Downtown Raleigh Update Q1 2021
Summary
The start of 2021 shows continued signs of growth for Downtown Raleigh despite the unpredictable past year. Downtown Raleigh continues to see growth in all real estate markets and in its population. The residential market in Downtown is responding to increasing demand and in Q1 2021, 328 new residential units were delivered. This includes downtown’s first condo project since the 2008 recession, The Fairweather. There are an additional 322 units under construction and there are 3,530 units currently proposed for Downtown as of the end of the 1st quarter. Since 2015, there have been 3,451 units completed, which is a 101% increase in downtown residential units over that period.
The office market is also showing signs of continued growth with 754K SF of office space under construction as of Q1 2021. This includes Tower Two at Bloc[83], which completed just after the 1st quarter, 421 N. Harrington (part of Smoky Hollow Phase II), and Raleigh Crossing Phase I. There is an additional 1.8 million SF of office space in planned or proposed projects.
Since the beginning of 2021, there have been 19 new storefront business openings, 2 storefront expansions, and 10 storefront business closings in Downtown Raleigh. This is a net of +11 new storefront businesses year to date. There are an additional 16 storefront businesses announced and coming soon to downtown. Since the beginning of 2021, 23 businesses have reopened that temporarily closed during the pandemic.
Notable openings include the highly anticipated Sam Jones BBQ, a traditional eastern-NC BBQ joint, and The Hightide Salon in the Warehouse District as well as Mon Macaron, a macaron shop and café, in the Seaboard & Person Street District. So & So Books and Burial Beer Co. opened significant expansions in the Seaboard & Person Street District and Moore Square District respectively.
Food and beverage sales continued to increase in Q1 of 2021 with a 33% increase from Q4 2020. March 2021 was a 76% increase from March 2020. (1*) Across 5 counter locations in Downtown Raleigh, average daily pedestrian traffic in Q1 was up 11% from Q4 2020 and up 71% from Q2 2020, when traffic was at its lowest during the pandemic. There were several notable commercial real estate sales in downtown in Q1.
The Snoopy’s Hot Dogs location at 600 Hillsborough St., a 0.18-acre site, sold for $1.6 million to Glenborough LLC. On the land alone, that sale amount equates to a valuation of just over $200 per square foot. CityPlat and Modalia Capital also acquired real estate in Glenwood South, purchasing the
0.19-acre, gravel parking lot located at 504 Hillsborough St. for $700,000.
Finally, Raleigh-based Edgewater Ventures purchased the office building at 111 W. Hargett St. in the Fayetteville Street District for $5.45 million or $176 per square foot on the building. (2*)
(1* Wake County Tax Administration) (2* Triangle Business Journal)
Residential
Despite the pandemic, demand continues for residential units in Downtown Raleigh. 328 residential units delivered this quarter in downtown with construction underway on an additional 322 units. There are currently 3,530 units proposed or planned and multiple apartment projects are gearing up to break ground before the end of 2021.
In Q1, search activity on Apartments.com in Raleigh increased to records levels, which is just one indicator of the increasing demand in the Raleigh market. According to CoStar data, Raleigh’s urban market rents are up
by 6% since the start of the year – which is one of the strongest urban market performances in the country for a metro’s urban properties. Greater Raleigh market rents are up by only 4%, indicating that there is a
higher demand to return to the city center in 2021.
Development Updates
Overall, there is $1.97 billion of investment in the current Downtown Raleigh development pipeline. This includes $724.6 million in projects completed since 2019, $390.2 million in projects under construction, and $865 million in proposed or planned developments.
In Q1 2021, The Fairweather and The Line Apartments were both completed, adding 328 new residential units. The Fairweather, a 45-unit condo project in the Warehouse District is Downtown Raleigh’s first condominium project completed since 2008. Another condo project, 615 Peace, began site prep this quarter for the construction of 24 condos in Glenwood South. This site also includes about 2,000 SF of retail space and is expected to deliver in spring of 2022. There are also 2 more condo projects currently planned in downtown at The Nexus and The Lynde.
The Line Apartments, the residential portion of Smoky Hollow Phase II, is a 283-unit apartment complex with studios, 1-bed, 2-bed, and 3-bed floor plans. The Line Apartments also adds about 30,000 SF of first-floor retail space. Construction continues on the office portion of Smoky Hollow Phase II, 421 N. Harrington, which will include around 11,000 SF in retail space and over 225,000 SF in Class A office space.
Seaboard Station Block B began site preparation work in Q4 of 2020 and remained under construction in Q1 of 2021. Plans for Seaboard Station Block B call for 298 residential units and 30,000 SF of retail. The future phases of Seaboard Station, Block A and C, plan for more retail space, residential units, and a hotel. Block B is expected to deliver in Q3 2022 and Block C in 2023. The combined investment across all three phases is estimated at $270 million.
”Downtown Raleigh Alliance” Study: More Here