This story was written for WRAL TechWire partner CBRE | Raleigh.
COVID-19 has understandably forced many industries to cut back operations or pivot their business models, however, the real estate market in the Triangle continues to thrive with land sales.
While a report for the second quarter of 2020 from commercial real estate company CBRE| Raleigh showed a slowdown in the Triangle’s commercial real estate market, researchers predicted the area would rebound faster than other cities because it entered the COVID-19 lockdown with a shrinking vacancy rate, a rise in leasing rates and a strong growth trajectory.
According to Chester Allen, an executive vice president at CBRE | Raleigh, land sales have remained strong despite the pandemic.
“The coronavirus has impacted so many industries and businesses across the country on many levels. Nevertheless, companies specifically in the industrial and life sciences sectors are still buying land to develop and many people are either migrating to the Triangle from larger cities increasing apartment occupancy or they are an existing resident looking to move into their first home,” said Allen.
It is not to say, however, that everything real estate related has been smooth sailing. As companies continue to contemplate how to operate and shuttered businesses are not able to pay their rents, there has been flux and transition in the market. Allen admitted this is unchartered territory for everyone, but said he remains optimistic about where the market is currently and where it is headed.
“Land and development for single-family residential, multi-family residential apartments, industrial, and life science has continued to sell,” said Allen. “One of the largest drivers of the borrowing right now on the commercial side is for life science properties. Considering the race to find a vaccine for COVID-19 and the large pharmaceutical hub located in and around the Research Triangle Park, we’re seeing interest from investors and developers looking to purchase life sciences properties right now.”
Allen pointed out that even though the majority of workers, children, and families are still homebound for the most part, there are some industries where this isn’t possible or optimal, such as life sciences — an industry the Triangle area is known for.
“Life sciences is one of the essential industries right now — for instance, think about all the people working to develop a COVID-19 vaccine. It would be really hard to do that from home,” said Allen. “Critical items like this have to be developed in a lab. You can’t do an experiment on your dining room table.”
And as more people settle in at home for the foreseeable future, Allen said that people are reconsidering what’s important to them from a residential perspective. People are getting reacquainted with the comfort of their homes and how good it feels to be connected with their homes. As people continue to work from home, homeschool their children, and use their homes and backyards to exercise, entertain and more, people’s preferences are evolving.
“People have begun looking around their homes during these months and are looking into the possibility of moving, remodeling or redecorating,” said Allen. “The residential market is on fire. There is some uncertainty and uneasiness in the economy right now, but the interest rate market is currently low and it’s propelling people to buy.”
As far as commercial real estate is concerned, Allen emphasized that it follows a process that can take time, with land sales representing the first piece in a timeline — so just because land is selling doesn’t mean it will immediately be developed. However, the activity for land sales makes the industry optimistic for the market’s future.
“The wellbeing of people and our economy are both important,” said Allen. “Thankfully we’re able to do what we do and work with clients in a way that keeps people safe, while also preparing for the future. We’re focused on working to get things in place for when all businesses can reopen and the world goes back to normal, whatever that may look like. When it comes to real estate, I am not worried. We are continuing to keep our heads up and work to feed the development pipeline, hopefully encouraging a quick economic comeback.”
This story was written for WRAL TechWire partner CBRE | Raleigh.
