Quarterly Newsletters
Market Insight | Raleigh-Durham Commercial Real Estate
Q1 2025 Triangle Commercial Market Overview
January 1 – March 31, 2025 | Anna Phan
Market Summary
The first quarter of 2025 highlighted a mixed but stabilizing commercial real estate landscape in the Triangle, with sector-specific performance shaping investor and tenant strategies.
🏗 Industrial
The industrial market remained active but is adjusting to an influx of new supply. Vacancy rates in both Raleigh (7.0%) and Durham (7.3%) rose above their 10-year averages due to robust construction pipelines. Despite this, demand remained positive, with strong net absorption supported by logistics, e-commerce, and advanced manufacturing users. Rent growth moderated but stayed above national averages at 3.7%, and private equity interest remained steady. Notable projects include FUJIFILM Diosynth’s major facility in Holly Springs and Wolfspeed’s silicon carbide plant in Chatham County. As construction levels taper in 2026, the market is expected to rebalance and regain pricing power.
🏢 Office
Office performance continues to reflect shifting workplace dynamics. Vacancies remained high—11.5% in Raleigh and 10.4% in Durham—but Class A buildings in mixed-use districts like North Hills and RTP saw growing interest. Rent growth slowed, and concessions increased, but leasing tours rose. New construction has nearly paused, particularly in Durham, easing supply-side pressure as the market searches for stability in a hybrid-driven environment.
🏬 Retail
Retail continues to be the Triangle’s most resilient and competitive sector. Availability rates are extremely tight—just 2.7% in Raleigh and 3.9% in Durham—driven by limited new construction and strong tenant demand. Rent growth remains robust: 5.9% in Raleigh and 3.2% in Durham, both above national benchmarks. Activity is strongest in suburban and medical-anchored strip centers. New construction is limited, with most projects already preleased, which will likely preserve pricing strength throughout the year.
🏘 Multifamily
Multifamily demand remains strong, but high new deliveries have kept vacancies elevated—12.3% in Raleigh and 11.5% in Durham. Rent growth turned negative (–0.9% in Raleigh, –0.6% in Durham), especially in high-end developments, while lower-tier units held stronger performance. Developers are now focusing on smaller, suburban projects. With nearly 14,000 units still under construction across both markets, pressure will likely persist through 2025 before improving in 2026.
Full Report Highlights
- Industrial: 3.7% rent growth in Raleigh/Durham, strong construction pipelines
- Office: Stabilizing vacancies; 1.1%–1.4% YoY rent growth; premium spaces seeing more traction
- Retail: 2.7%–3.9% availability, 5.9% rent growth in Raleigh, low new development
- Multifamily: Over 11% vacancy, rents declined slightly, but absorption strong
Insider Insights
“The first quarter of 2025 confirmed what we’ve long believed—resilience is built into the Triangle’s commercial market. While national trends show hesitation, our region continues to attract high-quality investment, driven by population growth, innovation, and long-term fundamentals. It’s a time for smart positioning, not sitting still.”