Marketview: Greensboro/Winston-Salem Office

Greensboro/Winston-Salem Office
MarketView
CBRE Global Research and Consulting
Q3 2014
VACANCY RATE
13.9%
NET ABSORPTION
371,717 SQ. FT.
LEASE RATE
$15.31
UNDER CONSTRUCTION
43,000 SQ. FT.
TRIAD OFFICE MARKET ACTIVITY INCREASES IN Q3

Quick Stats
Q3 2014
QoQ
YoY
Vacancy
13.9%
Lease Rates
$15.31
Net
Absorption
371,717
Construction
43,000
Hot Topics
Market
dynamics
yielding
stabilized rates and steady
improvement, resulting in supply
constraints.
The relocation of National

General (GMAC) to Madison
Park, the expansion of B/E
Aerospace at 150 Oak Plaza
and the expansion of Volvo into
123,000 SF build to suit
contributed heavily to large
positive absorption in North
Forsyth and Piedmont Airport
submarkets.
Note: Due to several buildings

added to the report, the RBA has
changed (184,971) sq. ft. from
Q2.
While positive absorption at

Madison Park was noted, CBRE
removed 500 W. Fifth Street
(620,000 sq. ft.) in WinstonSalem CBD from data pending
confirmation of re-development
plans.
CBRE tracks inventory for the Triad

office market consisting of nearly 24
million square feet in 390 buildings.
This total excludes owner occupied
and medical facilities. The market is
broken into two areas, Guilford
County
and
Forsyth
County.
Guilford County consists of almost
14.5 million square feet of office
space, compared to 9.4 million
square feet in Forsyth County.
Market activity remained steady, as it
has all year, with positive absorption
of 317,717 sq. ft. during the third
quarter 2014.
Vacancy rates
remained just below 14.0% and
average asking lease rates decreased
to $15.31 market wide at the end of
the third quarter.
The overall vacancy rate remained
below 14.0% and ended the quarter
at 13.9%. Comparing regions of the
Triad, the Guilford County vacancy
rate rose to 17.1%, compared to
16.3% at the end of the second
quarter, while the Forsyth County
vacancy rate fell 120 basis points to
9.1% in Q3. High Point and North
Forsyth submarkets project the lowest
vacancy rates out of all of the
submarkets in the Triad at 3.8% and
8.1% respectively.
Overall absorption metrics rose
340,000 sq. ft. quarter-over-quarter
to positive 371,717 sq. ft. in Q3.
The North Forsyth and Piedmont
Triad Airport Area submarket were
largely responsible for much of the
positive
absorption
as
both
experienced absorption in excess of
130,000 sq. ft. of office space. In

August Volvo delivered its new
123,000 sq. ft. office building at
8003 Piedmont Triad Pkwy in the
Airport submarket contributing much
of the positive absorption in the
Triad. In addition, much of the
absorption success in Q3 can be
attributed to little negative absorption
across the market, which has
diminished these positive absorption
metrics in the past.
The overall average asking rate
declined $0.35 from its recent high
of
$15.66.
Forsyth
County
contributed to the majority of the
average asking rate decrease, as
rates fell from $16.17 per sq. ft. in
Q2 to $15.12 per sq. ft. in Q3.
Guilford County rates decreased
$0.06 to $15.39.
Construction began on a 43,000
sq. ft. office building at 2485 Penny
Road in the Premier Center in High
Point. While CBRE does not
anticipate a significant amount of
new
development,
particularly
without pre-leasing commitments, the
improvement in the economy has
resulted in fewer options for larger
tenants that is likely to encourage
new construction over the next 24
months.
Overall, the Triad office market is
trending positively in 2014.
We
anticipate the market will continue
this trend as we prepare for the New
Year.
2014, CBRE, Inc.
Q3 2014
Figure #1: Submarket Breakout
Greensboro/Winston-Salem Office | MarketView
Rentable
Area
Market
Vacancy Rate
Q314 Net
Year to Date
Under
Average Lease Rate
(%)
Absorption SF Absorption SF Construction
($ SF/YR)
Guilford County
Greensboro CBD
2,851,165
9.5%
8,103
(17,544)
$16.41
Northwest Guilford
2,542,299
13.3%
7,504
12,123
$17.08
Northeast Guilford
1,272,835
7.6%
1,541
8,316
$17.78
Southeast Guilford
915,611
70.9%
$12.41
Southwest Guilford
1,615,665
27.1%
(26,940)
(31,037)
$12.74
High Point
1,458,281
3.8%
865
22,366
$14.16
Piedmont Triad Airport
3,843,659
16.3%
130,209
114,394
43,000
$17.12
14,499,515
17.1%
121,282
108,618
43,000
$15.39
Winston-Salem CBD
4,414,085
9.7%
35,724
196,282
$16.76
North Forsyth
2,419,001
8.1%
194,521
216,407
$12.00
189,605
0.0%
West Forsyth
2,394,652
9.6%
20,190
4,484
$16.61
Forsyth County Totals
9,417,343
9.1%
250,435
417,173
$15.12
TRIAD OFFICE TOTALS
23,916,858
13.9%
371,717
525,791
43,000
$15.31
Guilford Totals
Forsyth County
Southeast Forsyth
Note: Due to constant updates in CoStar data, the YTD Absorption numbers for Northwest Guilford and West Forsyth submarkets have been revised.
Figure #2: Top Lease Transactions of Q3 2014
Square Feet
Address
Tenant
123,000
8003 Piedmont Triad Parkway

Greensboro, NC
Volvo
116,048
5620/5630 University Parkway

Winston-Salem
National General (GMAC)
37,775
150 Oak Plaza

Winston-Salem, NC
B/E Aerospace
19,674
4050 Piedmont Parkway

High Point, NC
ITT Educational Services
16,866
301 N. Main Street

Winston-Salem, NC
Hatch, Inc.Source: CoStar and CBRE Research Q3, 2014 .
2014, CBRE, Inc.
Vacancy
Absorption
400,000
300,000
200,000
100,000
0
-100,000
Piedmont Triad Airport and North Forsyth experienced the

greatest absorption, boasting over130,000 and 194,000
sq. ft. respectively.
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2012 2012 2013 2013 2013 2013 2014 2014 2014
Source: CoStar October 2014.
Average rental rates settled to $15.31 per sq. ft. similar to

rates seen at the beginning of the year. It represents a
decrease from the $15.66 per sq. ft. rate in Q2.
Figure #4: Vacancy Rate vs. Lease Rate

Vacancy Rate
Lease Rate
13.9%
$15.31
18%
Overall vacancy rose by 10 bps in Q3.. Winston-Salem

CBD, West Forsyth, High Point and Greensboro CBD all
boasted vacancy rates below 10%.
$16.00
$15.50
16%
18%
16%
14%
12%
13.9%
371,717
Q3 2014
Positive absorption increased to over 371,000 sq. ft. in Q3,

a marked improvement from the 12,858 sq. ft. of absorption
that occurred in the second quarter.
Figure #3: Vacancy vs. Net Absorption
$15.00
14%
$14.50
12%
$14.00
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
Source: CoStar October 2014.
Figure #5: Unemployment Rate

Triad
U.S..
North Carolina
7.0%
6.1%
7.0%
12%
8%
4%
0%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2012 2012 2013 2013 2013 2013 2014 2014 2014
Unemployment increased just slightly in the Triad region in

Q3. As of August 2014, the combined unemployment rate
for the Greensboro-High Point MSA and Winston-Salem
MSA, which comprises the Triad region, was 7.0%, a 0.1%
increase from the second quarter. North Carolinas
unemployment rate increased to 7.0% from the 6.4% rate in
Q2. Despite the increase in unemployment in the region,
the Triad and state economies have continued to improve
compared to a year ago, when unemployment in the Triad
was 7.9% and unemployment in the state of NC was 7.9%.
Nationwide, unemployment was 6.1% at the end of August,
which represents a decrease from the 6.3% rate in Q2
2014.
Source: U.S. Bureau of Labor.
2014, CBRE, Inc.
Q3 2014
CONTACTS
For more information about this Triad MarketView, please contact:
Triad Research
Christy Smith
Client Services Specialist
CBRE
101 CentrePort Drive
Suite 160
Greensboro, NC 27409
t: +1 336 544 2726
e: Christy.smith@cbre-triad.com
www.cbre.com/triad
Twitter@CBRETriad
Greg Wilson
Executive Vice President
CBRE
101 CentrePort Drive
Suite 160
Greensboro, NC 27409
t: +1 336 331 9399
e: Greg.wilson@cbre-triad.com
www.cbre.com/triad
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Global Research and Consulting

This report was prepared by the CBRE U.S. Research Team which forms part of the CBRE Global Research and
Consulting- a network of preeminent researchers and consultants who collaborate to provide real estate market research,
econometric forecasting and consulting solutions to real estate investor and occupiers around the globe.
4
Disclaimer
Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do
not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your
responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by
CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written
permission of the CBRE.
2014, CBRE, Inc.

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Greensboro/Winston-Salem Office

CBRE Global Research and Consulting

TRIAD OFFICE MARKET ACTIVITY INCREASES IN Q3

The relocation of National

Note: Due to several buildings

While positive absorption at

CBRE tracks inventory for the Triad

130,000 sq. ft. of office space. In

2014, CBRE, Inc.

Figure #1: Submarket Breakout

Greensboro/Winston-Salem Office | MarketView

Piedmont Triad Airport

Forsyth County Totals

TRIAD OFFICE TOTALS

Figure #2: Top Lease Transactions of Q3 2014

8003 Piedmont Triad Parkway

5620/5630 University Parkway

National General (GMAC)

150 Oak Plaza

4050 Piedmont Parkway

ITT Educational Services

301 N. Main Street

Hatch, Inc.Source: CoStar and CBRE Research Q3, 2014 .

2014, CBRE, Inc.

Piedmont Triad Airport and North Forsyth experienced the

Average rental rates settled to $15.31 per sq. ft. similar to

Figure #4: Vacancy Rate vs. Lease Rate

Overall vacancy rose by 10 bps in Q3.. Winston-Salem

Greensboro/Winston-Salem Office | MarketView

Positive absorption increased to over 371,000 sq. ft. in Q3,

Figure #3: Vacancy vs. Net Absorption

Source: CoStar October 2014.

Figure #5: Unemployment Rate

Unemployment increased just slightly in the Triad region in

Source: U.S. Bureau of Labor.

2014, CBRE, Inc.

Global Research and Consulting

2014, CBRE, Inc.

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