Raleigh's Downtown Office Market Tightens Up

RALEIGH, NC-The long-stagnant Downtown office market here is showing signs of leasing up that could usher in a new wave of building, a local broker tells Globest.com. “I think there was as much as half a million square feet of vacancy five years ago or 20% of the total market,” says Steve Robinson, a broker for Anthony Allenton Commercial Real Estate.

Downtown has not had any new class A office space since the First Union tower and Two Hannover Square opened in 1991. Class A office demand has been met by developers converting old warehouses or upgrading class B structures, a trend that Robinson views as a “harbinger” of new building.

Reasons for the sluggish market include the high cost of land compared with the suburbs and low rental rates that are often more than $1 per sf foot below suburban areas such as Cary and West Raleigh. Estimates are that Downtown office space overall is down to a vacancy rate of anywhere from 3% to 5%.