Face off: Inside the Triangle’s shifting commercial real estate landscape

Writer: Eleana Teran

December 2025 — Demand patterns across the commercial real estate sector are changing, and the Triangle is feeling the effects. Retail availability is near record lows, industrial assets remain tight, and life sciences and manufacturing growth are expanding development activity into new submarkets.

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Retail fundamentals remain tight in Raleigh-Durham. Vacancy rates held at 2.4% in 3Q25, continuing a years-long stretch of limited availability. Even with big box exits, new tenants have moved in quickly. Most spaces were leased quickly, pushing rents up and encouraging creative reuse of older buildings, including recreation and specialty concepts.

Life sciences real estate rose slightly in 3Q25. Vacancy rates rose to 32.4%, reflecting slower move-ins rather than new supply. Leasing totaled more than 160,000 square feet, driven largely by pharmaceutical manufacturing and MedTech users.

At the same time, North Carolina added tens of thousands of jobs in 2025, with major biotech and manufacturing investments landing in the Triangle. Novartis’ planned a $771 million expansion across Durham and Wake counties, creating 700 jobs. Large-scale manufacturing projects are also reaching farther into surrounding counties, with Johnston County attracting billion-dollar facilities that will reshape the region’s industrial and life sciences footprint. 

These trends are unfolding in a more cautious capital environment. Higher borrowing costs and tighter lending standards have slowed transaction activity and raised the bar for new deals, pushing many investors and occupiers to take a long-term, more strategic approach to site selection, financing, and development planning. 

In conversations with Invest:, Amy Carroll, president and principal at TradeMark Properties, and Matt Hohorst, vice president at ARCO Design, shared how changing market conditions are influencing investment decisions, development strategy, and the future direction of commercial real estate across the Triangle.

What major shifts are you seeing across the region’s commercial real estate landscape right now?

Amy Carroll: The Triangle has experienced a meaningful shift in priorities as it relates to commercial real estate over the past year. For several years, residential and multifamily development dominated activity, but that momentum has slowed post-COVID.

At the same time, retail has surprised many by reaching one of the lowest vacancy rates we’ve seen in decades. Demand for well-located retail and experiential concepts has surged.

Flex and industrial assets continue to perform exceptionally well, with sustained tightness and steady absorption. And although the office sector has faced its share of challenges, we’re starting to see genuine signs of recovery, which is encouraging for the broader market.

Matt Hohorst: The life sciences industry has long been strong here, but over the past five to eight years, it has taken on a more prominent role nationwide. North Carolina offers several advantages: a deep labor pool, robust R&D and scientific talent from top universities, and lower population density, which makes it easier to site manufacturing facilities. Where companies once focused on major hubs like Boston, San Diego, or Chicago, they’re now viewing this region as a growth area for manufacturing. 

We’re seeing a trend toward investment in the outer edges of the market, not in the core cluster of Research Triangle Park, Raleigh, or Morrisville, but in areas like Greenville and Johnston County. That expansion opens new possibilities for placing larger manufacturing facilities and broadens the market’s potential.

Over the past 12 to 36 months, capital markets and private equity have shifted. Many facilities once focused on therapeutic areas in life sciences have seen investment dry up. In their place, we’re seeing major players like Genentech and Johnson & Johnson push into those outer rings. At the same time, new sectors are emerging, including mission critical, aerospace and defense, electronics, microelectronics, and food and beverage. We expect all of these to grow significantly over the next decade.

What factors are shaping the way companies and investors pursue opportunities right now?

Carroll: The nature of opportunity has evolved. Early in the post-COVID cycle, many investors expected a wave of discounted value-add acquisitions, but the Triangle market has proven remarkably insulated. Those deep discount deals simply haven’t materialized.

Because of that, our long-standing relationships, built over more than 41 years, have become even more essential. We’re guiding clients on timing, pricing, and strategic decision-making in a market with fewer active listings and more off-market movement.

Today, success requires more than transactional brokerage. We’re deeply focused on sourcing off-market opportunities and providing consultative guidance, whether that means buying, selling, or structuring interim leasing strategies that support long-term goals.

Hohorst: Traditionally, companies have focused on managing risk early in the development, design, and construction phases of a project. But today, with so many new and emerging players entering diverse sectors, the challenges have multiplied. Companies now face complex questions: How do you capitalize the deal? How do you get equipment into the country? How do you raise money in sectors where political headwinds are constantly shifting?

We’re finding it’s more important than ever for companies to have a strong grasp of key factors, such as labor availability, tax structures, incentives, grants, training programs, and equipment sourcing. These elements are critical to success, especially for manufacturers entering the market. Each piece must come together like a symphony. When aligned, they help companies navigate risk and position themselves for long-term success.

How are today’s market conditions affecting the way organizations plan and move projects forward?

Carroll: Interest rates have been the single biggest challenge, impacting everything from underwriting to closing.

The spread between cap rates and borrowing costs has made many deals difficult to justify. When investors can earn 5% or more by holding cash, the bar for acquiring medium-risk assets becomes extremely high.

We’ve seen deals fall apart due to lending constraints, shifting rate assumptions, or payment projections. The lending environment has been inconsistent, which has slowed transaction velocity. However, recent rate improvements, even slight ones, have already made the second half of the year stronger than the first.
Our role has become far more strategic. There is rarely a single clear path forward anymore. Clients face multiple potential decisions, each with meaningful implications.

We’re being asked by municipalities, local businesses, and expanding organizations to help craft long-term real estate strategies that align with their operational goals. That includes evaluating current holdings, future, financing structures, and development options.

In many cases, we’re acting as strategic advisors, not just brokers, ensuring clients have a full-picture perspective before making key decisions.

Hohorst: We haven’t seen significant pushback on large-scale rezoning. The most resistance tends to come in the mission-critical sector. These facilities are challenging. They don’t generate many jobs, yet they require substantial infrastructure and consume a lot of power. Some communities prefer advanced manufacturing projects that create 300 to 500 jobs over data centers that may only employ 30 to 50.

When it comes to zoning, we’re mindful of those dynamics. But we don’t face the same challenges seen in denser clusters farther north on the East Coast, where public opposition and “not in my backyard” sentiment are more common. You don’t see people picketing outside facilities here. That’s part of what makes this region’s pro-business climate so strong, and why it has remained robust over the past five to 10 years.

Want more? Read the Invest: Raleigh-Durham report.