Jan 19, 2024 - News

The Triangle hit a new record for empty office buildings

The Citrix building in downtown Raleigh is empty at the moment. Photo: CBRE

The amount of empty office space grew in the Triangle last year as employers offloaded large spaces and new buildings opened without tenants lined up.

Why it matters: Office vacancy rates in Raleigh and the U.S. as a whole hit record highs last year as companies continue to adapt to the new norms of remote and hybrid work, according to data from Moody's Analytics and CBRE's Raleigh office.

  • The changes are having significant ripple effects across the Triangle, changing how people interact with different parts of their communities, from downtown to the suburbs, Axios' Emily Peck writes.
Metro area office vacancy rate, Q4 2023
Data: Moody's Analytics; Chart: Axios Visuals

By the numbers: Office vacancy rates in the Raleigh metro area were 20.2% in the fourth quarter of last year, according to Moody's Analytics.

  • That was up 2.6 percentage points from the year prior.
  • The U.S. overall had an office vacancy rate of 19.6%.

What's happening: Some of the Triangle's largest tenants are shedding offices and flooding the market with available space.

At the same time, some new office buildings that began construction more than a year ago were completed at the end of last year, adding even more space to the market — including Kane Realty's One North Hills, which is 9% leased, according to CBRE.

What's next: CBRE is forecasting that the Triangle will see vacancy continue to increase over the next 12 months — potentially keeping several office projects from breaking ground across the region.

  • Some landlords in the Triangle are also considering turning former offices into apartments as well due to high vacancy rates, the Triangle Business Journal reported.
  • Yes, but: Leasing activity is also forecasted to pick up by the middle of next year.

What they're saying: "While hybrid work trends will place long-term downward pressure on the space needed per employee, Raleigh-Durham's robust growth and resilient economy will support demand for quality office space," the CBRE report noted.

  • The region added 41,000 nonfarm payroll jobs during for the year ending November 2023, representing a growth rate of 3.9%, per the report.
  • Office-using job growth remains "well above pre-pandemic levels."
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