RALEIGH – The massive Downtown South project is “slowed” due to high interest rates, says developer Kane Realty.
There won’t be a quick getting various parts of the project “out of the ground” with financial markets afflicted by high rates. Commercial real estate developers also are dealing with substantial vacancy rates in the wake of the COVID-19 pandemic that led to many workers embracing work-from-home options.
In a recent presentation made as part of a quarterly update about the project, Bonner Gaylord, chief operating officer of Kane Realty, said the company is “still geared up and ready to go” for the project which could cost more than $2 billion. The project is projected to include retail and office space, an entertainment venue, and housing.
“We’re bullish on long-term projects,” he added.
Gaylord told WRAL News that plans continued for groundbreaking of a music venue and in the second or third quarter of 2024.
However, Gaylord said further progress is “pending interest rates going down.”
“We’re working on financing,” he said. “It is in the midst of the financing page of the development process. And we’re facing the same market challenges that everyone is.”
Developers also face an 18.6% vacancy rate, according to the latest report from commercial real estate firm CBRE Raleigh.
Interest rates could decline in 2024 but the Federal Reserve continues to battle inflation but talk about cutting rates is premature, Federal Reserve Chairman Jerome Powell said on Friday.
“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said, according to CNBC.
Gaylord pointed out that project advancement is “capital dependent.”
He cited several points in the update:
- Navigating Capital Markets
- Pushing for Music Venue SPR and Building Permit Approval
- Working through Infrastructure and Sitework Logistics with Contractors
- Aiming to Start Infrastructure and Verticals – Capital Dependent
