Think Positive

May 25, 2011

Jimmy Barnes, SIOR, President of NAI Carolantic Realty

New figures were recently released by the NC Employment Security Commission which indicated the state added 2,900 nonfarm jobs during April.  In addition, the state’s unemployment rate held steady in April, remaining at 9.7 percent for the second month in a row.  Not tremendous growth, but at least on the positive side especially considering the disastrous job loss we had in 2009.

Along with this news, the North Carolina Department of Commerce released information that it has been working on 149 new projects with 74 actual projects announced.  Over 7,000 jobs have been created with a capital investment of $1.09 billion between January and May, 2011.

We can also celebrate some local good news with the Lenovo announcement on May 20th that it had signed a contract with Affiliated Computer Services, Inc, a Xerox Company, as part of an initiative to expand its Global Services business. The agreement will create approximately 300 new jobs in the Research Triangle region.

Oh, and I congratulate our hometown boy, Scotty McCreery who is a shining light for the Town of Garner and the State of North Carolina.  Way to go Scotty!

Just a few of the reasons why we have a lot to be thankful for living in North Carolina, and specifically the Triangle region.  Please let us know if we can be of assistance to you and your firm.

Advertisements

Triangle Industrial Market Update

March 18, 2011

At the Annual CCIM Forecast luncheon this past Wednesday, I gave an update on the Triangle industrial market to approximately 300 attendees.  My presentation included a historical look back to 1996 showing vacancy trends over the years with the most recent increase starting in 2006 with 12.5% vacancy to today with 20.8% vacancy.  Sublease space makes up a large portion of the vacancy with over 800,000 square feet on the market at the end of 2010.  It is then no surprise that there has been no absorption and in fact negative absorption since 2008. 

Ed Brown, SIOR, CCIM, NAI Carolantic Realty

The three largest submarkets for leasing activity are the Research Triangle Park, East Wake and North Raleigh/US 1 corridors. Given the high vacancy numbers, one would expect construction to be down and in fact, there was little to no speculative building.  Construction was limited to a few build to suits. Rental rates have been flat since 2000 with most Class A buildings hovering around $4.00-$4.50 per square foot depending on location and ceiling height.  Many companies have taken advantage of current market conditions and traded up to lower their cost to a newer and/or more efficient building.  Industrial building sales were generally in the $41 to $46 per square foot range, and land sales were anywhere from $29,000 per acre in outlying areas, to $100,000 to $200,000 per acre for prime locations.

Today, we see the most industrial market activity in the following sectors: printing, medical, food, electronics and furniture.  I expect our negative absorption will continue through 2011 with several tenants downsizing or moving out of buildings in Keystone Park, Imperial Center, Tri-Center South and Tri-Center North.  Construction costs continue to escalate especially with increasing fuel prices.  Steel has increased 16% this year and concrete is due to increase to $5 per yard in April.

For the future, I expect industrial vacancy levels to be up again this year, and absorption to remain negative.  Rates will be stable and there will be no speculative construction.  Land values will be down, and construction costs will rise.  But, job growth…the engine that drives our economy, should improve which can only help the overall commercial real estate market.

Please let me know if you have any questions or if I can be of service with your real estate needs.


2011 Will Be The Year

February 8, 2011

Jimmy Barnes, SIOR, President of NAI Carolantic Realty

2011 will be the year we begin the recovery for a successful 10 year run. If we can get 5 strong years out of a 10 year real estate cycle, we will have been successful. Historical numbers show we did just that in the 80s, 90s and from 2000 to 2010 and we expect the same trend as we head to 2020. So plan on 5 strong years and work, plan and prepare to make the other 5 ok and not awful. 

We continue to have serious challenges with $1.4 trillion in National commercial debt coming due between 2010 and 2014.  Commercial owners are returning keys to banks (you may have heard the term “jingle mail”), and employment rates that are not expected to improve much this year.  Past downturns have been based on over building, but this downturn is clearly Global, based on over leveraging and record setting job loss. 

But there’s not a better place to be in the country. Our market, as it has in the past, will recover more quickly than other markets, and our State and region give us reason to have confidence in the recovery.  This year expect: 
• Vacancy rates to start trending down
• Could be a supply problem is some submarkets
• Rental rates to hit bottom
• Absorption to remain flat
• No speculative construction anytime soon
• Investment sales up another 40 percent, and
• Land prices to now reflect true values.


Emerging Perspectives/Part III

January 31, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following  ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is the Part III and the final portion of his remarks.

“There are many who will try to convince us that ‘taking our country back’ means taking it backwards.  And nothing is further from the truth.  Yes, we want a return to our founding principles, to personal responsibility, statesmanship, and fair taxation. But, believe me, the solutions to the mess we are in now, require that we look to the future.  Specifically, to take a hard look at our schools and universities and work for fundamental changes in the ways we are teaching our children – especially when it comes to teaching the history of this great country.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

Unfortunately, many of us will not be around to solve the problems we’ve created.  I believe that at this point the best legacy we can leave behind . . . something we can accomplish . . . is to get our education system back on the right track. 

For example, at the high school and elementary level, you have the efforts of Bob Luddy, founder and president of CaptiveAire Systems.  Bob has a passion for education, and he’s put his enthusiasm, time and money into creating Franklin Academy, Saint Thomas More Academy, and, in 2007, Bob opened Thales Academy in Raleigh, the first in a network of private community schools offering a high-quality grammar school education at low-cost tuition.  Franklin Academy and St. Thomas More are both nationally ranked near the top of all secondary schools.

We have charter schools like Raleigh Charter High School.  It was founded by a Board of Directors made up of business professionals, experienced educators, and college professors.  It is a community school, with a diverse student population and parents dedicated to seeing that their children succeed in a disciplined atmosphere that promotes real learning.

There are many new perspectives emerging on the education scene.  Students and parents have new opportunities, and we need to provide them with even more. We, as business and community leaders, have a responsibility to get involved.  We need to work with our public school system to help them make changes to better prepare our children to compete and succeed in the next century.

If we are going to get our country back, the best place to start is getting our schools back.  And by that I mean getting control away from those who object to the Pledge of Allegiance, and those who don’t believe it’s important that our children learn about the real heroes of American history.  We need the next generations, to appreciate the sacrifices that have made possible all of the freedoms we too often take for granted.  

I’ll close with this quote:  “All tyranny needs to gain a foothold is for people of good conscience to remain silent.”  Thomas Jefferson

We have been silent long enough.”


Emerging Perspectives/Part II

January 25, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is Part II of his remarks.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

“My parents, and their generation, never complained to the government, and never asked for anything but an opportunity.  They rolled up their sleeves and went to work, and they made the most of any opportunity that was afforded them.  They belonged to a community, and that community looked out for one another. There was nothing exceptional about their circumstances, or their resolve to raise a family with a deep sense of personal responsibility and a respect for this country and what it stands for.  They were a typical North Carolina farm family of the 1940’s and Fifties. Their values were hard work, and thrift, and belief in God and family. Their values had not changed one bit from those of our Founding Fathers.

This was not so long ago.  A single generation, in fact.  So where did we go wrong?  And more importantly, what can we do to get our country back again?

First, bring back statesmanship . . . . in Washington DC, in our state capitals, and in our city and county governments as well.  We need to stop electing politicians who know how to campaign but know nothing about governing.  We need to quit the earmarks and eliminate the gerrymandering that creates congressional districts that look like somebody spilled a bottle of ink on the map. Both parties have been guilty of the same thing. 

Second, get rid of bloated government.  Lately it seems that the only jobs being created have been government jobs. On the day that the Federal government employs fifty percent of the population, plus one person, then our democracy will cease to exist. 

Third, bring integrity back to our electoral process.  The right of every legal, registered citizen to vote must be protected.  And we must recognize that if people who have not earned the franchise are allowed to vote, that hurts the legitimacy of the whole democratic process.  Bring back the process where voters need to show their voter registration card, or some other form of official ID.  Right now it’s too easy to cheat.  In fact, the instructions on how to do so are published on the Internet.

Finally, we’ve got to fix the relentless taxation that seems to be aimed at punishing those who make the most of their opportunities and achieve something in our society. 

In some twisted fashion the achievers have become the enemy, to be seen simply as a source of tax money that is then re-distributed.  And when the bill comes due for this incredible level of deficit spending, who do you think is going to be asked to pay it? 

(Part III, the final portion of Steve’s remarks will be posted next week.)


Emerging Perspectives/Part I

January 16, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is Part I of his remarks.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

“Last year, I talked about essentials to continued growth: the importance of funding our flagship universities to maintain our competitive edge; educating our residents to establish a metropolitan agency to plan for infrastructure, water, sewer, and public services providing efficiency and economies of scale; and finally asking for a good-faith effort between commercial lenders and their mortgagees to extend performing loans and avoid making calls that trigger domino effects throughout the local economy.

Today, I still hold to my recommendations from last year, but I think there is more at stake right now.  I believe our leaders in Washington are playing a dangerous game. Perhaps they should read again what Thomas Jefferson reminded his fellow citizens in his First Inaugural Address, that happiness and prosperity rested upon,

“A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.”  This, he thought, was “the sum of good government.” Thomas Jefferson

Today, government borrowing has created a staggering national debt – now an incredible 94% of GDP. That not only threatens our stability now, but it will be a burden to our children, and our children’s children.  The so-called stimulus did nothing, except create problems we’ll encounter further down the road.  Our national debt has increased by 86%. Unemployment is stuck at more than 9%, and we all know the real number is much, much higher than that.

Obviously our local economy remains at the mercy of decisions made in Washington.  So tonight I’m going to take a broader perspective, and talk to you about our legacy as a nation, and then focus in on what I perceive to be our best hope for getting out of this situation – a greater involvement by all of us in the education of our children. 

We need to return to teaching American history in a way that will renew their appreciation for this country’s greatness and its unique position as a beacon of freedom in the world….by teaching our children the principles put in place by our founding fathers.”


Lease Near the Airport Without Getting Your Wings Clipped

November 29, 2010

Some of you may have heard the expression, “Lease Near the Airport Without Getting Your Wings Clipped”.  This phrase has been used by Southport Business Park located one mile south of I-40 on Aviation Parkway in Morrisville and just minutes from RDU International since the late ‘80s.   The phrase accurately reflects leasing space in the most professional business park near the airport, offering the best location for the best value in the RTP area…and it still holds true today.

Southport Business Park

 

Southport Business Park is a 114-acre office, research and development multi-purpose business park containing seventeen (17) buildings with approximately 900,000 square feet.  There are three (3) office lots remaining for future development estimated to accommodate an additional 200,000 square feet.  Southport’s parent company is GID Investment Advisors LLC (GID).

Founded in 1960, GID owns 4.7 million square feet of office, flex and industrial space in sixteen business parks located in nine states. Throughout 23 years of flex/industrial park development and management experience, GID has demonstrated a commitment to providing tenants a quality product at an exceptional value. In total, GID owns and manages real estate with an estimated value of $5.3 billion that also includes 915,000 square feet of suburban office property and over 25,000 apartment homes spanning 19 states. GID participates with numerous public pension funds and a Fortune 100 pension fund for the acquisition of flex and office commercial properties and multi-family apartment properties.

GID’s philosophy is that well-maintained properties with exemplary customer service, and intensive management will provide a desirable location for tenants. Some of Southport’s larger tenants include: Catalent, Siemens, Gilmore, Hexatech, Semtech and Campbell University.  The park has only a 4% vacancy rate in a market hovering at 18.88%.  This is a testament to the management and ownership of Southport. 

Dee Creech Osborne, SIOR, NAI Carolantic

Dee Creech Osborne, SIOR and I are the leasing agents for the park and work with many types of firms who want easy access to I-40 and a competitive lease rate….thus the saying:  “Lease Near the Airport Without Getting Your Wings Clipped!”  Let us know if we can be of assistance.

John Webster, NAI Carolantic