Triangle Business Journal 2009 SPACE
Mid- Year Review notes from 23 July 2009
On the 23rd of July a hundred or more real estate and associated business professionals attended the Mid-Year Space review held by the Triangle Business Journal at the Embassy Suites in Cary, NC. Here are a few notes I took on each section, along with the presenters name and subject. Please see the attached slideshow from the presentation as a reference.
Keith Crisco/Keynote Speaker: North Carolina Secretary of Commerce. He discussed how North Carolina is aggressively competing for new businesses against neighboring states in the region and how important tax incentives can be. He also stated that these incentives are tied to performance and the ability of the incoming company to employ the number of people they projected. So if a company does not employ 90% of their projected number of new jobs, they do not get the incentive for that year. He also said that there have been 4500 new jobs created in the state since JAN 2009.
Matt Riggs/ Construction Costs: Vice President of Centurion Construction. Construction costs are down 40% from OCT 2008. He said there are a number of issues that will cause construction costs to increase in the future: Infrastructure building in China which will effect raw material costs, “Green” building concepts that may be integrated into building code, the possibilities of companies being required to provide healthcare .
Mike Munn/ Regulatory Issues: Vice President of the John R. McAdams Company. The proposed franchise Tax for LLC’s and LLP’s has not passed yet. There has been some development extensions which extends permits for current developments (Bill SB831). The Jordan Lake rules became law on June 30,2009 and increase the standards for stormwater management. The Falls lake rules are under revision and expect to see more changes as a result of the drought of 2007, which also resulted in a tiered water rate which increased water costs. Expect to see a new term emerge called LID or Low-Impact Development which will be the next LEED. Expect to see new regulations that stress the importance of water quality and quantity.
Bernard Helm/Residential Market: Market Opportunity Research Enterprises (MORE). New home sales down 30-40%. The average price of a new home is down 8% when comparing 2Qtr 2009 with 2Qtr 2008. Volume of home sales is down 30% when compared to the peak in 2006/2007. Many lenders are holding large numbers of properties and many homeowners are holding on to their properties instead of selling right now. On the positive side the rate of decline is slowing. www.morereport.com for more info and see TBJ SPACE slides.
Amanda Jones Hoyle/Real Estate By the Numbers: Real Estate Reporter, Triangle Business Journal. The Flex market is stable right now with little increase or decline in vacancy rates with warehouse vacancies increasing. Office vacancy topped 18% which is the highest it has been in the last 20 years. Very little new space will be built over the next few years.
Rex Thomas/ Looking Ahead, What’s in Store: Chairman and CEO, Grubb& Ellis/ Thomas Linderman Graham. Historically recessions have lasted about 3 years, but this is not a normal recession. The vacancy rates are projected to peak in 4th QTR 2010 or 1st QTR 2011 with unemployment rates to increase through mid 2010. Retail trends are going to change significantly since people have changed their spending habits. The triangle is expected to emerge from this recession ahead of the National Market with the triangles population expected to double by 2025. The accolades from National magazines have made this an attractive place to relocate to and start businesses.
Matt Rhoad/ Legal Trends: Lawyer, Smith Anderson. The legal trends right now are toward more lawsuits and less deals. There is an increasing importance on comprehensive community planning which tend to drive rezoning approvals. Matt referred to the city of Raleigh 2030 draft plan (431 pages) that was released DEC 2008 and includes 17 different categories of future land uses and has a future land use map. There is still some time to influence this plan since it will probably be voted on in SEP 2009. After the comprehensive plan is voted on their will be an overhaul of the UDO(Unified Development Ordinance) and development regulations.