Life science properties are hot in this market, which is experiencing explosive population growth.
According to the 2020 U.S. Census, the Raleigh-Durham area of North Carolina (also known as the Triangle for the three cities of Raleigh, Durham and Chapel Hill) ranks as the second-fastest-growing large metro area in the country. From 2010 to 2020, the region’s population grew by 23% to roughly 1.42 million people.
Along with that skyrocketing growth comes surging demand for all classes of commercial real estate. The 291 members of NAIOP Raleigh-Durham play a key role in meeting that demand. The chapter was recently named a Chapter of the Year in NAIOP's Chapter Merit Awards. Chapter President Michael Blount of Wilson | Blount Development spoke to Development magazine about CRE trends in the Raleigh-Durham region.
Development: How are the market conditions for member companies in your area?
Blount: Market conditions are exceptional across the board for the Research Triangle area. Bolstered by three major research universities (the University of North Carolina, N.C. State University and Duke University), a state capital and the world-renowned Research Triangle Park, our area is thriving. We are experiencing dramatic inbound migration, and our area is consistently ranked at the top for quality-of-life metrics. The Triangle region is well-educated, affordable, has great health care, excellent weather, and we have the luxury of being able to quickly drive to the beach or the mountains to get away.
Companies are taking notice across the country. A multitude of large employers, including Apple (3,000 jobs), Google (1,000 jobs), FujiFilm Diosynth (725 jobs) and Amgen (350 jobs) are opening facilities in the area. The Research Triangle Park and surrounding areas are currently ranked No. 4 nationally by JLL for potential growth in the life sciences industry. There is insatiable demand for biomanufacturing and R&D space, which has spurred inbound capital seeking investment opportunities at an unprecedented rate.
Our development community is actively working to construct new supply across all product types. Industrial product is increasingly preleased before buildings are completed. Office supply is healthy and being absorbed steadily while new construction projects are delivered. Multifamily product is being delivered at a previously unseen rate while rental rates continue to rise. Even new retail product is succeeding. Contractors, designers, brokers and other CRE-related professionals are very busy with new project activity. We are all working to help build on the fantastic growth currently driving our market.
Development: What are the challenges you’re facing in either the business or regulatory climate in your area?
Blount: Our primary challenges are a symptom of our own success. We’re currently experiencing a severe lack of housing, partially because of increased population growth, but also because we are slow to create new supply. Home values are increasing quickly and could erode the relatively inexpensive cost of living we enjoy. Developers complain about the slow path to project approval, but that slow review is often attributed to the sheer number of projects in the review process. Our municipalities are searching for trained labor to fill vacancies to help relieve this load.
The highly educated labor pool that is a major draw for high-tech firms entering our market can also present a big challenge. We have had so many announcements from large employers that it’s hard to imagine our universities producing enough talent to meet the demand over the long term. We are lucky to have a strong community college system that is making big investments to help fill this gap.
Development: What are the big opportunities in commercial real estate in your area right now?
Blount: The momentum in life science development is obviously a focus for developers and investors in our region. We are leading technological innovation but seem to be in the early stages of our maturation as a life science market. Our state has long pursued a large auto manufacturer, and our penchant for innovation may be our means for landing one. Toyota recently announced a major EV battery plant to be built just west of the Triangle near Greensboro. We all hope that we’ll have the opportunity to build the cars of the future in our area. North Carolina has a proud history of manufacturing that largely disappeared when textile and furniture jobs went overseas. We have an attractive business climate that could allow us to lead in manufacturing again.
We can also address issues that could foster even more growth ahead. We have struggled to properly invest in a regional transit system. We are in the process of widening and expanding major roadways but always seem to be playing catch-up to new growth. Our leaders recognize the need to think toward the future.
Development: What are some of your chapter’s legislative priorities?
Blount: We want to continue policies, particularly economic development initiatives, that have allowed us to compete for major employers. CNBC recently ranked North Carolina No. 2 in their Best States for Business in part because of our legislature’s prioritization of pro-business policies. Our local chapter is currently focused on House Bill 291, which seeks to speed up the development-review process noted above. It will establish minimum timelines for approval by allowing municipalities to utilize private industry for plan review. A similar bill was recently passed in Georgia and is currently in review in Florida. We must accelerate plan review times to have a chance of keeping up with this exceptional growth.
Development: Education is an important part of NAIOP’s mission. Have there been recent educational sessions specific to your chapter recently?
Blount: Our chapter focuses on education as a central part of our programming. We have held several programs for members specific to innovative projects and important issues. Our Developing Leaders group is especially active in providing mentoring programs throughout the year where veterans of our development community provide insights for those ready to learn. We’re currently sponsoring several educational programs for the UNC Kenan-Flagler MBA Real Estate Club.
We’ve also invested in an important educational initiative for our region. Our chapter has pledged a $125,000 commitment to North Carolina Central University’s new MBA program. The MBA concentration in real estate is the first of its kind offered by a historically black college or university among the 101 HBCUs in the U.S. Objectives of the program include: graduating 20-plus MBAs specializing in real estate each year, graduating business students who have real estate coursework and real-life experience, execute impactful community service projects involving faculty and students through the Real Estate Center, and establish strong relationships with state, national and international commercial real estate programs.