For more than five years tenants saw the benefits of a stagnant office rent situation and were able to rent office space with concessions and were able to negotiate what they were willing to pay.  There has been a change in the Triangle.  “Class A space has increased 3.3 percent to around $22.23 per square foot per year in 2014, and in 2015, the price hike in office rents is expected to more than double with another 7 percent increase.”

Owners and landlords of Class A office space across the market area are able to raise their rental rates due to the low level of space available. The Triangle is at its lowest level in the past 15 years at 8.9 percent.

Another factor is construction material and labor costs for new buildings. These costs are on the rise. The costs are being reflected in the higher rental rates for new construction.

“Rental rates for the new Class A office buildings currently under construction in Wake, Durham and Orange counties range from $24 per foot at Duke Realty’s Perimeter Four building in Morrisville, to $34.50 per foot at the 123 West Franklin (formerly University Square) in Chapel Hill.”

(Source: TBJ 2/13/15)