Triangle, North Carolina.  Office Space Demand Strong.  Yesterday I reported the dramatic drop in purchases of office properties in the Triangle during the first quarter of this year vs. the first quarter of last year.  Again, it should be pointed out that much of that drop was caused by inability to get financing on the part of many interested buyers.  None-the-less, the flip side of that coin is the demand for office space by end users.  It was surprisingly strong during this year’s first quarter.  At the end of the first quarter only 12.5 percent of the Triangle’s offices were empty.  That is down from 13 percent at the end of the fourth quarter of 2007.  Furthermore, class-A rents jumped 10 percent from the year ago quarter.  The first quarter of the year is usually the slowest leasing period of the year and yet leasing activity was quite strong. 

Is there a cloud lurking on the horizon?  There is 2.7 million square feet of office space currently under construction.  That’s the highest first quarter total in more than 10 years.  Commercial property managers had problems getting deals closed last year while this year the deals are being closed relatively promptly.  That doesn’t mean that every area in the Triangle is strong.  Some are and some are soft.  However, overall the leasing of office space in the Triangle is going very well.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com 

North Carolina - Hispanic Population Increased 7.8 Percent In 2007.  More specifically an additional 46,266 called North Carolina Home during the year.  The state’s total of 640,000 make Hispanics the state’s second largest minority group.

CARY - DETROIT PARTNERSHIP BUYS CROSSROADS PROPERTIES       Four Buildings And 20 Acres Comprise The Package.  The purchaser, MayfieldGentry Realty Advisors, paid $56.8 million in behalf of a retirement fund for Detroit fire and police employees.  The buildings, Crossroads I-IV, have a total of nearly 400,000 square feet.  This price is equal to about $145 per square foot.  The buildings are 95 percent occupied.  Another $2.2 million was paid for six tracts that are zoned for shops, hotels or offices. 

The difficulty potential buyers of properties are having in lining up financing for purchases they would like to make is dramatically shown by the fact that only $27.6 million in offices were sold in the Triangle during the first quarter of 2008.  During the first quarter last year $456 million were purchased.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com

Triangle, North Carolina.  Contractors Cry Two Kinds Of Tears.  While Triangle residential contractors cry about lack of business their commercial counterparts cry about lack of employees to handle all the construction jobs available.  Triangle commercial contractors have a huge backlog of private, government and educational projects.  Finding skilled people to handle their needs is proving to be a difficult task to handle.

The total value of commercial building permits for Wake and Durham counties during 2007 rose 53% to $1.9 billion.  For 2008 that number should increase by at least 4%.  Projects getting ready to start or just underway include: East St. - a mixed use condo, office, condo project - $50 million, Lafayette Hotel - $80 million, Wake Schools - $1.1 billion  University of North Carolina System - $614 million and NC Museum of Art - $70 million.  If you have to have problems an embarrasment of riches is the one to have.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website:  www.JohnFish.com

Durham, North Carolina.  Hawthorne Retail Partners Buys Fourth Shopping Center In Triangle.  Hawthorne’s purchase of the 40,524 square foot Shannon Plaza center for $2.43 million was equal to $59.96 per square foot.  Hawthorne is a Charlotte company.  They plan to update the center.  About a mile away they are doing an extensive re-do on what was Regency Plaza.  When finished the mix of shops and residences will be called University Marketplace.

TRIANGLE COMMERCIAL PROPERTY SALES AT RECORD LEVELS.  Several commercial real estate deals in the area have fallen apart recently because of increased interest rates and increased equity demands.  Even so, CB Richard Ellis data indicates that at the end of the third quarter Triangle commercial properties sales were 3 percent ahead of the full year of 2006.

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John Fish  (919) 696-3474    Email: Marvmax@mindspring.com   Website: www.JohnFish.com

Morrisville, North Carolina.  We all know that Clark Kent has X-ray vision. It appears that Morley Muralidhar does as well.  In 2005 he purchased an eyesore wharehouse in Morrisville that nobody wanted.  The condition of the 576,100 square foot building was, to say the least, very sad.  It was built in 1985 by AP Parts to manufacture mufflers and tailpipes.  Since that time it has been through other owners and prior to Morley’s purchase had been vacant for two years.  Furthermore, until recently warehouse space has been a drag on the Triangle commercial market.  The purchase price was $7.7 million.  Since the purchase the building has undergone extensive renovation to the tune of another $3 million.  In June Macfarlen Partners, a Dallas company, paid Morley $20 million for the building.  Morley, who is Chairman and CEO of USC Solutions (a Sanford, NC contract logistics company) then turned around and agreed to lease the entire building back from Macfarlen for USC for a five year period.  So, you might not be able to see through walls but the next time you think you are taking a really critical look at something you might want to think about Morley and ask yourself how much you are really seeing.

John Fish (919) 696-3474     Email: Marvmax@mindspring.com      Website: www.JohnFish.com

Durham, North Carolina.  Grosvenor Investment Management paid $105.5 million for 1.5 million square feet of space of Research Triangle Center buildings.  That equates to about $70 per square foot and is about double what the seller, Transwestern Investment of Chicago paid for it two years ago.  The space Grosvenor purchased  is 82% leased.  After the dot com bubble burst a few years ago, the Triangle became one of the nation’s worst areas for empty warehousing.  Now, it is a red hot area and premium prices are being paid for space.  In just over a year the Triangle has seen a 17% vacancy rate decline to just above 10%. 

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website: www.JohnFish.com

Raleigh, North Carolina.  During 2006 the sale of second homes purchased as an investment fell in the U.S. by 28.9%.  Translated into a number that is equal to 1.65 million sales.  By the same token vacation homes sales hit an all time high of 1.07 million or an increase of 4.7%.  On the surface this would not seem to be either reasonable or possible.  However, the chief economist for the National Association of Realtors, David Lereah, says that the reason for this is the fact that “The demographics favor vacation-home sales because large numbers of consumers are in the prime buying ages.”  He further states that “Buyers want recreational property for personal use - investment is a secondary consideration.” 

When you consider the marvelous vaction homes that are available along the coast and in the mountains of North Carolina you might want to do some serious investigating into the possibility of finding one for you and your family.  Also, if you are looking for investment property in Raleigh and other areas of the Triangle that should do well above average during the next few years (especially in the $600,000 to $5 million range) I think you will find I can provide it for you.  In this case I am speaking of well positioned land.  If you have an interest call me or send me an email.

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website:  www.JohnFish.com

Morrisville, North Carolina.  Lutz Real Estate Investments and Capri Capital Partners purchased 11 flex buildings in Morrisville for $56.3 million.  Flex space vacancy rates have been very high in the Triangle in recent years climbing to 20.3% in 2003.  Now, a stong demand for area office buildings, increasing construction costs and increasing rents have cast a different look on flex space.  The current flex space vacancy rate of 14.4% is the lowest in five years and is causing investors across the nation to take a long hard look at such space the Triangle.  During 2006 investors spent nearly $270 million on warehouse and flex space in the Triangle which is about three times the annual average rate in the last 10 years.   

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website: www.JohnFish.com

Raleigh, North Carolina.  A 20 story office building close to North Hills shopping center and near the intersection of Six Forks Road and I-440 is scheduled to get underway this fall.  It will include 250,000 square feet of office space and ground floor restaurants and a 910 space parking deck.  The project will be a partnership between Raleigh’s Kane Realty and Duke Realty an Indianapolis real estate investment trust.  This is not Duke’s first venture in this area.  It currently has about 5.2 million square feet of office space in the Triangle.

John Fish (919) 696-3474  Email: marvmax@mindspring.com   Website: www.JohnFish.com   

Raleigh, North Carolina.  In a deal just completed, Developers Diversified, an Ohio REIT purchased a 307 property portfolio from the Inland Retail Real Estate Trust.  Of these properties, 12 are shopping centers in Wake, Durham, Orange, Chatham and Johnston counties.  The area properties in question are: Chatham Crossing in Siler City      (32,000 square feet), South Square in Durham (89,622 square feet), Meadowmont Village Center in Chapel Hill     (132,857 square feet), Capital Plaza in Wake Forest (46,793 square feet), Clayton Corners in Clayton (125,653 square feet), Sexton Commons in Fuquay-Varina (49,097 square feet), Mill Pond Village in Cary (84,364 square feet), Circuit City in Cary (27,891 square feet), and the Raleigh properties of Alexander Place (143,073 square feet), Eckerd-Perry Creek (10,908 square feet), Capital Crossing (83,248 square feet), and Wakefield Crossing      (75,927 square feet).  This expands Developers Diversified’s portfolion in the Triangle to nearly 2.5 million square feet.

John Fish (919) 696-3474  Email: marvmax@mindspring.com  Website: www.JohnFish.com