COMMERCIAL REAL ESTATE & CONSTRUCTION INTERVIEW
Squeezed out Flight from ‘unhealthy’ cities is pushing demand and squeezing some buyers and renters out of the market
Jim Anthony CEO – APG Capital and APG Advisors What are the biggest challenges to developing in Raleigh-Durham? Our biggest challenge at the moment is that huge demand is overwhelming the short supply, which is squeezing lots of homebuyers and renters out of the market. It has been that way in a lot of Southern cities, as the flight from what I’ll call unhealthy cities around the country continues to grow. These are places where there is structural economic, leadership, regulatory, and tax challenges. Folks who live and work there were already frustrated and COVID pushed them over the edge. So, folks are coming here in droves. They’re going to Florida, Tennessee, South Carolina and Texas but that immigration is a major challenge for every one of those markets. Infrastructure is getting strained, land prices are going crazy and construction prices are too high with labor shortages. You will be fortunate to find loyal subcontractors right now because they’re charging whatever they want and getting it. That’s not good. Here’s what will rebalance that: I’m talking to people from New York, Pennsylvania and New Jersey who have little to do there because things are mostly not growing. These people are coming down here, bringing their skills and companies with them, so there will be growing numbers of subcontractors and general contractors here. If there’s a second major challenge, I would say that I’m hoping that people will stop buying up all of the lumber and building materials so that what doesn’t get bought in New York, Illinois, and California, can get sold down here. There is an unbelievable strain caused by the price of construction materials and products at the moment. Can you elaborate on the Edgewater Commons development that is in the works? Edgewater Commons is a project that has been three years in the making. The project site — roughly 70 acres — has been among the most complicated we’ve ever
worked with. It has environmental contamination, has had roadways planned that had been on the maps and which had to be removed, it had incorrect zoning, it has a slave graveyard on it because it’s an old farm, and about five or six acres of our land is in or under the Neuse River. It’s a truly interesting site and a transformational project for the east side of Raleigh. We are planning on doing around 500 units of housing, we hope to have a shopping center in the range of 120,000 square feet, a community oriented recreational area on the banks of the River, and we’re looking into additional retail and office. We will do most of the development ourselves, despite an abundance of interest from other parties, though not the retail since we’re not retail experts. I imagine it will take three to five years to get fully built out. www.capitalanalyticsassociates.com
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