The Lewis Group/CORFAC International Represented the Buyer of a Raleigh Commercial Building and Lease to McCormick Paints

Raleigh, NC (October 21, 2015)W. Michael (Mike) Lewis, CCIM, SIOR and Principal of The Lewis Group/CORFAC International announced the sale of a 4,445-square-foot commercial building located in the Hillsborough Street and Western Blvd. corridor in Raleigh and the immediate five-year lease of the property to McCormick Paints.

Lewis represented a local investor and the buyer in the transaction, WooDaddy LLC. The seller was Fred’s Beds, which operated a mattress sales and showroom at the location – 5521 Western Blvd., for many years. The sale price was not disclosed. However, the deal included a yellow, 1999 Volkswagen Beetle that was almost always parked in front of the mattress store and seen by thousands of Raleigh and Cary residents driving by on Western Blvd.

McCormick Paints was referred to Lewis by Brian Coakley, SIOR and a Senior Vice President with Donahoe Real Estate Services/CORFAC International, which has offices in Washington, DC, Tysons Corner, VA and Silver Spring, MD.

McCormick Paints is a family owned business that was incorporated in 1960 and is based in Rockville, MD. The Raleigh store will be the company’s 29th retail outlet when it opens. All of the stores are in the Mid-Atlantic States of Maryland, Delaware, Virginia and now North Carolina.

The new Raleigh location will undergo tenant improvements and should be ready for occupancy in late 2015 or early 2016.

Donohoe Real Estate Services/CORFAC International has exclusively represented McCormick Paints for all of its stores for over 20 years,” said Brian Coakley. “Our membership with CORFAC International has been key in helping us to assist McCormick Paints with their expansion beyond the Baltimore/Washington area. This is the company’s third store outside the region. We worked with another CORFAC affiliate, Porter Realty/CORFAC International in Richmond, VA to open two stores in that market over the last 18 months.”

About CORFAC International

CORFAC International is comprised of privately held entrepreneurial firms with expertise in office, industrial and retail, tenant and landlord representation, investment sales, multifamily, self-storage, acquisitions and dispositions, property management and corporate services. Chicago, IL-based CORFAC has 48 offices in the U.S., 7 in Canada and 24 offices internationally. Founded in 1989, CORFAC firms completed (in 2014) more than 10,000 lease and sales transactions totaling 400 million square feet of space valued in excess of $7.4 billion. For more information on the CORFAC network, call the Chicago headquarters at 224.257.4400 or visit www.corfac.com.

Retail Real Estate and Industrial Real Estate Benefitting from The Triangle’s Population Growth

While the office market it a little tricky to predict in terms of occupancy (other than the obvious factor – jobs) because there are too many variables, retail real estate and industrial real estate occupancy is more of a numbers game. Namely, head count. As in people. The more people there are, more stuff is going to be sold at the retail level. The more stuff sold in stores, the greater the demand becomes for warehouse buildings and distribution facilities. And so on.

This is not to say that retail and industrial real estate developers are guilt-free of over-building retail and industrial real estate from time-to-time, because they do. Yet short and long-term trends are for the Raleigh Triangle to keep growing at a similar pace to our growth in recent years.

Earlier this year (February) the Urban Institute projected population growth in the Raleigh area to grow by 50 percent between 2010 and 2030. Interested readers of this blog can view the entire report on UNC-Chapel Hill’s Carolina Demography Institute webpage: http://demography.cpc.unc.edu/2015/02/02/what-will-your-city-be-like-in-15-years/

Raleigh’s population grew by 8.9 percent from April 1, 2010 to July 1, 2014, according to U.S. Census data. During the same period, Durham County grew by 9.1 percent while Chapel Hill grow at a more historically average rate of 3.7 percent. The State of North Carolina grew 4.3 percent during that +four-year span.

Switching to local real estate market conditions, the overall retail vacancy rate declined in the second quarter to 4.6 percent — down from 4.9 percent at the close of the first quarter this year (all of this and the following data is from CoStar unless otherwise noted). The retail vacancy rate was 5.5 percent at the end of the third quarter last year. Net absorption was positive in 2Q2015 – 631,690 square feet. In the recent four quarters, net retail absorption in Raleigh-Durham was nearly 1.92 million square feet. This includes malls, power centers, specialty centers, shopping centers, general retail properties, strip centers and neighborhood centers. For a market with “only” 95 million square feet of total retail inventory, that’s a lot of net absorption in as year.

During the second quarter, 15 retail buildings totaling 358,121 square feet were brought to market in Raleigh-Durham.

Average rental rates for all product types ended the quarter at $14.55 per square foot, or $0.14 than they were at the end of March this year.

By comparison asking retail rental rates for ground-level space on Madison Avenue (yes, New York) averaged $1,700 a foot in May of this year, according to the Real Estate Board of New York, which is a relative bargain compared with Times Square between 42nd and 47th streets, which was running at $2,413 a foot.

I bet these interesting factoids have got you really wondering what the asking rate for ground floor retail is going for on 5th Avenue! Well here it is: between 49th and 59th Streets, the rate was $3,683 per square foot – a 4 percent increase from May 2014 to May 2015.

5th Avenue, New York City
5th Avenue, New York City

In our next blog, we’ll take a closer look at The Triangle’s industrial market conditions.

Raleigh Office Market Update

It is with mixed emotions that we find ourselves compared to the hottest office markets on the planet (excuse us New York, London and Hong Kong – we’re not kidding). And the two hottest are both in, where else, California.

According to a recent study by CBRE, Raleigh-Durham ranked third among U.S. tech markets for the largest increase in office rents over the past two years, surpassed only by Silicon Valley and San Francisco.

Raleigh-Durham rents increased 23.4 percent to $23.31 per square foot while the vacancy rate declined to 14.2 percent.* Silicon Valley rents went up 28.1 percent during the 24-month period (with office vacancy averaging 7 percent and rents at $49.20 per foot) while office rents in San Francisco spiked 30.7 percent during the period, to $67.99 a foot. The San Fran vacancy rate, not surprisingly, settled at 5.7 percent – the lowest of the 11 cities CBRE used in its tech cities report.

However, CoStar reports that the Raleigh-Durham office market ended the second quarter with an overall vacancy rate of 9.3 percent. We suspect* that CBRE measured only Class A office product that is actually or likely to be occupied by technology clients, whereas CoStar’s report covers all industries as well as Class B and C offices. Another reason why the data points from all CRE firms and market trackers like CoStar never matchup is methodology and buildings tracked. Some of these firms track buildings as small as 5,000 square feet and others start at 10,000 square feet.

Some of our largest tech occupiers, by the way, include Lulu, ShareFile, Cree Inc., Epic Games, Quintiles, Cisco Systems, IBM., eTix and SAS Institute (which began as a project at North Carolina State University (NCSU) and was originally funded by the National Institute of Health – thought you would like to know!)

Returning to the local real estate market, according to CoStar the largest lease signings in the second quarter were:

  • Biologics Inc. booked 75,000 square feet in the West Wake County market
  • Fujifilm did a 30,589-square-foot deal, also in West Wake County
  • NCSU signed a 25,906-square-foot lease in Raleigh

Six office buildings totaling 713,759 square feet were delivered in 2Q2015 in Raleigh-Durham and there was 840,316 square feet of offices under construction at the end of June.

In terms of the supply and demand equation, we predict that the Raleigh-Durham office market is far from in danger of being over-built and in fact the vacancy rate is likely to continue its decline for the foreseeable future, based on the amount of net absorption the market is getting.

While the combination of space delivered and under construction in the second quarter was +1.5 million square feet, in the recent four quarters, net absorption totaled a whopping 2,974,003 square feet, CoStar reports. Net absorption in the recent quarter this was 909,270 square feet.

CORFAC International Announces Completed Referred Transactions in Multiple Markets

Chicago, IL (May 26, 2015) – CORFAC International 2015 President Scott Savacool, CCIM, SIOR, announced the completion of multiple lease transactions involving two or more CORFAC firms in recent months.
CORFAC (www.corfac.com) is comprised of independently owned and entrepreneurial real estate service firms that work collaboratively to serve their clients. Savacool is also a Senior Associate at Sansone Group/CORFAC International, based in St. Louis, MO.

Raleigh, NC: W. Michael (Mike) Lewis, CCIM, SIOR, with The Lewis Group/CORFAC International represented National Delivery Systems Inc.in a 45,600-square-foot industrial lease at 810 Lufkin Road, Apex, NC (near Cary). National Delivery took space in a 145,517-square-foot building owned by Henry Wurst Inc. National Delivery was referred to Lewis by Cliff Porter, SIOR and a principal with Porter Realty Co./CORFAC International, based in Richmond, VA.

Richmond, VA: Cliff Porter also completed a 4,000-square-foot retail lease in Midlothian, VA, on behalf of McCormick Paints Inc., which was referred to him by Brian Coakley, SIOR, and a principal with Donohoe Real Estate Services/CORFAC International, based in Silver Spring, MD. Donohoe represents McCormick Paints at all 25 of their locations.

Milwaukee, WI: In a transaction that was referred by Steve Podolsky, SIOR, and a principal with Chicago-based PodolskyICircle CORFAC International, Wurth Baer Supply Company leased 9,600 square feet of industrial space at N28 W23240 Roundy Drive in Pewaukee, WI. Zach Noble, formerly with Milwaukee-based The Dickman Co./CORFAC International, represented Wurth Baer in the lease. The building owners were represented by the brokerage firm’s principals Sam D. Dickman Sr., SIOR, CRE, and Sam M. Dickman Jr., SIOR, making it an “all CORFAC” deal.

Memphis, TN: Charles Sevier, CCIM, SIOR, managed a 12,000-square-foot office lease located at 2871 Business Park Drive in Memphis on behalf of Aerospace Products International. Sevier, a principal with Memphis-based Crump Commercial/CORFAC International, was referred by Alan Wood, a principal with Weber Wood Medinger/CORFAC International, based in Cleveland, OH.

Walnut Creek, CA: Pat McGrath, a Senior Vice President in the Walnut Creek office of TRI Commercial/CORFAC International, handled a 3,630-square-foot retail lease located at 200 Pringle Avenue in Walnut Creek on behalf of Scottrade Inc. Scott Savacool with St. Louis-based Sansone Group/CORFAC International referred the Scottrade requirement to McGrath.