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New Report: CRE Sentiment Declines Amid Growing Caution

Originally published by NAIOP Research and Publication, Spring 2025

2025 NAIOP CRE Sentiment Index

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North Carolina Is the #4 State in the U.S. for CRE Development

North Carolina is the fourth highest-ranking state in the U.S. for overall contributions of commercial real estate to state GDP, with $34.2 billion, $15.2 billion in direct spending, $10.5 billion in personal earnings, and 185,936 jobs supported in 2024 (the most recent data available). 

  • Industrial (includes manufacturing): North Carolina ranks #6
  • Office: North Carolina ranks #9
  • Retail: North Carolina ranks #6
  • Warehouse: North Carolina ranks #9

The data is from “Economic Impacts of Commercial Real Estate, 2025 U.S. Edition,” published annually by the NAIOP Research Foundation.

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New Report: 2025 Economic Impacts of Commercial Real Estate

Originally published in January 2025 by Brian Lewandowski, Adam Illig, Ethan Street, and Richard Wobbekind, Ph.D. by the NAIOP Research Foundation.

The NAIOP Research Foundation has published the annual Economic Impacts of Commercial Real Estate, 2025 U.S. Edition, research study. The combined economic contributions of new commercial building development and the operations of existing commercial buildings in 2024 resulted in direct expenditures of $898.5 billion and the following impacts on the U.S. economy:

  • Contributed $2.5 trillion to U.S. GDP.
  • Generated $862.5 billion in personal earnings.
  • Supported a total of 14.2 million jobs.

Other highlights from the report:

  • Each $1 of construction spending generated a total value of $2.95 for the economy, reflecting the cumulative effects of the initial construction expenditures as they cycle.
  • The U.S. Census Bureau estimates that private data centers represented 28.7% of office construction value in 2024, an increase from 19.7% in 2023. This is the first year the organization has separated data center construction from financial and general office construction.
  • Industrial (manufacturing) and warehousing starts are down but still significantly above pre-pandemic levels. Much of the new online construction can be attributed to recent reshoring efforts in the U.S., including the CHIPS Act and Inflation Reduction Act.
  • Demand for retail space in 2024 remained strong and shifted toward smaller, more creative spaces. Successful retailers offered experiential shopping with a more personalized touch or other activities, such as dining, for consumers to engage in between shopping. While larger department stores struggled, retail as a whole proved resilient.
  • Some cities have experienced a larger recovery in office attendance than others. New York, for example, reached 82% utilization as of October 2024 and 91% for top-tier office buildings, indicative of a shift in demand to high-quality office properties. See data by State.
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Tackling the Tenant Workforce Issue

Originally published on June 8, 2023, by Brielle Scott for NAIOP.

“Please raise your hand if your tenants have encountered any difficulties obtaining or retaining the workforce they need,” Anne Strauss-Wieder, Director, Freight Planning​, North Jersey Transportation Planning Authority​, asked the audience at NAIOP’s I.CON East: The Industrial Conference.

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Work With a Purpose: How CRE Firms are Positioning for Success

Originally published on April 3, 2023, by Kathryn Hamilton, CAE for NAIOP E-Newsletter.

“There’s a really exciting trend emerging in hiring and compensation that’s going to accelerate throughout 2023,” opened Chris Lee, CEO of CEL & Associates, during a recent NAIOP webinar. “It’s the blending together of the quantitative – the numbers, compensation and bonuses – and the qualitative – workplace environment and benefits.”

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Vision 2023: Annual Report

Originally published on January 31, 2023, by NAIOP E-Newsletter.

NAIOP is your forward-thinking partner committed to working alongside our members to build your knowledge, advance your career and protect your business.

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NAIOP: Commercial Real Estate Vital to the Overall Economy; Industrial Sector Leads, and Retail Stages a Comeback

Originally published on January 26, 2023 by Kathryn Hamilton for NAIOP E-Newsletter. 

The impact of new commercial real estate development in the U.S. continues to grow, according to the annual Economic Impacts of Commercial Real Estate research study conducted by the NAIOP Research Foundation.

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NAIOP Insights: ESG Essentials for Commercial Real Estate

Originally published on January 19, 2023 for NAIOP E-Newsletter.

ESG is emerging as a hot topic for businesses and commercial real estate development in particular. To stay ahead, developers can embrace standards to set their projects up for success. Learn how smart building technologies, tax and state incentive programs, and setting measurable goals as companies establish their ESG practices can support this evolving initiative.

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New Report: Office Absorption Will Continue to Slow into 2023 Amid Economic Uncertainty

Originally published in NAIOP Research Foundation's Fourth Quarter 2022 Report. 

Absorption Will Continue to Slow into 2023 Amid Economic Uncertainty

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q4 2022.

Key Takeaways:

  • Office market vacancy rates rose to 17.1% in the third quarter of 2022 as the completion of new space outstripped net absorption. This marks the highest vacancy rate since the third quarter of 1993.
  • Class A buildings continue to outperform the rest of the sector as tenants migrate to spaces that offer more flexible layouts and modern amenities.
  • Leading economic indicators and an inverted yield curve point to the growing risks of a recession in 2023. Occupiers are growing more cautious, opting to sublease space, and choosing smaller footprints when leases come up for renewal.
  • Given these trends, net office space absorption in 2023 is forecast to slow to only 8.1 million square feet for the full year, following an absorption of 7.1 million square feet in the fourth quarter of 2022.
  • Absorption is forecast to rebound in the first three quarters of 2024 to a total of 13.3 million square feet.

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New Report: The Role of Data Analytics in CRE Siting, Design and Valuation

Originally published in October 2022, by Clifford A. Lipscomb, Ph.D., MRICS for NAIOP.

Industries are rapidly evolving as business processes grow more interconnected and automated. Data and analytics play an important role in information technologies and their interaction with the physical world, including emerging fields such as artificial intelligence, the Internet of Things (IoT), and virtual and augmented reality. Although commercial real estate (CRE) has been slower than other industries to adopt data analytics, some firms have identified several ways that data analytics can support land and building development and contribute to better project outcomes.

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Achieve Peak Operational Efficiency in Warehouse Design

Originally  published on November 15, 2022, by NAIOP.

NAIOP’s valuable 60-page e-book, “Rules of Thumb for Distribution/Warehouse Facilities Design, Second Edition,” allows you to gain a step up in today’s competitive marketplace. The e-book includes detailed instructions and diagrams on everything from site planning to floor slabs. Members save 50% off the list price!

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2022 NAIOP/CEL CRE Compensation and Benefits Reports Now Available!

Is your 2023 salary and bonus package competitive? Find out with the 2022 NAIOP/CEL Commercial Real Estate Compensation and Benefits Reports. These valuable reports (either Office/Industrial-Retail or Office/Industrial-Retail-Residential) enable commercial real estate businesses to stay current on salaries, bonuses, and benefits for CRE professionals from executive to entry-level positions.

The report includes:

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CRE Sentiment Index: Higher Interest Rates, Cap Rates Among Areas of Concern

Originally published on October 18, 2022, by NAIOP.

The NAIOP CRE Sentiment Index for September 2022 is 47, down from April’s reading of 53. It is at its lowest level since September 2020. This reading suggests that respondents expect unfavorable conditions for commercial real estate over the next 12 months. 

Key Takeaways:

  • Respondents expect higher interest rates, higher cap rates, and a decrease in the supply of equity and debt over the next year.
  • Their outlook for occupancy rates, face rents, and effective rents are also less optimistic, though they still expect rents to grow.
  • Respondents also expect a sharp deterioration in general industry conditions over the next 12 months.
  • The only positive development in the September survey is that respondents expect a slower pace of construction cost inflation over the next year.
  • Despite a more pessimistic outlook for development conditions, developers plan to maintain recent deal volume over the coming year.
  • Most respondents expect to be most active in projects or transactions related to industrial properties over the next year.
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Development Magazine Fall 2022: Developer of the Year

Originally published in the Fall 2022 NAIOP Development Magazine by Ron Derven.

Since its founding in Dallas in 1991, Granite Properties has understood the impact of real estate developments on people and communities. That’s why it creates spaces and relationships where people can flourish while supporting local communities.

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CommercialEdge: Charlotte Office, National Sales and Vacancy Rates Up in Midyear 2022

By Eliza Theiss 

Two and a half years after the pandemic began, the short-term future for the office sector remains uncertain, with record vacancy rates adding to the industry’s woes, according to a recent office report from CommericalEdge. And as hybrid and work-from-home business models continue to take hold — and rising inflation rates further deter workers from returning to traditional office settings — the sector’s long-term prospects are also murky.

Top Markets for Highest Listing Rate Growth

The average full-service equivalent listing rate in the top 50 U.S. office markets was $37.58 per square foot in June — up two cents from the previous month, but down 2.6% from the previous year.

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Industrial Space Demand Forecast, Third Quarter 2022

NAIOP research

By: Hany Guirguis, Ph.D., Manhattan College and Michael J. Seiler, DBA, William & Mary
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Strategic Mobility Plan Out Thursday


UDO graphic

Thursday will mark the release of the Strategic Mobility Plan (SMP) draft. The public can access the May 19 meeting at this link.

The SMP’s goal is to shape the mobility future for the City of Charlotte and expand on the “Safe and Equitable Mobility” goal of the Charlotte Future 2040 Comprehensive Plan (2040 Plan). The SMP dives deeper into the mobility policies of 2040 Plan to achieve a safe, connected, equitable, sustainable, prosperous, and innovative mobility vision for Charlotte. To learn more, follow this link to the Strategic Mobility Plan homepage.

SMP Virtual Engagement Sessions will be live on Thursday, May 26 (6 p.m.) and Tuesday, May 31 (noon). Meeting links will be available by visiting charlottenc.gov/smp.


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Charlotte Fire Department Update

 

originally posted by REBIC for Two for Tuesday with permission to repost

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Important Government Affairs Update

Top 3 Items to Note:

  1. We are making significant progress on our efforts to identify and bring aboard a seasoned individual to provide additional eyes and ears on the ground in Iredell County and Cabarrus County.  More on that to come later this week.
  1. The City of Charlotte is seeking development/real estate representatives to serve on two advisory boards created by the passage of the policy section of the 2040 Comprehensive Plan.  It is essential we engage qualified and knowledgeable individuals to fill these positions.  We have an incredible opportunity here and I could use your help.  (Deadline is Friday, August 27th, details follow)
Charlotte Equitable Development Commission
The Charlotte Equitable Development Commission was created with the adoption of the Future Charlotte 2040 Comprehensive Plan by City Council resolution on June 21, 2021. The Commission is charged with advising in the assessment of infrastructure throughout the city and recommending strategies that balance equitable investments in areas most in need, including areas with absent and insufficient facilities, areas growing fastest, and areas targeted for growth. The Commission will work with the Office of Strategy and Budget to provide input on the development of the city’s proposed Capital Investment Plan. The Commission will provide regular updates to the Budget and Effectiveness Council Committee and quarterly reports to the entire Council.  The committee will consist of individuals with significant backgrounds in community development and infrastructure assessments. Examples of preferred experience shall include consulting engineers in the project development business; attorneys specializing in development; developers; independent business representatives; construction contractors; bankers or insurance agents engaged in the financial aspect of development; representatives from homebuilder's association; homeowners or neighborhood association representatives.
9 Members (3 appointments by Mayor, 6 appointments by City Council), Term Length – 3 years, 1 term
 
Charlotte’s Neighborhood Equity and Stabilization Commission (Charlotte’s NEST)
The City of Charlotte needs to address displacement caused by gentrification in a comprehensive, broad, and systematic, intentional manner. The recently adopted 2040 Comprehensive Plan includes the establishment of the Charlotte Neighborhood Equity and Stabilization Commission (Charlotte’s NEST). The City currently has an adopted Affordable Housing Framework coupled with a number of neighborhood programs that are used to address gentrification. However, the City desires to engage the community in developing additional strategies to limit displacement. Therefore, the Charlotte Neighborhood Equity and Stabilization Commission is established for a 3-year period and is charged with reviewing and recommending specific anti-displacement strategies and specific tools for protecting residents of moderate to high vulnerability of displacement. The Commission will make regular reports to the Great Neighborhood Council Committee, quarterly reports to the entire Council and provide recommendations for combatting displacement prior to the implementation of the Plan.
15 Members (5 appointments by Mayor, 10 appointments by City Council) who shall be appointed according to the following criteria:
- 3 appointees - Housing Advocates (1 appointed by Mayor, 2 appointed by Council)
- 3 appointees - Neighborhood Leaders or Community Organizers (1 appointed by Mayor, 2 appointed by Council)
- 3 appointees - Involved in the Real Estate Development Industry as specified below:
- Non-Profit Affordable Housing Developer (1 appointment by the Mayor)
- For Profit Affordable Housing Developer (1 appointment by the Council)
- Market Rate Housing Developer (1 appointment by the Council)
- 2 appointees - Residents who have experienced or are experiencing displacement (1 appointed by Mayor, 1 appointed by Council)
- 1 Urban Studies and Planning Representative with experience in displacement and gentrification and implementing equitable inclusive development strategies (1 appointment by the Mayor)
- 1 Housing Finance Representative with experience in rental housing finance and homeownership and affordable and subsidized housing (1 appointment by the Council)
- 1 Land Use Representative with expertise and experience in historic preservation and landmarks, zoning, and development rights (1 appointment by the Council)
- 1 appointee - Neighborhood Conditions Representative with expertise and experience in economic development, health, racial/ethnic segregation, schools and education and crime (1 appointment by the Council)
Term Length – 3 years, 1 term
 

For more information on the new advisory boards, please visit: https://charlottenc.gov/CityClerk/Pages/BoardsandCommissions.aspx

 

  1. The next phases of CLT Future 2040 (mapping and UDO) are underway –
    • Alan and I had our second monthly meeting with Taiwo and Alyson last Thursday.  As a result of that meeting, REBIC will be putting together a small group of design professionals that will meet with planning staff every two weeks (for as long as necessary) beginning a few days prior to the public release of the UDO on October 4th.  These meetings will allow REBIC representatives to provide feedback and to receive an immediate response, much earlier in the process, on elements of the proposed ordinance that could be problematic if implemented  It also allows us to be a cheerleader for those things in the UDO that help streamline the process and reduce development time frames.
    • Brenda Hayden will be joining Alan and me for the monthly meetings beginning in September.
    • A brief presentation containing the projected schedule for mapping/UDO is here.
  • Due to recent and higher than anticipated COVID infection rates, the Government Center has been closed to the public for the time being.

North Carolina Budget Update

 

originally published by REBIC with permission to repost through NAIOP Charlotte

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