As businesses adjust to remote work trends, the number of office leases signed has taken a big dip in the Research Triangle, and — to a lesser degree — the Piedmont Triad. This new leasing landscape is forcing builders and would-be renters to adjust.
According to a quarterly report from the real estate firm Savills, new office leases are down 35% in the Triangle year over year. Robbie Perkins, market president of brokerage firm NAI Piedmont Triad, says compared to the Triangle, whose office market has grown very strong over the past three or four decades, the demand for space outside of the medical sector pales in comparison here.
"We’ve seen some office growth here, but mainly we’ve seen downsizing being a trend than any new absorption," says Perkins. "And that’ll continue to be the case."
Perkins attributes the downsizing to the pandemic, people working from home, and not returning to the office yet. To deal with this new reality, companies are renting less space, and property owners nationwide are having to repurpose their office buildings. Perkins says he expects that to take place in the Triad with the very best locations absorbed as office space, and older buildings left vacant as banks become less likely to take a lending risk. He says it’s a competitive market that he expects will become more so in the short term.
"If your space is dull, boring, antiquated, shopworn, it’s going to be very, very difficult to lease," he says. "If your space is cool and very well located, particularly a space in close proximity to amenities — restaurants and shopping — then you’ve got a really good chance of it being leased."
Looking ahead, Perkins says he sees the top of the market —the class A, brand new spaces — being leased by people moving out of much larger class B and C properties, upgrading in quality, and downsizing in square footage while enjoying substantial savings. He says the commercial rental market will get through this difficult period, but things will be different.