Q3 2024 MARKET REPORT
DOWNTOWN RALEIGH
SUMMARY AND HIGHLIGHTS:
Downtown Raleigh is growing. When completed, 16 developments under construction will add 1,772 residential units, 261 hotel rooms, and 82,944 square feet of retail space 1 An additional 41 planned and proposed developments would bring a further 7,820 residential units, 1,590 hotel rooms, 368,300 square feet of office space, and 243,507 square feet of retail.1
Downtown Raleigh’s stabilized apartment occupancy rate is 88.7% and effective rent is $2.13 per square foot.2 Stabilized occupancy does not include recently completed developments that are still in their initial lease up phase. Both The Miles and The Point, part of the Seaboard Station development, have delivered 204 and 75 apartment units, respectively.1 A total of 2,482 residential units are either under construction or have been delivered so far this year.1
Overall, Class A Office net absorption in Q3 was negative across the Triangle. The downtown office market saw -88,881 square feet of net Class A absorption with direct vacancy increasing to 15.2% in Q3 2024. Downtown Raleigh remains the lowest vacancy submarket in the Triangle market 3 In notable Q3 leasing activity, the office tower of 301 Hillsborough, which delivered in 2021, is now fully leased. Class A rent per square foot is $35.07, a slight decrease year over year.4
16 Q3 2024 PROJECTS UNDER CONSTRUCTION1
1,772 RESIDENTIAL UNITS UNDER CONSTRUCTION1 Q3 2024
14
NEW STOREFRONT BUSINESS OPENINGS1 Q3 2024
*Stabilized occupancy does not include recently completed projects
Photo: Downtown Raleigh skyline facing south west Credit: Bryan Regan
Average monthly food and beverage sales increased +3.5% year over year during the first two months of the quarter.2 Total year to date food and beverage sales within the Fayetteville Street District have increased 9.2% over the same period last year, the most of any district.2
Downtown Raleigh has seen 55 businesses open or expand since the start of 2024, including 15 in Q3.1 Fayetteville Street in particular has seen significant activity with Birdie’s Barroom and Kitchen, DICED, Raleigh Lace Museum, and Sir Walter Coffee + Kitchen all opening since July. An additional 37 storefront businesses have publicly announced their intent to open or expand in Downtown Raleigh.1 11 businesses closed during the quarter for a net gain of three storefront businesses. 1 The full list of business openings, closings, and coming soon can be found on page 11.
Hyatt House, a 149 room hotel that is part of the final phase of the Seaboard Station development, has begun welcoming guests.1
Estimated hotel room revenue collected in July and August increased 12% year over year as Downtown Raleigh saw over 1.8 million unique visitors in Q3.2,4
611 W South, a 1.73 acre vacant lot in the Warehouse District, sold in August for $10.3 million.5 801 and 807 Halifax St, a small office building across from William Peace University, sold in July for $2.8 million.5
84.8%
Class A Office Direct Occupancy Q3 20246
DEVELOPMENT UPDATES:
Total Visits To Fayetteville Street Year Over Year Q3 20244 INCREASE
$26.3M
Estimated Average Monthly Food & Beverage Sales July & August2
*Average Monthly Hotel Room Sales Revenue From Q3 20232
1.8M Q3 20244 UNIQUE VISITORS +12% INCREASE
1DRA
2Wake County
3Eco-Counter
4Placer.ai
5CoStar
6JLL +1.9%
Overall, there is $7.4 billion of investment in the current Downtown Raleigh development pipeline.1 This includes an estimated $2.6 billion in projects completed since 2015, $903 million in projects under construction, and $3.9 billion in proposed or planned developments.1
$2.6 Completed (since 2015) BILLION $903 Under Construction as of Q3 MILLION $3.9 in Site Preparation/ Proposed/Planned Developments BILLION $7.4 Completed since 2015, Under Construction, and Planned Developments BILLION
Seaboard Station Completes Final Phase
The multi-phase Seaboard Station development has completed construction. The final phase delivered 75 apartment units at The Point and 149 hotel rooms at Hyatt House. In total, the full project has added 577 apartment units, approximately 88,000 square feet of retail, and 149 hotel rooms.
Row 12 Townhomes Deliver
12 townhomes have finished construction on the eastern edge of Downtown Raleigh at 540 E Hargett Street. Each unit features a rooftop deck with views of Downtown Raleigh.
Oldham & Worth Begins Construction
The second phase of the West End development project has begun construction and when complete will add 252 apartment units to the rapidly expanding Warehouse District.
Image: Row 12 Towhomes at 540 E Hargett Credit: Row 12 Raleigh
Image: All three phases of the Seaboard Station development Credit: Hoffman & Associates
Image: Rendering of Oldham & Worth Credit: Kane Realty
Q3 2024 DEVELOPMENT MAP
Construction In Site Preparation, Planned, or Proposed
An interactive development map with updated listings of project information and images is viewable at downtownraleigh.org/ do-business/ developments
IN SITE PREPARATION,
OFFICE MARKET HIGHLIGHTS
Average asking rates for Class A space in downtown are flat year over year at $35.07 per square foot.1 Class A direct vacancy increased to 15.2% with -81,881 square feet of total Class A net absorption in Q3.2 Downtown Raleigh remains the lowest vacancy submarket in the Triangle at 84.8% occupancy 2 Notable leasing activity includes Fox Rotchschild leasing 16,000 square feet at 301 Hillsborough, relocating from 434 Fayetteville, and ndustrial.io leasing 12,000 square feet at 319 W Martin.4 As a result, the office tower of 301 Hillsborough, which delivered in 2021, is now fully leased 4
PERFORMANCE INDICATOR: CLASS A TOTAL NET ABSORPTION (SF)1
-81,881 SF Class A Office Net Absorption1 $35.07 Class A Office Average Rent PSF2
6,448,761 SF Total Office Inventory2 84.8% Class A Office Occupancy Rate1
446,379 SF Office Sublease Space Available2
OFFICE MARKET 1JLL 2CBRE 3DRA 4Triangle Business Journal
1,972,889 SF Office Delivered Since 20153 Q3 2024
-28,238 SF CLASS A OFFICE NET ABSORPTION YEAR TO DATE¹
Photo: a collection of downtown office buildings Credit: Bryan Regan
Seven residential developments have delivered so far this year, adding 710 residential units to Downtown Raleigh.2 While the overall number of people living in downtown has increased, the recent wave of apartment deliveries, 674 units in total across four developments, has decreased downtown’s stabilized occupancy rate to 88.7% and decreased the effective rent to $2.13.1 Effective rent peaked in Q2 2022 at $2.41 after six consecutive quarters without a single development delivering.1 There are an additional 1,772 residential units under construction across seven developments.2
PERFORMANCE INDICATOR: APARTMENT UNITS DELIVERED AND VACANCY1
MARKET Q3 2024 1CoStar 2DRA 88.7% Stabilized Occupancy1 $2.13 Effective Rent per SF1
9,607 units Residential Inventory2
1,772 Units Under Construction2 #6 U.S. News August 2024 Raleigh BEST PLACE TO LIVE IN THE U.S.
#5 U.S. News August 2024 Raleigh BEST PLACE FOR QUALITY OF LIFE IN THE U.S.
Photo: Resident lobby area in 400H Credit: Trammell Crow Company
STOREFRONT MARKET HIGHLIGHTS
Fayetteville Street in particular has seen significant activity with the recent openings of Birdie’s Barroom and Kitchen, DICED, Raleigh Lace Museum, and Sir Walter Coffee + Kitchen all opening since July.1 An additional 37 storefront businesses have publicly announced plans to open or expand in Downtown Raleigh.1
The multi-phase Seaboard Station development has completed, adding 88,000 square feet of new retail space.1 There is an additional 82,944 square feet under construction and 243,507 square feet proposed across 30 projects.1
PERFORMANCE INDICATOR: TOTAL VISITOR VISITS TO DOWNTOWN RALEIGH2
RETAIL MARKET
Q3 2024
Retail SF Under Construction1
82,944
Retail SF Planned or Proposed1
243,507
15 New Storefront Business Openings & Expansions (Q3)1
Storefront Business Openings & Expansions (2024 YTD)1
55
#1 LendingTree 2023 Raleigh BEST CITY TO START A BUSINESS 1DRA 2Placer.ai
Q3 2024 VISITS AS A PERCENT OF Q3 2019 VISITS2 +97.8% RECOVERED
Photo: La Terrazza Raleigh Credit: Monica Slaney
STOREFRONT MARKET HIGHLIGHTS
FOOD AND BEVERAGE SALES BY DISTRICT IN Q31
Average Monthly Food & Beverage Sales in Q31*
$26.3 MILLION
$25.4 Million in Q3 2023
Average monthly food and beverage sales for the first two months of Q3 in downtown increased by +3.5% over the same period last year.1
PERFORMANCE INDICATOR:
AVERAGE MONTHLY FOOD AND BEVERAGE SALES BY QUARTER1
160+ Restaurants & Bars In Downtown With Outdoor Seating2 1Wake County Tax Administration, DRA *Only July & August data available 2DRA 9 Craft Breweries & Distilleries In Downtown2
The monthly average for the Warehouse District increased by +26.1% year over year, the most of any district, and was 67.4% higher than in 2019.1* +3.5% INCREASE Q3 2023 TO Q3 2024*1 Seaboard Person
Q3 2019 TO Q3 2024*1
Photo: The Self Care Marketplace Credit: Monica Slaney
Q3 2024 STOREFRONT ACTIVITY
Q3 2024 STOREFRONT BUSINESS ACTIVITY
HOTEL & TOURISM MARKET HIGHLIGHTS
Hyatt House, a 149 room hotel that is part of the final phase of the Seaboard Station development, has begun welcoming guests.3 The dual branded Tempo by Hilton & Homewood Suites is the only hotel development under construction in Downtown Raleigh. There are an additional 1,590 hotel rooms planned or proposed for Downtown Raleigh.3
Estimated hotel room revenue collected in July and August increased 12% year over year as Downtown Raleigh saw over 1.8 million unique visitors in Q3.1,2
PERFORMANCE INDICATOR:
DOWNTOWN AVERAGE MONTHLY HOTEL ROOM REVENUE1
Hotel revenue increased +12% year over year in Q3 20241
HOTEL + TOURISM MARKET
Q3 2024
261 Hotel Rooms Under Construction3
487 New Hotel Rooms Added Since 20203
1.8M Unique Downtown Visitors in Q32
$10.6M Average Monthly Hotel Room Revenue Q31*
1Wake County Tax Administration, DRA 2Placer.ai 3DRA
*Only July & August Data Available
+12% INCREASE Q3 2023 TO Q3 2024*1
Photo: concert at Red Hat Amphitheater Credit: Red Hat Amphitheater
NEWS & EVENTS
2-Hour Free Parking Pilot Approved
Raleigh City Council recently approved a pilot parking program that would provide 2-hours of free parking in five city-owned parking garages in Downtown Raleigh. The pilot program will begin mid-November and run through early 2025. The decision stems from a recommendation in the recently completed Economic Development Strategy to attract more visitors to downtown.
Red Hat Amphitheater Relocation Moves Forward
Raleigh City Council moved forward with the planned relocation of Red Hat Amphitheater, making way for the approved expansion of the Convention Center. Construction on the new facility is expected to begin early in Q1 2025 to be open for the 2026 concert season.
Downtown Economic Development Strategy Unveiled
The Downtown Raleigh Economic Development Strategy was unveiled in August. The report calls for bold, new investment in better public spaces, stronger physical connections, strengthening ecosystems, and a new spirit of celebration through public art and activations to elevate Downtown’s past and future. Implementation is already underway with initiatives such as a Fayetteville Street streetscape design RFP, new artistic wayfinding, two-hour free parking in city decks, and other early-action recommendations having begun implementation. More information on the newly unveiled strategy and its recommendations can be found online at downtownraleigh.org/ed-strategy
Image: Moore Square Station Parking Deck Credit: City of Raleigh
Image: rendering Lenoir St between RHA and the Convention Center Credit: Raleigh Convention Center
13,700+
Resident Population1 Employees Within 1 Mile of the State Capitol1
48,500+
19.1M Visitor Visits Per Year2
Median Age1 Average Household Income1 Bachelor’s Degree or Higher1 DOWNTOWN POPULATION GROWTH
32.8
149K
71.1%
44.7% Of population between ages 20-341
ABOUT DOWNTOWN RALEIGH ALLIANCE (DRA)
DRA has a mission of advancing the vitality of Downtown Raleigh for everyone. DRA facilitates this mission through five goals:
1 2 3 4 5
Improve downtown economy through recruitment, pop-ups, financial support, research, marketing & promotions;
Advocate to make downtown a place for everyone that reflects evolving needs and interests of the community and lessons learned from the recent past;
Make downtown an engaging place to live, work, and visit through safe activations that appeal to a wide variety of stakeholders;
Improve and maintain a sense of safety and security in downtown through our Ambassador program, Social Services and work with RPD; and,
Elevate and improve DRA’s internal organization and processes through improved database, project management, communication, financial stewardship, and planning.
For additional information and resources visit: downtownraleigh.org/do-business
CONTACT FOR QUESTIONS:
Gabriel Schumacher Research Manager
Downtown Raleigh Alliance 919.821.6981 // gabrielschumacher@downtownraleigh.org
DOWNTOWN BOUNDARY AND DISTRICT MAP
Photo by Patrick Maxwell