Office 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 Ryan Gaylord, CCIM, SIOR, Executive Vice President of Corporate Services Division to share his thoughts on office trends.

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

What was unique about 2024? And were there any milestones for this property type?

At a macro level, 2024 was an election year that presented some additional uncertainty leading up to the election and afterward. As customary in any election cycle, onlookers attempted to predict the impact those elected officials might have on the greater real estate market. At a micro level, the Triangle continues to see year-over-year improvement in in-office attendance. The downtown areas (Raleigh and Durham) are showing some improvement but still have a long way to go before I would consider them fully recovered, at least from an office attendance perspective.

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

The big winners are landlords who heavily invested in creating best-in-class amenities within their buildings and those located in mixed-use projects with walkable amenities.

Do you see any new emerging trends?

The size range with the most deal velocity continues to be 2,500-10,000 SF range users. Flight to quality continues to be prevalent across the market. In many cases companies are reducing their footprints come renewal time, which helps them to rationalize the higher per square foot cost of the newer, nicer office buildings. We are still continuing to see the well-amenitized and located office buildings thrive while their B and C counterparts struggle.

What do you anticipate for 2025?

I expect Tenant deal sizes to continue to grow, but it’s all relative. I think we are a long way off from seeing the number of 100K+ SF users that existed in 2019 and earlier. The good news is there are some, so that’s encouraging.

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

Good concession packages are still available, particularly for larger Tenants that are out in the market now or have leases rolling within the next few years. That said, with controlled supply, no new office starts, and demand continuing to improve, the true Class A/premier space will start filling up. Once that occurs, those larger users might have limited relocation opportunities to consider. So, the best move is to start the analysis sooner to ensure sufficient runway to explore all options.

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

While overall deal activity is improving, many very large blocks still need to be backfilled. Also, a handful of single-tenant buildings don’t easily multi-tenant.

Construction costs also continue to make deal-making challenging. One winning formula that several landlords have been rolling out is spec suites. This allows landlords to spread their construction costs across several suites to create economies of scale and removes the hassle of Tenants dealing with a full build-out. Those spec suite investments are proving to be a successful strategy.

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

Companies are focused on the employee experience in their space. If it’s just plain office space, that doesn’t help to motivate team members to come in. So, companies are really trying to create a sense of place and community that encourages team members to want to go into the office. Also, after getting those employees in the office, making it convenient and easy for them to have accessibility to food options, gym, apartments, hotels, etc, are all important in driving employees back to the office.

What do you love about working with this property type?

Each client has unique challenges that must be overcome. The opportunity to come up with creative solutions to those challenges is what makes every day unique and interesting.

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

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2024 Triangle Market Overview and 2025 Forecast: OFFICE