Economy
Greensboro/Winston-Salem continued to attract major economic investment in the third quarter as exterior building product manufacturer ProVia announced a $120.0M investment in a new 580,000-square-foot (sf) build-to-suit manufacturing facility in Davie County, creating 400 jobs. Regional unemployment measured 3.7%, 50 basis points (bps) below the U.S. average.
Supply And Demand
The overall vacancy rate fell 30 bps year-over-year (YOY) to 5.5% in Q3 and remained the lowest among the major Carolinas industrial markets. The rate held largely stable quarter-over-quarter (QOQ), ticking up a modest 10 bps despite notable new vacancies. The quarterly increase was primarily driven by the delivery of 5672 Millstream Rd., which added 130,000 sf of vacant speculative space, and American Tire's move-out from 102,000 sf at 3020 Tucker St. More than 500,000 sf delivered during Q3, with only 25.4% vacant at completion. Meanwhile, the construction pipeline contracted to just over 1.0 million square feet (msf), limiting the amount of speculative supply expected to reach the market.
Net absorption totaled nearly 230,000 sf in Q3 and 1.4 msf year-to-date (YTD), supported by seven move-ins of 100,000 sf or larger. The largest was Environmental Air Systems’ purchase and occupancy of 710 Almondridge Rd. New leasing totaled nearly 770,000 sf during the quarter and more than 4.6 msf YTD, up 5.8% YOY, while renewals exceeded 200,000 sf.
Pricing
Overall asking rental rates increased 1.4% QOQ to $6.37 per square foot (psf). Space under construction is likely to demand a higher asking rate, indicating further upward pressure as projects deliver. With limited premium supply and sustained demand, landlords may have greater ability to push rends in second-generation space as occupiers face fewer newly constructed alternatives.
