JULY 8, 2014

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The 13-property portfolio offers more than 1.7 million square feet
of industrial space in the Charlotte MSA.

CHARLOTTE, N.C. -- Grandbridge Real Estate Capital has arranged a $53 million loan to refinance a 13-asset industrial portfolio located in the Charlotte MSA. The portfolio totals more than 1.7 million square feet. Chris Caison of Grandbridge arranged the loan with a fixed interest rate through an unnamed life insurance company on behalf of the owner, Charlotte-based Beacon Partners. Beacon Partners leases and manages more than 9 million square feet of office and industrial space in the Carolinas. C.J. Webb of Grandbridge assisted in the deal.


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Located in Asheville, N.C., the 93-unit Kenilworth Inn Apartments
was fully occupied at the time of acquisition.

ASHEVILLE, N.C. -- Capstone Apartment Partners has brokered the $14.8 million sale of the historic Kenilworth Inn Apartments in the Biltmore Village in Asheville. The 93-unit multifamily community was fully occupied at the time of the sale. The apartment community, originally built in 1892 and renovated in 2003, is listed on the National Register of Historic Places. Austin Green and Alex McDermott of Capstone Apartment Partners' Charlotte office represented the seller, Kenilworth Apartments LLC, in the transaction. Saratoga Capital LLC was the buyer.


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FAYETTEVILLE, N.C. -- Aldi Inc. has purchased a 2.4-acre land parcel at Ramsey Street and Stacy Weaver Road in Fayetteville. Best Locations LLC sold the land for $1.55 million. Aldi plans to develop a 16,500-square-foot Aldo grocery store on the site. The store is slated to open in first quarter 2015. James Mattox and Ty Thomas of Cushman & Wakefied|Thalhimer's Raleigh office represented the seller in the transaction. 


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COLUMBIA, S.C. -- NAI Avant has brokered the $1.3 million sale of a 22,000-square-foot retail and warehouse property located at 1313 Bush River Road in Columbia. Autozone Inc. purchased the asset from Bush River Crossings Associates. Bobby Hathaway of NAI Avant represented the seller in the transaction. The building will be divided into a parts supply warehouse and a 6,000-square-foot Autozone store. Autozone will use the warehouse portion as a supply hub for its regional stores.


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Neal White

DURHAM, N.C. -- Neal White has joined The Dilweg Companies as chief financial officer for the Durham-based company. In this newly created position, White will oversee the operations of Dilweg's finance and accounting team. White has 13 years of commercial real estate and corporate finance experience, and he previously served as senior vice president at Eastdil Secured/Wells Fargo Securities in Washington, D.C.

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By Larry LaMarr Lakins II, Hunter Willard and Shoshana Collins of Cassidy Turley

RALEIGH, N.C. -- The Raleigh/Durham/Chapel Hill Triangle has captured national attention as a powerhouse of innovation and economic growth for many years, winning a steady stream of accolades for growth, technology, entrepreneurial drive and quality of life. So it comes as no surprise that while some parts of the country are still limping along in what has been the longest and most tepid recovery in recent memory, the Triangle is booming.


Indeed, it's hard to find a metric that shows the region as anything less than thriving. The unemployment rate declined sharply over the past year, down over 2 percentage points from the first quarter of 2013 to 5.1 percent in April 2014, and the region has been adding jobs - more than 26,000 nonfarm jobs in the past four quarters and 7,700 in March 2014 alone. As a result, the region's industrial market is rapidly accelerating.


Raleigh-Durham has consistently placed in the top 10 fastest growing MSAs since 1980, and the Triangle's industrial market is primarily geared toward providing goods and services for the burgeoning local population, ensuring that demand for institutional-grade industrial product remains strong. This dynamic has also created a tendency toward a high degree of diversification, and both factors contributed to partially insulating the local warehouse market from the severe corrections suffered by national and regional distribution hubs during the recent economic downturn.


Demand Surge

Still, the years from 2008-2012 saw elevated Class A vacancy rates of up to 15.5 percent, as higher unemployment and depleted consumer confidence and spending took their toll. But those days are long gone. The region has seen nine consecutive quarters of positive net absorption, and leasing velocity is increasing. Absorption totals for the first quarter of 2014 surpassed the totals for the previous four quarters combined. Among Class A buildings with a minimum of 24-foot clear heights, there are already more prospects than quality options, and the region's rapid population growth and strong economic fundamentals will only increase demand for institutional-grade warehouse space.


The RTP/Interstate-40 submarket is the Triangle's most desirable center-of-market location, and contains almost 40 percent of the total warehouse space in the Triangle, as well as the vast majority of the area's modern bulk space. The area's prime location adjacent to RDU International Airport and along the major transportation artery of the I-40 corridor ensures that space here will always be at a premium. 2013's annual absorption rate of 2.7 percent has the submarket bursting at the seams with a painfully constricted vacancy rate of 5 percent, and as current demand and long-term drivers remain strong, 2014 should see the end of what has seemed like a virtual moratorium on new warehouse construction during the past several years.


New Construction

While it's clear that demand supports significant new construction, questions remain about where to put it. The natural choice would be RTP/I-40, but that submarket is almost completely built out, with only a few sites left for new development. Additionally, prospective developers must contend with significantly higher land prices in the submarket, as well as steep developer fees and costs in Durham. Despite this, market conditions suggest that the time is ripe for someone to pull the trigger on at least one of these sites, and market insiders anticipate an imminent announcement that construction will soon commence on approximately 450,000 square feet of space to be delivered in 2015, with a portion of the space to be spec.


This project may ease supply constriction somewhat, but it is unlikely to be sufficient to satisfy demand. For additional options, developers have shown interest in Eastern Wake, the Triangle's secondary focal point of industrial activity, which has more current availability than RTP/I-40 as well as room to grow. Duke Realty recently announced several build-to-suit opportunities for up to 400,000 square feet at Greenfield North, and development is underway on the first of several proposed flex and warehouse buildings ranging from 10,000 to 80,000 square feet at Triangle East Business Park in Zebulon. But land prices in the most desirable, central areas of Eastern Wake are not much lower than in RTP/I-40, and logistics make space there more attractive to the Triangle's handful of regional distributors, rather than the majority of users. As a third choice, developers may turn their gaze to the outlying counties, where land is cheap, but lack of proximity to infrastructure limits appeal.


Still, with growth during the last several quarters exceeding all expectations and showing no signs of altering its upward trajectory, space to meet voracious demand will have to come from somewhere -- and soon. In the meantime, rents are expected to continue to rise aggressively. Users are out of options: they must relocate to the outlying counties, or pay the new rates that were traditionally thought to be higher than what the Triangle market would bear in what is now truly a landlord's market.


This article originally appeared in the June 2014 issue of Southeast Real Estate Business.


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Upcoming Events
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Raleigh/Durham Lunch Meeting: August 12

BOMA Raleigh/Durham's lunch meeting will feature Kenneth McArtor with the Wake County Department of Revenue. He will speak about the overall revaluation process and drill down on the income approach, which is applicable to commercial properties.
Tuesday, August 12; 11:30am - 1:00pm
One Eleven Place
111 Realtor's Way
Cary, N.C. 27513
Click here to RSVP by August 6.
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BOMA Fall Conference: September 12

BOMA Carolinas/West Virginia Fall Conference.
Friday - Sunday, Sept. 12 - 14
Hilton DoubleTree
181 Church Street
Charleston, S.C. 29401
Click here for more information.
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