner and work together to achieve them
- Provide consistent service throughout the sale of an asset to prevent any interruption of service when the building changes ownershi
By following these tips, property managers can boost the value of the assets they manage on behalf of their clients, making markets like Raleigh-Durham even more lucrative for investors.