Triangle's commercial real estate market could recover faster than other cities post pandemic, experts say

RALEIGH, N.C. (WTVD) -- Commercial real estate suffered a major blow as the novel coronavirus pandemic forced businesses to close as a stay-at-home order went into place across the state.

Retailers are being hit especially hard, including Pier 1 Imports, which is permanently closing all stores. Restaurants also suffered--for example, Golden Corral announced several locations will close for good including the Glenwood Avenue location in Raleigh.

Small businesses are also being forced to close or pivot, including Trophy Brewing Tap and Table in downtown Raleigh. The company announced onits Instagram it will be closing while owners make major changes to the building and concept.

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"Within retail space, there's a 10.1% vacancy rate and 2.2% decline as far as like sales for retail space when you compare to Q1 of last year," said Jon Pugeda, a real estate agent with the Kereda Group, powered by EXP Realty. Pugeda specializes in residential and commercial real estate in the Triangle. He said while lack of business due to COVID-19 is one aspect leading to vacancies, so is working remotely.

"Companies are learning, 'hey, we can actually function without having to have rent and real estate and they're finding people are more productive at home because they don't have to commute," Pugeda said.

Major corporations like Nationwide Insurance, which has gone to 98% work from home workforce during COVID-19, announced a permanent transition--including the Raleigh location.

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As industry experts track statistics and vacancies, research shows data centers, warehouses for e-commerce, and the tech and telehealth industries are likely to fill many vacant spaces in the recovery period.

"Tech is going to evolve in more demand for servers to handle these types of calls and do virtual business," Pugeda said. "We need data centers."

Industry experts are looking for the e-commerce industry to fill the spaces in malls or multiuse buildings while expecting a rebound for flex workspaces like WeWork, which took a downturn in the crisis.

And while a May 27 report from CBRE| Raleigh shows the Triangle's commercial real estate market has suffered a slowdown, researchers are forecasting the area could rebound faster than other cities because it entered the shutdown with a strong demand for growth, a shrinking vacancy rate and a rise in leasing rates.

Pugeda said he believes the Triangle is positioned much better than other cities of the same size with research universities and tax-based employment, since Raleigh is the state capitol.

"I feel like the Triangle, we're in a bubble," Pugeda said. "We have pharma companies here. We have tech companies here, startup companies here. We're always developing and building. It's interesting and exciting. We'll see what happens."
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