CONSTRUCTION ECONOMY OVERVIEW
Bill King President & CEO Downtown Raleigh Alliance
How is the pipeline of residential developments in Downtown Raleigh developing? The pipeline is building up. We’ve added new residential units, with 3,451 units added between 2015 and 2020. That is a lot of units and we still have more coming with another 3,530 units in the pipeline. People still see the value of residential and are excited to get a unique urban core in the region. Because of the market’s performance, with occupancy still hovering near 95%, we will see the residential pipeline continuing to grow.
market continued to record solid growth. The expansion in population, combined with tight housing inventory has led prices to soar by almost 20% year over year as of May. As of that month, the Triangle had only 0.4 months of inventory available; market equilibrium is considered six months’ supply. Fewer properties are coming onto the market than in 2020 and those that are coming are spending fewer days on the market. As a result, in May, the average sales price in the Triangle was $401,292, up from $330,258 for the same month a year earlier. Much of the demand for houses in the Triangle market is driven by worker relocations, following major company investments in the region. Tech giant Apple in April committed $430 billion in expansion CAPEX over the next five years, with plans to add 20,000 jobs to the area. One of those investments will be a new campus and engineering hub in the Triangle region, with a planned investment of $1 billion that will create at least 3,000 new jobs in machine learning, AI, software engineering and other high-paying fields. The Silicon Valley firm has also pledged a $110 million infrastructure spend across the state and $100 million in support of schools and community initiatives. ( )
How does current economic activity in Raleigh compare to 2019 levels? Food and beverage sales are recovering rapidly. They were low for a large part of 2020 and they started to take off a little unevenly. But people are coming in; nightlife has already recovered with a number of restaurants and bars already exceeding pre-pandemic levels. Downtown residential-oriented and less office-oriented businesses are much closer to fully recovered. Some are now seeing pre-pandemic sales. We’re picking up rapidly and gaining ground. Visitors are back and feeling comfortable. What are some of the incentives in place to attract businesses and create diversity? The office side of Downtown is pretty diverse already. The area is not heavy in one particular industry. The heaviest is probably the government but in the past six years, we’ve seen that share decrease from 50% to 40% of Downtown employment. We still have typical office users in Downtown, like law firms. We don’t depend on one large, private industry. We have a strong cloud-based software development segment that is diversifying into a lot of innovation. Some larger out-of-market employers like Apple have formalized their move to the region partly because they know they can get the labor they are looking for within the local talent base. That is a big moment for a leap forward. We’re working to continue to diversify. It has been neat to see Downtown diversify even through the pandemic. www.capitalanalyticsassociates.com
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