July 31, 2025
Durham-Chapel Hill MSA
Industrial Market Report – Q2 2025
By Carey Greene, Senior Vice President
The industrial market in the Durham-Chapel Hill MSA (which we will refer to as “Greater Durham” in this report) remains a story of strong construction activity and resilient demand—but also increasing vacancies and slower rent growth as supply has outpaced absorption in recent quarters. Despite these trends, the region continues to attract significant investment and development interest, fueled by robust population and economic growth, as well as its well-established life sciences and advanced manufacturing sectors.
Market Snapshot
12 Month Deliveries: 3.4 million square feet of new industrial construction deliveries
12 Month Net Absorption: 2.1 million square feet
Vacancy Rate: 7.9% - up from 6.2% year-over-year
Market Asking Rent Growth: 3.3% - down from 7.2% a year ago and 9.8% two years ago
Space Under Construction: 3.2 million square feet with approximately 60% pre-leased
Sales Activity: $312 million over last 12 months – below 10-year annual average of $369 million
Number of Sales: 35 industrial properties sold in the last 12 months - below 10-year annual average of 60
Economic Development Update
After a lighter first quarter of economic development announcements, the second quarter proved more fruitful. While there were no significant announcements in the Greater Durham area itself, activity in surrounding areas will still benefit the local economy. Big announcements included JetZero’s planned manufacturing facility of it’s “all wing” plan, known as the Z4, in Greensboro at PTI International Airport, where over 14,500 jobs are to be created with a nearly $5 billion investment. Also in the Triad, a new data center by Enovum Data Center Corp will create just 60 jobs but approximately $1 billion in investment. In the Triangle, Genentech announced 420 jobs on $700 million in investment in a new manufacturing facility in Holly Springs.
The three largest combined statistical areas (Charlotte, Triangle and Triad) accounted for 92% of the announced new jobs but only 42% of investment. The reason? A $10 billion data center announced by Amazon Web Services in Richmond County. The investment promises 500 jobs.
On a broader economic front, the U.S. economy is navigating a period of uncertainty, with concerns over tariffs and their potential impact on growth. However, recent data suggests a rebound in economic growth in the second quarter of 2025. The labor market has remained robust, with consistent job creation and a low unemployment rate.
CAREY'S $0.02 and Summary
Vacancy rates are rising—not from a lack of interest, but because a remarkable volume of new space is coming online. This surge in deliveries is reshaping local markets, offering fresh options for tenants but also intensifying competition among property owners.
At the same time, rent growth is decelerating. After years of rapid increases, landlords are now adjusting expectations as the pace cools, even though local growth continues to outperform national averages. These trends suggest a market in transition, caught between the momentum of expansion and the natural checks of increased inventory. Some developers are preferring build-to-suit projects or pre-leasing before coming out of the ground to mitigate risk and reduce costs.
On the investment side, sales activity is below its historical average, both in terms of dollar volume and the number of transactions. Yet, with billions of dollars flowing into new facilities and major players like Amazon and JetZero announcing transformative projects, the sector remains vibrant. Economic development announcements—sometimes outside the immediate local area—promise ripple effects that could benefit the broader region.
Sources: CoStar, Economic Development Partnership of North Carolina, SVN | Real Estate Associates, SVN International Corporation