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Raleigh’s Rally to Top the Commercial Real Estate Market
July 26, 2021

Raleigh’s Rally to Top the Commercial Real Estate Market

by The CE Shop Team

Raleigh’s Commercial Real Estate Ranking Is No Surprise

The National Association for REALTORS® has released its top 10 commercial real estate markets for 2021, and Raleigh has made the cut. Let’s break down the national outlook for CRE this year before exploring just what makes Raleigh an easy choice for commercial real estate opportunities.

2021: Commercial Real Estate Outlook

Though retail, hotels, and office space prices declined 5-10% over the last year, industrial sectors, data/research centers (specifically related to life science), and rental properties have all increased in value. Demand has transitioned to these areas as novel remote work opportunities and increased rates of travel and tourism influence the current commercial real estate market.

According to the National Association of REALTORS®, properties or portfolios of at least $2.5 million fell 28% year-over-year in the first quarter of 2021, with declines across all commercial property types except for hotels. Across the country, commercial real estate is scraping by to make a comeback, as reopening unfolds slowly but surely.

"The top commercial real estate markets that are expected to outperform the rest of the nation are generally affordable and able to draw new residents with a greater flexibility to work from home," said NAR's Chief Economist Lawrence Yun.

Between Raleigh’s growing population and its affordability, it comes as no surprise that its commercial real estate market is poised for success this year.

Raleigh's Growing Commercial Real Estate Market

Raleigh’s Commercial Real Estate Appeal

People are stoked to call the City of Oaks their new home — and where residents gather, commercial real estate opportunities follow. Raleigh was named among the top relocation destinations in the U.S. in 2020. In fact, the city of Raleigh ranked as the second fastest-growing city in the nation due to its 23% growth in population over the past decade.

But why are so many folks making this move? In 2015, Apex, NC, (a suburb of Raleigh) was named the best place to live in America by Money Magazine. The magazinecited the charming downtown area, community togetherness, and high-paying tech jobs as reasons why the area called to so many. Money Magazine also mentioned the affordability aspect, and, though it’s been years since Apex received its ranking, none of its winning qualities have changed.

Raleigh and its suburbs remain within reach for the American people, and that hasn’t gone unnoticed by those who migrated out of bigger cities during the initial months of the pandemic. The average price for a home in Raleigh is $382,000, just below the national average of $386,888. Its location and proximity to larger coastal cities also offer residents choices and opportunities for work, living, and traveling.

"Multifamily and industrial remain the commercial market's bright spots," said Gay Cororaton, NAR’s senior economist and director of housing and commercial research. "With wide differences in commercial and apartment rents across metro areas, development will turn to less expensive markets that are closer to the gateway cities.”

And Raleigh clearly fills the role of an inexpensive market with access to gateway cities along the coast, providing a multitude of prospects across the commercial real estate industry — and to its residents, further spurring its population growth as a result.

In 2020, Raleigh ranked as the best city to find a job, according to a report by Glassdoor. The city has been nicknamed the Research Triangle, anchored by the three major universities in the area: North Carolina State University, Duke University, and University of North Carolina Chapel Hill. This wealth of education creates a steady flow of talent for the city’s top industries including financial services, healthcare, and an emerging tech industry.

“[Raleigh] is part of the Research Triangle, which provides a healthy number of job openings in education and feeds the local talent supply with university graduates,” said Amanda Stansell, a senior economic research analyst with Glassdoor. Raleigh added more than 52,000 new jobs in January of 2020, making it the top city for those seeking employment.

And companies have taken notice. Already, big names such as Cisco, IBM, Red Hat, and SAS all call Raleigh home. Notable corporate migrations also include:

  • Phreesia
  • Microsoft
  • Apple

Raleigh’s Commercial Real Estate Growth

North Carolina’s economy has relied heavily on its key industries mentioned above, while Raleigh’s “Research Triangle” continues to grow with developments in research and development facilities. The triangle’s establishment in 1995 has played a foundational role in the city’s fast economic development. The economy’s growth along with Raleigh’s diverse high-value industries has created selling points that can’t be passed up by commercial investors.

"A recovering economy and the near-certain job growth will steadily lead to the absorption of commercial properties," Yun said regarding NAR’s picks for the top commercial real estate markets this year.

With its economy on an upward trajectory post-pandemic, booming population growth, and a prime location for companies and residents alike, savvy commercial real estate investors would do well to keep a close eye on Raleigh this year and beyond.

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