The Durham-Chapel Hill market in North Carolina includes five counties: Durham, Orange, Chatham, Granville and Person. The market experienced significant job losses at the beginning of the pandemic but then recovered a large number. Several companies have also announced expansions in Durham amid the on going pandemic, amounting to thousands of new jobs over the next few years. The list includes a number of life sciences and biotech firms such as Grail, Eli Lilly, KBI Biopharma, and BioAgilytix.
Vacancies did rise to a 10-year high in 2Q2020 due to more than 1,200 new apartments being delivered, the largest quarterly addition in the past decade. Vacancy figures have trended downward slightly since then but are still slightly above the market's historical average. New apartment deliveries are expected to be lighter over the next few quarters, giving apartment communities some breathing room to lease up. Although vacancies are projected to remain elevated, it is only in the short term as demand continues to increase given the metro's continued economic improvement.
Workforce apartment communities have achieved a 2.9% year-over-year rent increase
The number of new apartments delivered in 2020 is currently affecting rent growth for apartment communities that are at the higher end of the market. Class A communities have only increased rents by 0.3% in the past 12 months. In comparison, workforce apartment communities have achieved a 2.9% year-over-year increase. This puts Durham’s average rent growth at about 1.5% on a year-over-year basis.
The Durham-Chapel Hill market is poised for more economic growth in the long term, bolstered by Research Triangle Park (RTP) and the major universities in the area (Duke, UNC Chapel Hill, and NC State). RTP is the largest research park in the country and is home to more than 200 companies, with more than 50,000 employees, according to pre-COVID stats. IBM, CiscoSystems, and Fidelity Investments are among the largest employers in the park. RTP generates a significant amount of economic activity in the region and contributes to the market’s strong demographics. With a median household income above $73,000/year, residents in this market are high earners.
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