Raleigh-Durham shallow bay vacancy leveling off

– Vacancies in industrial properties under 100,000 sf have leveled off over the last few quarters in Raleigh-Durham. Despite the increase in deliveries of big-box distribution centers, shallow bay space remains a highly sought-after product type. On average over the last 5 years, 89% of leases are sub-100,000 square feet. Asking rates have also risen for this space type, averaging $11.23 psf, up 5.3% since 2023.

– The shallow bay vacancy in Raleigh had been rising since 2022, when rates were roughly 1%, but has leveled off over the last 3 quarters to 4.4%. From 2020 to 2023, over 2.5 msf of shallow bay inventory was delivered, driving up the vacancy rate. The market has since caught up to that rise in development.

– Now, under construction inventory for shallow bay space remains scarce. Currently, only 456k square feet is currently under construction for spaces 100,000 square feet or smaller. With consistently strong demand for shallow bay space, expect to see the vacancy rate in this subtype tighten moving forward.