New corporate locations, expansion projects and current development activity are illustrative of a significant momentum underway throughout the Triad. The region boasts excellent connectivity to the country’s most important transportation routes, and is well positioned to capitalize on the growth of e-commerce.
Vacancies remain near record lows. The market’s 21Q1 average vacant available space rate of 4.8% is 460 basis points below the 10-year average quarterly rate of 9.4%.
Leasing demand is driven by retail and manufacturing sectors and focused on sites along I-40 and I-85.
The market realized 495,535 square feet of positive net absorption in 21Q1. Direct asking rents average $3.79 per square foot, representing a 10.8% increase over five years, and 27% increase over ten years. We are seeing the highest asking rents, an average of $5.03, in the Airport submarket, the largest of the Triad submarkets housing 21% of the market’s inventory. Fast-growing Alamance County is also experiencing significant rent growth; an increase of 43% over five years.
New construction and development activity is at a record high. Approximately 583,000 square feet was added to the market in 21Q1, and another 2.1 million square feet is under construction with planned delivery by or before year-end; potentially 3.5 times the 10-year average annual volume of deliveries.
State-supported economic development project wins of 2020 include Canada-based furniture manufacturer, PrePac Manufacturing, which will occupy 260,000 square feet at the Rock Creek Center in East Guilford once the property delivers in 21Q4. Belgian-based Ontex Group will occupy 254,000 square feet at South Rockingham Corporate Park in Stokesdale, also planned for delivery in Q4. Another notable lease transaction was executed by Rhode Island-based textile manufacturer, Cranston Print Works Company, which has signed on to 110,000 square feet at 780 Pegg Road in the Airport submarket, a newly delivered warehouse property built by Scannell Properties.
There have been seventeen individual industrial properties of an average of 280,000 square feet sold in the last 12 months for a combined $202.2 million, or $42.55 per square foot.
Notable property sales include:
- Nestle Purina Petcare Co. purchased the former MillerCoors Brewery in Eden for $18.86 million. Nestle plans to invest $450 million to redevelop the property into a 1.3 million square feet manufacturing plant for pet foods. The facility is expected to be operational in 2022, eventually employing over 300.
- The 1.5 million square foot former K-Mart distribution center situated on 94 acres on Penry Rd in East Guilford, was sold to NFI Industries for $74 million, or $47.84 per square foot. NFI Industries, a third-party supply chain solutions provider, had been leasing the facility in its entirety since 2016. The seller, a joint venture between Pacer Partners and Drake Real Estate Partners, originally acquired the property in March 2019 for $44.75 million.
Notable land sales include:
- Chick Fil A purchased 79 acres on Park Center Drive in Mebane for $3.9M, or $49,500 per acre. Alamance County earned the project win after beating out Ohio, Indiana and Texas. Chick Fil A’s planned $52 million investment includes the construction of a new 182,000 square foot facility to be used for both cold storage and vehicle maintenance. The distribution center, which will employ 160, will support 175 restaurants regionally.
- FedEx purchased a combined 25 acres on Old Greensboro Road in Kernersville for $4.98 million, approximately $19,904 per acre. The land is adjacent to the existing FedEx 493,000 square foot distribution facility at 1544 Old Greensboro Road. No plans for expansion have been announced.
Sources: Costar Group, Real Capital Analytics, Greensboro-High Point Economic Development, Economic Development Partnership of North Carolina, NC Commerce
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