2023 Triangle Market Overview and 2024 Forecast: FLEX

February 16th, 2024

Flex Trends and Outlook Jimmy Barnes NAI Tri Properties

Each year, our industry experts evaluate and review the Raleigh, Durham, and greater Triangle commercial real estate market’s annual performance. We share activity and trends from the market data we analyzed and experienced in 2023 to activities we anticipate in 2024.

In this segment, we interviewed Jimmy Barnes, SIOR, Executive Vice President to share his thoughts on flex trends.

To learn more about other property types click on office, land, investment sales, retail, and warehouse.

What are the key market drivers? How have the different real estate sectors performed?

The commercial real estate market continues to have challenges relating to a slowing economy, rising interest rates, credit tightening, and lingering effects from the work-from-home period. However, the Triangle Market continues to be one of the Nation’s top performers. Population growth, geographic location, transportation, universities, quality of life, and a reasonable cost of living continue to be key market drivers. The office market continues to struggle with historically high vacancy and minimal absorption. Maturing loans combined with high vacancy and rising interest rates will create additional problems for some owners. Meanwhile, there also continues to be a lack of supply of single-family homes, and although the multifamily market has seen an uptick in vacancy, it remains healthy. The industrial and flex sector continues to be the bellwether as activity, although not “white hot” as it was 36 months ago, remains strong.

What was unique about 2023? And were there any milestones for this property type?

Although there was some slowdown in tenant demand, vacancy in the industrial market continued at record lows in 2023, with RTP at less than 2%. Continued spending on consumer goods increased additional demand throughout the year.

Who were the big “winners” in this property type?

Demand for flex and warehouse space remained strong, with 1,771,000 SF absorbed over the last 12 months. Rental rates remained strong. Wigeon Capital at Greenfield Business Park in Garner, NC, has been the winner with the completion of 2 industrial buildings, both 100% leased. Merritt Properties has also been a big winner with their flex project at Merritt Midway in Knightdale, where three buildings have just been completed and are 83% leased. They have several other successful projects in the Triangle area.

Do you see any new emerging trends? Where do you see growth occurring?

Repositioning of office assets continues to be a hot topic. 2024 will determine if this can be successful. US 1 toward Sanford will see good activity considering its proximity to Raleigh and I 540, as will Wendell, with an abundance of population and housing growth.

What do you anticipate for 2024?

Continued strong demand in the industrial and flex markets. The investment market will improve with more transactions than the previous year as buyers become more comfortable with rising interest rates. The Triangle and the Sunbelt region will continue to be a top area for investment.

Where do you see opportunities in your property type for Raleigh, Durham, and the greater Triangle?

Value-add opportunities with older, existing flex/warehouse buildings will be sought after in 2024. New owners will see an opportunity to redevelop/refurbish and create value with higher rental rates.

In our market, what challenges are there in this property type?

Scarcity of well-located industrial land. Available sites have development challenges and can be overpriced.

What factors are you seeing drive CRE decisions in this property type?

Location, pricing, and efficiencies for the tenant and their business.

What do you love about working with this property type?

Decisions about flex/warehouse properties are usually based on certain business items as outlined above like location, price, efficiencies, etc.  These items can be easily defined in each project.


As you look ahead, planning your CRE goals for 2024, let our real estate advisors help guide you with insider market knowledge and experience.

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