North Carolina stands at a critical crossroads when it comes to housing and workforce stability. A sweeping new study forecasts a staggering gap of 764,000 housing units by 2029, underscoring the depth of the state’s housing crisis. This shortage directly threatens North Carolina’s business community, as a lack of affordable homes is driving workers farther from jobs—making it harder for companies to attract and retain essential staff like teachers, healthcare workers, and first responders.​

The report notes that supply gaps affect all income groups, but middle-class and entry-level buyers face particular challenges. Only 0.8% of North Carolina homes are currently available for purchase, dramatically below the healthy 2-3% market standard, with just 2,324 homes statewide listed below $200,000. This limited availability and high pricing have raised the median age of homeowners to 61, compared with just 31 in 1981, reflecting the growing difficulty younger generations have in finding attainable housing.​

Recognizing this urgent need, the NC Chamber and key industry groups—including NC REALTORS® and the North Carolina Home Builders Association—are rallying behind a revised version of Senate Bill 205. This pivotal legislation strives to modernize zoning, promote affordability, and foster collaboration between developers and local governments, aiming to protect local authority while addressing the root causes of the shortage. By investing in both new construction and preservation strategies, and advocating for policy solutions like SB 205, North Carolina is taking bold steps to ensure that its workforce and business climate remain strong and competitive.​

As communities and companies look ahead, bold housing reform isn’t optional—it’s essential for building a prosperous future where opportunity is within reach for everyone.​

At York Properties, our 110-year tradition of service, expertise, and integrity continues to guide how we help businesses succeed in the Triangle’s dynamic commercial landscape. As a fourth-generation, family-led CRE firm, we know the success of our clients—and our region—depends on a stable workforce and vibrant community. While our company’s focus is on retail, office, industrial, and asset management, we’re committed to providing strategic advice, data-driven solutions, and deep local insights to help our clients navigate evolving market challenges and achieve great outcomes. Because at York Properties, our goal isn’t to be the biggest—it’s to be the best partner you have in commercial real estate.

Sources:

• North Carolina Housing Finance Agency: “New Research Shows North Carolina Has a 764,000 Unit Housing Gap” (March 2025)
• NC Chamber: Statewide Housing Study and Policy Statements (2025)
• Carolina Journal: Coverage on housing affordability and related legislative developments (2025)
• North Carolina Home Builders Association statements on legislative support (2025)

North Carolina’s Research Triangle has long been defined by the strength of its universities—institutions like Duke University and UNC-Chapel Hill that draw billions in federal research funding. This investment fuels not only academic discovery but also the region’s economy, workforce, and real estate development.

However, that symbiotic relationship is under pressure. Recent reductions—and the looming threat of further cuts—to federal research funding are beginning to reshape the landscape, with ripple effects across employment, innovation, and the commercial real estate (CRE) market.

A Strained Research Ecosystem

Universities in the Triangle are already feeling the impact. Since January, UNC-Chapel Hill has seen the termination of several federal grants, resulting in the loss of funding for the equivalent of 77 full-time employees. A mistakenly sent federal email revealed over 150 grant terminations, affecting institutions including UNC and Duke. Meanwhile, proposed changes to the indirect cost rates universities can recover from federal grants have heightened concerns. For example, capping these reimbursements at 15%—down from UNC’s negotiated rate of 55.5%—would significantly diminish the funds universities use to maintain research facilities.

In anticipation of these funding challenges, the UNC Board of Trustees has set aside $50 million to offset potential losses. Even so, total federal grant funding at UNC for fiscal year 2025 is already tracking below last year’s levels.

This uncertainty has already altered university planning. A prominent example: UNC-Chapel Hill paused its $228 million translational research building—a 174,000-square-foot project meant to attract top-tier talent and catalyze commercial innovation. The decision underscores a broader trend: fewer capital projects, delayed leases, and a general slowdown in research-related development.

Broader Impacts on CRE and the Regional Economy

• Office, Lab, and Flex Space: Universities and their spinoffs are major tenants in these categories. As funding slows, so does the demand for new space—impacting vacancy rates and lease prices.

• Startup Ecosystem: Life sciences and tech startups often emerge from university research. Cuts in funding may stifle this pipeline, dampening demand for coworking and incubator spaces.

• Mixed-Use and Residential Development: With fewer research-related jobs and graduate students, demand for urban housing and mixed-use developments could also decline.

• Investment Caution: The uncertainty may cool investor enthusiasm, leading to slower construction timelines and potential declines in property values, particularly near university campuses and RTP.

According to estimates, North Carolina could face an economic loss of $668 million from NIH funding cuts alone, with Durham, Orange, and Wake counties bearing the brunt.

Navigating the Road Ahead

While the full impact remains to be seen, the connection between federal research funding and real estate is clear. As universities adjust, CRE professionals will need to do the same—reassessing development strategies, monitoring public funding trends, and remaining flexible in how space is built and used.  In a region where innovation has long been the engine of growth, staying attuned to these shifts will be key to future success.

Whether you’re navigating changes in the lab market, evaluating investment opportunities, or managing space near a university, our team is here to help you adapt with insight and confidence.

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Sources:

Triangle Business Journal. (2025, May 29). UNC pauses $228M facility amid funding woes.  [Subscriber content]  https://www.bizjournals.com/triangle/news/2025/05/29/unc-pauses-translational-research-building-funding.html

WUNC. (2025, February 10). Trump order cuts research funding for NC universities, raising concerns about jobs and innovation. WUNC. https://www.wunc.org/education/2025-02-10/trump-nih-order-research-funding-nc-universities

Schenke, J. (2025, April 29). Universities put developments on ice as Trump cuts billions in research funding. Bisnow. https://www.bisnow.com/national/news/construction-development/college-headline-here-129169

By Brian Wallace, Broker | York Properties, Inc.

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The commercial real estate landscape continues to shift, and one trend has risen to the top: the flight to quality. Across both office and industrial sectors, tenants are gravitating toward modern, amenity-rich, and sustainable properties. This evolving preference is influencing leasing activity, fueling renovations, and reshaping investment strategies.

What Is the “Flight to Quality”?

“Flight to quality” refers to the growing tenant demand for newer, well-located spaces that offer top-tier amenities and sustainability features. In the post-pandemic era—and amid economic uncertainty—companies are prioritizing environments that promote employee well-being, productivity, and long-term efficiency.

Hallmarks of high-quality properties include:

• Modern construction or recently completed renovations
• Flexible, open layouts that support hybrid work
• Advanced HVAC and air purification systems
• High-speed internet and smart building infrastructure
• On-site amenities such as fitness centers, lounges, and green spaces
• Sustainability certifications like LEED, WELL, or ENERGY STAR

Office Market: Smaller Footprints, Higher Expectations

While remote and hybrid work models remain the norm, companies are increasingly intentional about the office spaces they do lease. Many are reducing their square footage but elevating quality to entice employees back on-site.

Top office tenant priorities:

• Touchless entry, smart access, and integrated tech
• Natural light, biophilic design, and wellness rooms
• Collaborative workspaces and designated quiet zones
• Proximity to public transit, restaurants, and retail

Class A office buildings with robust amenities, upgraded systems, and strategic locations are outperforming outdated properties that lack these features.

Industrial Market: Smart, Sustainable, and Scalable

Demand for industrial real estate remains strong, particularly in last-mile logistics and advanced manufacturing. But tenants aren’t just seeking space—they’re seeking functionality and sustainability.

In-demand industrial features include:

• High clear heights and flexible loading dock configurations
• LED lighting and energy-efficient HVAC systems
• Solar energy integration and EV charging stations
• Advanced security systems and smart warehouse technology

For industrial users, operational efficiency and ESG alignment are just as important as square footage.

What This Means for Landlords and Investors

As tenant expectations evolve, landlords and investors must pivot accordingly. Staying competitive means focusing on:

1. Property Upgrades: Modernize interiors, enhance building systems, and invest in smart technology. Even small updates—like common area refreshes or EV chargers—can make a big impact.
2. Sustainability: Energy efficiency and green certifications are no longer optional for many tenants. Consider pursuing LEED, WELL, or other sustainability standards to appeal to forward-thinking occupiers.
3. Flexibility: Adaptable layouts are key. Whether it’s modular office configurations or convertible warehouse setups, flexible design helps future-proof your assets.
4. Amenities That Matter: From wellness spaces and outdoor work areas in offices to enhanced breakrooms and secure access in industrial buildings—thoughtful amenities attract and retain quality tenants.

The York Properties Advantage

At York Properties, we understand what today’s tenants are looking for—and how to position properties to meet those expectations. Whether you’re leasing office space, managing an industrial asset, or planning capital improvements, our team can help you stay ahead of the curve.

Let’s future-proof your portfolio.
Contact your York Properties team today to explore how we can help you attract and retain high-quality tenants in 2025 and beyond.

📞 919-645-2773
✉️ brianwallace@yorkproperties.com
🌐 www.yorkproperties.com

Sources:

https://www.forbes.com/sites/jeffsteele/2024/12/26/commercial-real-estate-trends-to-watch-for-in-2025/

https://www.ccim.com/real-estate-insights/blog/commercial-real-estate-2025-hurdles-and-horizons

https://www.cbre.com/insights/books/us-real-estate-market-outlook-2025

• 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.