RALEIGH, NC-The Mang Group, an insurance advisory firm headquartered in Raleigh, has inked a deal for 2,622-square feet of Class A office space in a struggling area of the Triad. Mang is taking up residence at 5400 Glenwood Ave. in the Carolina Corporate Center.
Jim Baldwin, a real estate advisor at Coldwell Banker Commercial TradeMark Properties, represented Mang Group in a market where many tenants are actively shopping for deals. With a 20 percent vacancy rate in the Highway 70 Corridor and a 26 percent occupancy rate at the Carolina Corporate Center, Baldwin negotiated a lease with heavy concessions.
“The typical model in this area is one month free rent per year term, but most landlords are doing more than that and this deal was heavier on the free rent,” Brian Farmer, president of real estate advisory services for Coldwell Banker Commercial TradeMark Properties, tells GlobeSt.com. “The landlord also came down on the rate.”
Farmer declined to disclose specific terms of the five-year lease, but says landlords that offer free rent concessions are pushing for “out of the box free rent” that is attached to the end of a lease term. So a three year lease would run 39 months with the free rent at the end of the term.
The Triangle office vacancy rate was 18.3 percent in the first quarter, according to Karnes Research. Major employers are shedding space in the region. So even small leases like Mang’s are welcome as the Raleigh market looks to absorb space after finally turning the corner to net positive absorption in the second quarter.
Elizabeth Raiford, vice president of marketing and research at Grubbs & Ellis in Raleigh, tells GlobeSt.com that much of the movement in the local market is “sideways,” but lease activity is beginning to pick up.
“We’re not seeing a lot of absorption yet, but tenants are beginning to make decisions again,” Raiford says. “That’s a positive trend. We are starting to see tenants looking for longer-term leases as well.”
Although concessions still characterize the market, some landlords are willing to be patient, Raiford says. She describes the general mood in the market as renewed optimism.
“The overall sense is that the window of opportunity to get the most competitive rates is starting to close,” Raiford says. “The Raleigh market is still not in good shape, but people are starting to feel like we are bouncing along the bottom and the worst is probably behind us.”
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