RALEIGH – Whether for work, living space or a combination, demand for real estate in downtown Raleigh is high, and it is driving further development and growth. Plus, one key indicator is showing that more workers are returning to their downtown offices compared to a year ago.
That’s according to a new report from the Downtown Raleigh Alliance, which tracks the downtown Raleigh market across multiple sectors of the economy, based on data from the first quarter of the year.
In residential markets, multi-family occupancy remained high during the quarter, with 95.8% occupancy, according to the report. That’s a vacancy rate of 4.2% in multi-family residential units (apartment buildings and condominiums).
Since 2015, there have been 3,451 completed residential units in downtown Raleigh, the report notes. As of the end of the first quarter of 2022, however, there are an additional 1,456 units under construction and 5,535 units either planned or proposed. Compared to the first quarter last year, there are now 78% more units under construction.
But it still might not be enough.
The proposed or planned units are about half of what one real estate executive has said is needed downtown in order to meet demand and stabilize prices, which have increased in recent months, leaving some residents squeezed in the housing markets. And those already under construction are some 15% of what the area may need, Brian Leary, the COO of Highwoods Properties, has said previously.
Leary told a virtual audience that he believed that downtown core markets in the Triangle, including Raleigh, needed more than 10,000 additional residential units in order to meet demand and stabilize price increases in median area rent rates.
(Editor’s Note: In the coming weeks, WRAL TechWire will be releasing special reports, Future of Work, on the Triangle’s economy and the impact on the commercial real estate markets, including the multi-family sector.)
Special report: The future of the Triangle’s economy hinges on its spaces
Demand high for commercial spaces, too
According to the report, the downtown office market is also seeing high demand. The market is “an attractive place for companies looking for amenities and Class A space,” the report reads.
In the first quarter, Pendo moved in to its new headquarters location at 301 Hillsborough. While Pendo occupies the top five floors of the building, the national law firm Nelson Mullins recently leased the 14th floor of the building, the report noted.
In the office segment, there was 754,002 square feet of space delivered in the 2021 calendar year, and through the end of the first quarter of 2022, net absorption has been 169,394 square feet of office space.
Meanwhile, there is currently 144,410 square feet of Class A office space under construction at the new mixed-use tower 400H, and an estimated 1.7 million square feet of office space planned or proposed in downtown Raleigh, the report notes.
More people are parking cars downtown
One metric that the organization tracks to measure how the region is performing is parking deck occupancy. There’s been a 50% increase in occupancy of parking decks between the first quarter of 2021 and the first quarter of 2022, which the report notes is one indicator of workers returning to offices downtown.
For the first quarter, occupancy of parking decks was 23.3%, up from 15.5% a year ago, the report found.
Special report: Space in high demand, even as future of work remains uncertain
