Flex Trends and Outlook

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 2024 to activities we anticipate in 2025.

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 2024? And were there any milestones for this property type?

The flex market continued to perform in 2024 with positive absorption and single digit vacancy. Rental rates reached record highs in the $15-$20 PSF range.

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

Eastern Wake County emerged as one of the strongest markets with year ending 2.3% vacancy and 125,000 SF of positive vacancy for the fourth quarter. New construction was the winner. Merritt Properties and Midway in Knightdale benefitted here.

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

Outdoor storage needs continue to be on trend and properties able to provide this to tenants will have an advantage. Growth will continue in Eastern Wake County and southeast and east on I-40 and highway 70 as there are several prospects underway in this submarket.

What do you anticipate for 2025?

For 2025 expect continual activity in all submarkets and rental rates to level off.

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

Opportunities exist for new development south of Wake County, down US 1 toward Sanford. Any useful location will be successful if numbers can “pencil out.”

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

Land costs combined with construction costs continue to be a challenge for this product. Further the lending environment is creating challenges as well.

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

Location and pricing will continue to drive tenants’ decisions in the product category.

What do you love about working with this property type?

The property type offers great flexibility for tenants, and most tenant needs are different.

As you look ahead, planning your CRE goals for 2025, let our real estate advisors help guide you with insider market knowledge and experience.

Contact info for all our professionals can be found at
https://www.triprop.com/about/team/

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https://www.triprop.com/category/market-reports/

2024 Triangle Market Overview and 2025 Forecast: FLEX