A common discussion topic since the COVID-19 pandemic began has been its inevitable effect on the price of housing. Triangle real estate prices have famously shot up by previously unimaginable margins in the last 18 months: Raleigh alone has seen its average residential home price increase by 19%. As the area continues to grow and expand, commercial spaces have not been immune from these price increases.
Right at the start of the pandemic, it was uncertain if commercial real estate spaces would maintain longevity. Businesses closed their in-person operations as we all sequestered in our homes for safety while we waited to see what would happen next. Essential businesses began to struggle with staff and inventory, further adding to our collective sense of uncertainty. Office space became less of a necessity; if your workers are safe and productive at home, why ask them to risk themselves and their family’s health coming back into the office? At least before the vaccine became widely available, this was a prevailing theory.
Despite this momentary uncertainty, commercial real estate in the Triangle has rebounded with a bang. Apple and Amazon bringing major campuses to RTP has driven California investment groups to our state with a bang. They’ve begun snapping up all the real estate they can get their hands on, whether it’s commercial or residential.
By now, everyone has a story, whether it’s their own or someone else’s, about a particularly desirable listed home selling seemingly immediately for way more than anyone thought it could demand. Our residential team, Kima Real Estate Group, recently sold a beautiful home in the heart of Cary (talk about location!) for a stunning 37.5% over asking price. Commercial real estate is no less valuable.
Most recently, The Lab in RTP changed hands from New York-based firm Thor Equities Group, who purchased the property for $20M in December 2020, to the California-based firm Alexandria Real Estate Equities for a surprising $80M. The Lab is a 70,000sf space across six buildings on 72 acres, meaning there is space for up to 1,000,000sf of additional development. Most of the existing space is leased by AgBiome, a biotechnology firm.
This sale, and others like it, signal that commercial real estate in booming markets like the Triangle are still at a premium. Developers still know they will thrive here, just as commercial tenants know that securing the right piece of space in the Triangle will make the difference between their business succeeding or failing. After selling The Lab for 4 times what they paid for it, a statement from Thor Equities Group’s Executive VP Jack J. Sitt said the following:
“The sale of this best-in-class asset demonstrates the demand for high-quality space in top-performing markets. It was an opportune time to sell these six buildings, and we look forward to identifying new opportunities in this region and beyond.”
The future of the Triangle is still being built, and it is being built in spaces like The Lab. Our local real estate market is thriving. The best time to get involved is yesterday, but the second best time is today. Let Kima Commercial help you reach your real estate goals this year, whether you are a large equity group or a small business owner starting out.