• 52 Missing Middle subdivisions submitted for approval
• 195 Accessory Dwelling Units (ADU) applications
• 98 townhouse unit applications

RTP 3.0 is a visionary initiative aimed at transforming North Carolina’s Research Triangle Park (RTP) into a more dynamic, mixed-use environment over the next 50 years. Historically, RTP has been a sprawling office park spanning 7,000 acres across Durham and Wake counties, primarily dedicated to research and development facilities. The RTP 3.0 plan seeks to evolve this landscape by integrating residential, retail, and entertainment spaces, thereby fostering a vibrant community where people can live, work, and play.

A central component of this transformation is the development of **Hub RTP**, envisioned as a downtown district within the park. This ambitious project includes up to one million square feet of office and life sciences lab space, 38,00 square feet of experiential retail, 1,200 multifamily residential units, 279 hotel rooms, and 16 acres of green, open space. The goal is create a walkable urban center that enhances connectivity and community engagement within RTP.

To facilitate these changes, RTP companies approved covenant modifications with a 96% majority in early 2025, marking a significant step toward reimagining the park’s development framework. These amendments pave the way for introducing mixed-use developments and residential options within RTP’s boundaries.

The RTP 3.0 initiative also emphasizes sustainability and inclusivity, aiming to create a “15-minute city” where essential services and amenities are accessible within a short walk or bike ride. This concept addresses future housing and transportation challenges, ensuring RTP remains attractive to companies and talent in the evolving economic landscape.

Overall, RTP 3.0 represents a strategic effort to modernize Research Triangle Park, enhancing its role as a global innovation hub wile providing a more integrated and living community for residents and professionals alike.

Sources indicate that industrial building sales in the region are occurring frequently and at increasingly higher prices. For instance, a fully-leased warehouse in Raleigh recently sold for $14.4 million, almost triple its previous sale price. This trend suggests that the demand from manufacturers is driving up property values in the industrial sector, making it an attractive investment opportunity.

The manufacturing boom’s impact extends beyond industrial real estate. The influx of new workers associated with these manufacturing facilities is creating a ripple effect across other CRE sectors.  The increased demand for housing is fueling the need for more residential real estate development, as seen in the numerous reports of new apartment and townhome projects in areas experiencing manufacturing growth, such as Wilson, Hillsborough, and Cary.   The growing population of workers will also drive demand for retail spaces, restaurants, and entertainment options, potentially benefiting those commercial real estate sectors.  Last, the expansion of supporting industries, such as logistics and supply chain management, further contributes to the demand for various types of commercial properties.

While the outlook for CRE growth in North Carolina appears promising, several factors could influence the market’s trajectory. The ongoing workforce shortage in the state, highlighted by the competition for skilled labor among companies like Wolfspeed and Toyota, could impact the pace of manufacturing expansion and, consequently, the demand for CRE. The broader economic climate, including interest rate fluctuations, inflation, and potential recessionary pressures, will also play a role in shaping the CRE market’s future.

The Federal Reserve’s decision on September 18th to lower the target range for the federal funds rate by half a percentage point has been met with optimism by many in the commercial real estate  industry. This rate cut, characterized as more aggressive than anticipated, is expected to provide a much-needed boost to the industry following a period of significant challenges.

Here’s a look at the potential impact of interest rate cuts on the CRE sector:

• Easing the Credit Crunch: The aggressive interest rate hikes implemented by the Federal Reserve beginning in 2022 to combat inflation significantly impacted CRE dealmaking. High interest rates made it difficult to secure financing for buying, selling, refinancing, or developing properties. The recent rate cut, along with the possibility of additional cuts in the coming months, is anticipated to unlock liquidity in CRE financing. This renewed access to capital could potentially revive deals that were stalled due to the high cost of borrowing.

• A Boost to Certain Sectors: While the overall impact of the rate cuts is positive, certain CRE sectors are expected to benefit more than others.  Multifamily stands to gain significantly from the recent rate cut, as many multifamily loans are structured with floating rates. Lower rates could translate into lower monthly payments for borrowers and potentially stimulate investment activity in this sector.  Industrial real estate is also expected to benefit from the rate cuts. Strong fundamentals within the industrial sector, driven by factors like the growth of e-commerce and near-shoring, suggest continued demand in this area, even in a fluctuating interest rate environment.  The office sector, on the other hand, faces significant uncertainty. High vacancy rates, fueled by the rise of remote work, coupled with concerns about the long-term viability of traditional office spaces, make this sector less likely to experience immediate relief from the rate cuts. Experts believe that more significant changes, beyond interest rate reductions, are needed to address the fundamental challenges facing the office market.

It’s important to note that while the rate cuts are viewed as a positive step, they are not a cure-all for the challenges facing the CRE industry.   Delinquencies Remain a Concern. Despite the recent rate cut, CRE loan delinquencies continue to rise. The gap between the interest rates on existing loans and those on new loans remains significant, posing refinancing challenges for some borrowers. This difference in rates is unlikely to be fully bridged by a single rate cut, suggesting that some level of distress within the market will persist.

Broader economic factors, such as inflation, insurance costs, and real estate taxes, continue to exert pressure on the CRE market. These factors, combined with existing occupancy issues and cash flow concerns, can create significant challenges for property owners, particularly those with lower-quality assets or those facing upcoming debt maturities.

While the long-term effects of the rate cuts are yet to be fully realized, the overall sentiment within the CRE industry is cautiously optimistic.  The rate cut is seen as a crucial first step in potentially shifting the industry toward recovery by mid-2025. Experts suggest that it may take time for the full impact of this and subsequent rate cuts to be reflected in market activity. However, it’s crucial to acknowledge the significant distress already present in the market. While the rate cuts offer some relief, a full recovery will likely necessitate a combination of factors, including sustained economic stability, ongoing adjustments to property valuations, and a willingness from both borrowers and lenders to navigate the evolving CRE landscape.

Today, the Regional Transportation Alliance (RTA) business coalition hosted an event at the Umstead Hotel & Spa in Cary to welcome Pedro Heilbron, CEO of Copa Airlines.

Copa Airlines will launch international service from Raleigh-Durham International Airport to Panama City in June of this year. The airline has the biggest international network among Latin America-based airlines. According to the Condé Nast Traveler 2023 Readers’ Choice Awards, Copa Airlines is noted as being the most punctual airline in the Americas and the only carrier from the Western Hemisphere to feature among the top 15 international airlines in the world. Copa Airlines services 85 destinations in 32 countries in North, Central, and South America and the Caribbean, linked via the Hub of the Americas® in Panama City, Panama.

Heilbron spoke to the growth and transformation of the airline and the growing Raleigh/Durham market. His hope for Copa’s new route through Raleigh-Durham is that it will “bring Latin America much closer to the Research Triangle area, strengthening business and cultural ties between our regions. We also hope this new route provides the opportunity for more American tourists to visit Panama and enjoy the wonders our country has to offer.”

Michael Landguth, CEO of the Raleigh-Durham Airport Authority, Ellis Hankins, Chair of the Raleigh-Durham Airport Authority Board, and other leaders from RTA were also in attendance. York is proud to be a sponsor of the RTA and continuing to connect with both the local business community and regional leaders.

City of Raleigh has selected Omni Hotels to develop a convention hotel in downtown.

The new hotel is anticipated to include 550 guest rooms and 55,000 SF of meeting space. The hotel will also feature several food and beverage outlets, a rooftop pool, a signature Mokara spa, and a fitness center.

Omni posted on their website that the property will be built on an over one-acre lot across from the Raleigh Convention Center and Martin Marietta Center for the Performing Arts at the end of Fayetteville Street. It is expected to open in 2027.

A recent report released by Wake County Economic Development lists 21 companies collectively investing over a quarter billion dollars and creating nearly 1,200 jobs during the reporting period of October 1, 2022 – June 1, 2023.  Below are the largest “new jobs” creators from the report:

COMPANY                                       INDUSTRY                                                       NEW JOBS

View the full report to learn more about new jobs and companies investing in Wake County.

Last month, Oak City CRE (Commercial Real Estate) asked a group of Raleigh brokers to share their guesses about where the Raleigh market is going to be in 3Q 2023. 24 brokers responded. That survey resulted in the first Raleigh CRE Crystal Ball Report. This unique report is meant to try and look into the future.

The brokers project a tenant market for leasing activity and a buyer market for asset sales in 3Q 2023. For the leasing market, the report predicts that office will be a strong tenant market and industrial will be a strong landlord market. For the asset sales market, the data shows that office will be a strong buyer market and industrial will be a strong seller market.

The report also includes a Leader Board that ranks brokerage firms by the number of qualified submissions they send in for the survey. York Properties tied for 5th place.

Oak City CRE is an online platform created by Jed Byrne to connect and identify any projects he creates related to Raleigh and North Carolina. In addition to a blog, A/E/C job board, and upcoming events page, Oak City CRE offers the Top Five, a weekly real estate newsletter focused on development in Raleigh that curates a list of the top five pieces of CRE content that Jed finds. Jed also runs the DirtNC Podcast, where he talks about the “places and spaces of North Carolina and the people who make them awesome.”

Read the full report here: 3Q2023 Crystal Ball Report Final.