Durham-Chapel Hill MSA Industrial Market Report – Q3 2025
By Carey Greene, Senior Advisor / Partner
The industrial real-estate landscape in the Durham-Chapel Hill market continues to evolve. While underlying demand remains solid—fueled by life-sciences and advanced manufacturing growth—the region is contending with rising supply and a resultant uptick in vacancy. This quarter saw fewer “headline” economic-development announcements, but a major move by Biogen underscores the strategic value of the market.
Construction, Absorption & Vacancy
According to recent market data, the market delivered roughly 3.6 million SF of industrial space in the past 12 months.
Over the same 12-month period, net absorption in the Durham industrial market stood at about 2.6 million SF, aligning with the market’s 10-year annual average.
The vacancy rate has climbed to approximately 7.1%, up from around 5.9% at the start of 2024, reflecting the fact that new supply is outpacing immediate demand.
A robust pipeline remains: the market reportedly has around 3.3 million SF of space under construction, which suggests continued near-term supply pressure.
Rent Trends & Pricing
Asking rents continue to grow, but the pace is decelerating. Over the past 12 months, asking rents increased about 3.9%, compared to national rent growth of ~2.1%.
The deceleration trend is clear: the market is growing, but at a slower clip than the boom years—driven largely by new deliveries and the longer time needed for lease-up of speculative space.
Because of supply pressure and rising vacancy, many mid-sized users (20,000 to 50,000 SF) remain constrained in purchase opportunities, which continues to push some to lease rather than buy.
Submarket & Demand Driver Notes
Prime submarkets—such as South Durham and the RTP/I-40 corridor—continue to command premium rents and attract strong tenant interest, especially for users needing superior locations, workforce access and modern building specs.
Outlying submarkets with older, less efficient product remain under greater pressure—not only from new supply further in, but from tenant preference for newer, higher-clear-height, functional buildings.
Key demand drivers remain in place: strong regional population growth, a well-educated workforce, large presence of life sciences/biotech and increasing advanced manufacturing operations. These fundamentals suggest long-term optimism despite near-term supply headwinds.
Economic Development
This quarter was lighter than recent quarters in terms of major announcements. Development professionals and brokers reported fewer large-scale manufacturing or logistics commitments in the Durham-Chapel Hill area.
Notable Exception – Biogen Expansion (RTP)
Biogen announced a $2 billion investment to expand its manufacturing footprint in the Research Triangle Park (RTP) region. The investment will be applied across Biogen’s two campuses in RTP to modernize manufacturing technologies, expand antisense oligonucleotide (ASO) capabilities, build new fill/finish platforms, and integrate advanced automation and AI-controlled operations. The company employs over 1,500 manufacturing/technical personnel (plus ~400 contractors) in the Durham/Wake area. The announcement underscores RTP’s strength as a biotech and advanced manufacturing hub and signals further demand tailwinds for industrial/logistics real estate in the region. (Reuters | July 21, 2025)
Purchase Market for Users
For owner-users seeking mid-sized properties (20,000-50,000 SF) the market remains tight. Few properties are being offered, and those that do hit the market often move quickly.
With lease rates increasing (albeit slowly) and purchase opportunities scarce, many users are opting to lease, look further afield (e.g., Granville or Alamance Counties) or consider ground-up speculative development.
From an investor’s standpoint, valuations remain elevated, cap-rates compressed and competition strong—this despite the slowing rent-growth trajectory.
Major Takeaways – Carey’s $0.02
Vacancy has risen into the low-7% range (≈7.1%) but net absorption remains in line with historical norms (~2.6M SF). This suggests that demand is healthy, but supply is outpacing it in the short-term.
If you’re a user wanting to own a mid-sized industrial building in the Durham-Chapel Hill market, your options remain extremely limited. Ground-up development or looking further outside the core of the Triangle may be one of the few viable paths.
For investors: while rent growth is decelerating and vacancy is up, the structural demand drivers (life sciences, advanced manufacturing, logistics, regional growth) remain intact. Quality buildings in prime submarkets should continue to perform.
For tenants: this may be an opportune moment to negotiate favorable lease terms, especially in newer speculative buildings that may need to ramp up occupancy.
Outlook: Expect vacancy to remain elevated for the near-term and rent growth to remain modest until much of the speculative supply is absorbed. That said, the long-term outlook is favorable given the region’s strategic assets and economic development momentum.
Sources: CoStar; SVN | Real Estate Associates; regional market data; Reuters, July 2025 – Biogen Expansion in RTP
