Interview: Matt Hohorst, Vice

Matt Hohorst

Vice President ARCO Design/Build

What factors explain the strong performance of the industrial sector in Raleigh?

With everyone forced to stay home due to the pandemic, consumers turned to the internet as the primary means to procure products and groceries. Now in a post-pandemic world, it also seems that consumers have become accustomed to these buying behaviors and are gravitating away from shopping malls. From our perspective, the Triangle industrial market has been relatively dormant over the last decade but it really started to pick up the pace over the last year. As I understand it, there are approximately 160 people moving to the region on a daily basis. Even with a margin of error, it’s clear that Raleigh-Durham is one of the fastest-growing metros in the country. Rapid population growth is usually a good indicator that a robust industrial market is soon to follow.

We see three trends in the industrial development space in the Triangle. First, to my last point, last mile is going to be required to address the trends in e-commerce and local population growth. Second, industrial assets seem to be offering the best means to address speed-tomarket opportunities for life sciences companies looking to establish themselves in the region. Third, due to the growing demand for lab space, many flex buildings are being converted, creating a very low vacancy rate for smaller industrial users.

How does Raleigh fit into ARCO’s growth strategy?

We pride ourselves on being evangelists of the designbuild process in its truest form. Over the past several years, we’ve organically grown into the life science market throughout the country. Effective use of design-build is not very common in this sector. Though we’ve found that underperformance of traditional execution models have led to an ever growing need for a means of designing and building in a more efficient, thoughtful, and controlled way. That’s exactly what we have brought to the RaleighDurham market and the life sciences sector in North America. So far, the results of this method are staggering, and we couldn’t be more proud of our success.

Commercial real estate in the Triangle prevailed throughout the pandemic and has yet to slow down.

( )Conversely, the pandemic-driven demand for e-commerce and last-mile delivery provided a jolt to the Triangle’s industrial sector, as seen by the strong industrial asset class performance during this cycle. In that same vein, the focus on health and wellness opens opportunities for healthcare and life sciences entrepreneurs to innovate and improve healthcare delivery models, bolstering demand for lab space, medical offices, clinics and expansion of healthcare systems.

On the apartment front, the healthy population growth, further bolstered by factors such as newfound remote work capabilities, low-interest rates and growth of local suburban markets, put multifamily developers and investors in a good position to capitalize on the Triangle’s projected growth.

Challenges loom for the commercial real estate and construction sector, however. Developers and construction leaders are closely monitoring factors such as price escalation, supply chain disruptions and labor challenges that could potentially impact project ( )