2015
CHAIRMAN’S LETTER 2014 was a terrific year of growth for our community and region as the following pages will attest. We continued to be a leading market in the economic recovery. • The unemployment rate has fallen to 4.4% — 1.1% lower than the state and national rate of 5.5%.
“As we look at 2015, our momentum will be sustained and our community’s attention focused on investing in the infrastructure needed to meet demands of an expanding population.”
• Over the past year, the region’s GDP growth has outpaced that of North Carolina and the nation nearly two to one: Raleigh-Cary MSA: 4.15%
NC: 2.32%
US: 2.23%
• Wake County’s employment growth over the past year has exceeded the state and nation by 2% and 1.6%, respectively. • Wake County remains a high-growth community, growing at more than twice the rate of the state and nation since 2012: Wake: 2.1%
NC: 1%
US: 0.7%
• 49.1% of Wake County's population holds a bachelor’s degree or higher, compared to the state average of 28.3% and the national average of 29.6%. As you see, our numbers were sound and our successes many. The most important thing is that our community remains a priority destination for individuals, families, and businesses seeking opportunity.
ED WILLINGHAM President, First Citizens Bank 2014–2015 Chairman of Greater Raleigh Chamber of Commerce
As we look at 2015, our momentum will be sustained and our community’s attention focused on investing in the infrastructure needed to meet the demands of an expanding population. We see Wake municipal and county governments actively engaging the community in the review of our public education and transit strategies and investments. These are very important conversations to have if we hope to control our future and prepare for continued prosperity. Over time our county has done well by making key municipal and county investments and we have been rewarded with economic vitality. Our success has never been taken for granted and we make intentional investments in quality of place as Raleigh did last year with the overwhelming passage of a parks and recreation bond. An exciting future lies ahead for Raleigh and Wake County, and your Chamber is leading the way. I am honored to be part of this team, and I look forward to working with each of you as we continue our path to even greater prosperity.
2
PLANNING FOR GROWTH
215
New Residential & Commercial Permits by Municipality within Wake County 2,500
103
57
103 5
46
441 10
693 Holly Springs
329 2
1212 Wake County
423 16
27
695 Wake Forest
35 2029 Raleigh
821 FuquayVarina
126 53
1816 Cary
500
18
1,000
980
#1
Angier
Zebulon
Wendell
Rolesville
Knightdale
Morrisville
0 Garner
New Permits within 18 months Construction Type Commercial Residential Permit Density High Low
1,500
Apex
Legend
Commercial Permits Residential Permits
38
2,000
14
Residential & Commercial Permit Concentrations Wake County: 2013–2014
FASTEST GROWING METRO (2000–2013) (Raleigh-Cary, NC) — CityLab, April 2014 Wake County is growing by
62 PEOPLE per day
Wake County’s population hit
January 2013–July 2014. This map was created by Wake County, Wake County Planning Department. August 22, 2014. Information depicted hereon is for reference purposes only and is derived from best available resources. Wake County assumes no responsibiliity for errors arising from misuse of this map.
ONE MILLION
people on 8/22/14
3
COMMUNITY STATISTICS
Wake County Retail Sales
Wake County Permits
$12,076
Residential New Construction
4,075 PERMITS
Raleigh
#1
$897M PERMIT VALUE
Sources: Population: NC State Department and ESRI. Labor Force and Employment: NC Department of Commerce and Division of Employment Security. Retail Sales: NC Department of Revenue and U.S. Census Bureau. Building Permits: Wake County Revenue Department.
4
Raleigh-Cary MSA
1,768,603
1,187,941
Raleigh/DurhamChapel Hill CSA
Labor Force Growth 1M
2000 2014
800K 600K 400K
BEST PLACE FOR BUSINESS IN 2014 (Raleigh-Cary, NC) — Forbes, July 2014
Wake County
943,161
Information: 18,040
0
728,616
Financial Activities: 25,507
250K
621,943
Trade, Transportation & Utilities: 87,476
500K
454,464
Professional & Business Services: 98,588
BILLION
1M 750K
Manufacturing: 22,307
627,846
Construction: 26,735
1.5M
804,360
1.25M 431,746
Education & Health Services: 91,780
Natural Resources & Mining: 1,088
2000 2014
508,670
Leisure & Hospitality: 53,875
1.75M
276,093
Other Services: 15,024
Government: 75,913
984,568
2M
1,227,990
Population Growth
366,028
2014 Employment by Sector / Total Employment: 516,333
200K
0
Wake County
Raleigh-Cary MSA
Raleigh/DurhamChapel Hill CSA
2014 PROJECT HIGHLIGHTS Advanced Auto Parts Automotive Retailer | Jobs: 600 | Investment: $5 million Advanced Auto Parts is opening a corporate support center in Raleigh and plans to create 600 jobs by the end of 2017.
BB&T Financial Services | Jobs: 20 | Investment: $89 million Branch Banking & Trust is building a data center in Zebulon that is expected to be completed by the end of 2015. BB&T will employ 20–30 associates at the new facility.
Cisco Systems Software/IT | Jobs: 550 | Investment: $1.6 million Cisco Systems announced it is expanding its workforce in the RTP by adding 550 new jobs over the next four years.
HCL Technologies
Wake County Economic Development New and Expanding Announcements
74 4K+
announcements
new jobs
$466M+
investment
Software/IT | Jobs: 1,237 | Investment: $9 million HCL Technologies plans to expand its existing operations in Cary and create an additional 1,237 jobs by the end of 2018.
Merz North America Biotechnology/Pharma | Jobs: 250 | Investment: TBD Merz North America is establishing its headquarters in Raleigh and is expected to have 250 employees.
Tyton BioEnergy Systems Biotechnology/Pharma | Jobs: 15 | Investment: TBD Tyton BioEnergy Systems is planning to hire 20 employees for an operation to support its biorefinery in Hoke County.
Xellia Pharmaceuticals Biotechnology/Pharma | Jobs: 50 | Investment: $100 million Xellia Pharmaceuticals is creating 50 permanent full-time jobs and investing $100 million in its manufacturing operation on Capital Blvd.
5
NEW & EXPANDING ANNOUNCEMENTS
Company Name
Industry Cluster
New Jobs
Investment
(as of 11.14.2014)
Company Name
Industry Cluster
New Jobs
Investment
TBD
TBD
3C Institute for Social Development
Software/IT
TBD
TBD
Crude Bitters & Sodas
Retail Food/Beverage Manufacturer
ABB
Smart Grid/Cleantech
TBD
TBD
TBD
Automotive Retailer
600
$5M
Professional/Technical Services
TBD
Advanced Auto Parts
Cushman & Wakefield/ Thalhimer Dimension Data
Software/IT
TBD
TBD
Angler Environmental
Professional/Technical Services
6
TBD
Distil Networks
Software/IT
10
TBD
AT&T
Software/IT
23
TBD
Draft Line Brewing
3
$450K
BB&T
Financial Services
20
$89M
Retail Food/Beverage Manufacturer
Biologics, Inc.
Biotech/Pharmaceuticals
TBD
$15M
DreamQuest Productions
Media/Communications
2
TBD
Boss Key Productions
Media/Communications
20
TBD
Dude Solutions
Software/IT
440
TBD
Brown Fleet Services
Transportation/Logistics
20
TBD
Entigral
Software/IT
10
TBD
Brueprint Brewing Company
Retail Food/Beverage Manufacturer
TBD
TBD
Equity Resources
Financial Services
8
TBD
Bryant International Law and Tax Group
Professional/Technical Services
Expion
Software/IT
35
TBD
5
TBD
Geomagic
Software/IT
60
TBD
Cary Orthopaedics and Sports Medicine Specialists
GlaxoSmithKline
Biotech/Pharmaceuticals
75
TBD
Healthcare
TBD
TBD
Hatteras Funds
Financial Services
TBD
TBD
1,237
$9M
Centrifuge Media
Media/Communications
TBD
TBD
HCL Technologies
Software/IT
ChannelAdvisor
Software/IT
TBD
TBD
Huron Consulting Group
Professional/Technical Services
70
TBD
Charles Schwab
Financial Services
TBD
TBD
I-Cubed
Software/IT
25
TBD
Kilpatrick Stockton
Professional/Technical Services
3
TBD
Lenovo
Software/IT
TBD
TBD
Local Government Federal Credit Union
Financial Services
TBD
TBD
Longistics
Transportation/Logistics
60
TBD
Mead & Hunt
Professional/Technical Services
TBD
TBD
Cisco Systems
Software/IT
550
$1.6M
Clinipace Worldwide
Biotech/Pharmaceuticals
50
TBD
Coastal Federal Credit Union
Financial Services
TBD
TBD
CommunityOne Bank
Financial Services
TBD
TBD
Complete Delivery Solution
Transportation/Logistics
TBD
TBD
Concord Hospitality
Hospitality Management
TBD
TBD
6
Company Name
Industry Cluster
New Jobs
Investment
Company Name
Industry Cluster
New Jobs
Investment
Medfirst Medical Center
Healthcare
12
TBD
Teradata
Software/IT
20
TBD
Merz North America
Biotech/Pharmaceuticals
250
TBD
The Mayton Inn
Hospitality Management
TBD
TBD
NetApp
Software/IT
150
TBD
TrialCard
Healthcare
TBD
TBD
Netsertive
Software/IT
60
TBD
Tyton BioEnergy Systems
Biotech/Pharmaceuticals
15
TBD
Newmark Grubb Knight Frank
Professional/Technical Services
4
TBD
Ultra Electronics – 3 Phoenix
Defense Technologies
120
TBD
Nexus Software
Software/IT
TBD
TBD
Valencell
Software/IT
10
TBD
Nickelpoint Brewing Co.
Retail Food/Beverage Manufacturer
5
TBD
WakeMed Health & Hospitals
Healthcare
TBD
$10M
Novozymes
Biotech/Pharmaceuticals
100
$36M
Workday
Software/IT
8
TBD
Paragon Bank
Financial Services
TBD
TBD
Xellia Pharmaceuticals
Biotech/Pharmaceuticals
50
$100M
TBD
Xylem
Smart Grid/Cleantech
TBD
TBD
Zurn Industries
Advanced Manufacturing
TBD
TBD
PowerSecure International
Smart Grid/Cleantech
Professional Builders Supply LLC
Professional/Technical Services
TBD
TBD
Ranpak Corp.
Manufacturer
TBD
TBD
Red Hat, Inc.
Software/IT
50
TBD
RevGen
Software/IT
20
TBD
Rex Healthcare
Healthcare
TBD
$200M
Sensus
Smart Grid/Cleantech
30
TBD
SpringHill Suites
Hospitality Management
TBD
TBD
Statera
Software/IT
1
TBD
Stockton Graham & Co.
Retail Food/Beverage Manufacturer
3
TBD
Storm Cloud Brewing
Retail Food/Beverage Manufacturer
TBD
TBD
Teague Campbell Dennis & Gorham, LLP
Professional/Technical Services
TBD
TBD
100
#2
EASIEST PLACE TO FIND A JOB (Raleigh, NC) — Forbes, November 2014
7
WAKE COUNTY MUNICIPALITIES
#1 #3
BEST CITY FOR RAISING A FAMILY (Raleigh, NC) — Forbes, April 2014 SAFEST CITY IN AMERICA (Cary, NC) — 24/7 Wall Street, November 2014
“Wake County is where talent and tools converge to create opportunity. We are leading the country in areas like Life Sciences, CleanTech and Data Analytics. It is an exciting time and our momentum has never been greater.”
ADRIENNE COLE
Apex
Fuquay-Varina
The Town of Apex’s new Western Wake Regional Water Reclamation Facility is now in operation, providing the Town with 6 million gallons/day of treatment capacity. The Town has also begun expanding the Cary/Apex Water Plant and is planning the opening of Scotts Ridge Elementary and Apex Friendship High School in August 2015.
The Town of Fuquay-Varina created a partnership called the Big 4 to capitalize on trends in advanced manufacturing and workforce development. Also, A-Safe, Inc. has completed its first phase of locating its US operations to the Town, with its second phase providing a $19M investment and 130 new jobs.
Cary
Garner
The Town of Cary announced over 2,200 new jobs and more than $75 million in new capital investment in 2014. Major announcements included large retailers such as Bass Pro Shop, Field & Stream and the Triangle’s first Publix, as well as significant expansions at SAS and HCL America’s.
Cabela’s, the world’s leading outfitter of hunting, fishing and outdoor gear, is building a 100,000-square-foot store in Garner and is anticipated to create approximately 225 new jobs. This largescale commercial development is made possible by major road improvements completed in 2014 along U.S. 70 at the I-40 interchange.
Executive Director, Wake County Economic Development
8
Holly Springs
Morrisville
Rolesville
Wendell
The Town of Holly Springs has completed the installation of a high-speed fiber network in an ongoing effort to provide world-class government services. The network includes spare fiber strands and conduit space that can be leased by a competitive provider.
In the Town of Morrisville, Perimeter Park completed Perimeter 2 and 3 adding more than 450,000 square feet of class A office space and construction has begun on Perimeter 4. A new ice skating facility called the Wake Competition Center is slated to open along with the McCrimmon Road Extension in 2016.
In 2014, the Town of Rolesville population eclipsed 5,000 residents. Construction of the Rolesville Bypass is underway and is expected to be completed in 2015. The town is quickly adding new amenities and has expanded its Parks and Recreation Department with a new Director and a diverse line-up of programs for the community.
The Town of Wendell has relaunched Wendell Falls, a 1,200 acre development slated to have 4,000 residential units (approximately 10,000 residents) and two million square feet of commercial and office space. The amenity site is under construction and is expected to be available to residents by May 2015.
Knightdale
Raleigh
Wake Forest
Zebulon
The Town of Knightdale undertook an extensive branding campaign that resulted in a new logo and tagline that exemplifies Knightdale. The new tagline, Start Something, is indicative of Knightdale’s young, vibrant community where businesses and families come to start something special.
The Raleigh Union Station project will transform the western edge of Downtown Raleigh. The first phase, which includes the renovation of the Dillon Supply Company Warehouse (Viaduct Building) into a passenger rail facility, is scheduled to start construction in 2015 with the station Grand Opening scheduled for 2017.
Wake Forest continues to see growth in innovative entrepreneurs, technology and small start-up companies. PowerSecure added roughly $215 million in new contracts, the Wireless Research Center of NC acquired three portable radio towers, and Wake Forest Co-Working recently opened its doors, providing shared office space for entrepreneurs.
Construction on BB&T’s data center project has begun in the Town of Zebulon. With over 150,000 square feet of space in the first phase, the center is expected to be completed in November 2015. A second phase could expand the facility by 100,000 square feet.
9
CENTENNIAL CAMPUS
$300M
sponsored research conducted at NC State in 2014.
This past year, in the midst of celebrating its 30th anniversary, NC State’s Centennial Campus was named the top “economic engine” for research parks by the Association of Public and Land-grant Universities. Meanwhile, the Hunt Library continues to receive accolades internationally, and university leaders have begun the initial planning for building a multiuse Town Center in the heart of the campus. Construction will begin on the Executive Conference Center and Hotel, which will open in 2016, and more townhomes are in development, which complement the new luxury apartments that opened in 2014. But the heart and soul of Centennial remains its partnership and collaboration activities.
“Centennial Campus has become a globallyrecognized innovation destination.”
More than 70 corporate, governmental and non-profit partners on campus work with researchers in a variety of disciplines—from material science and smart fibers to innovative management techniques and the psychology of social media behavior. NC State researchers are pushing the envelopes and companies such as Eastman Chemical, Mann+Hummel, and ABB are benefiting. In 2014, NC State also welcomed an announcement by President Obama in which the University would collaborate with the U.S. Department of Energy and corporate partners to advance the current state of manufacturing through improved power electronics. This consortium, called PowerAmerica, chose Centennial Campus as its home.
LEAH BURTON Director of Partnership Development, Centennial Campus, North Carolina State University
10
RESEARCH TRIANGLE PARK
Fifty-five years ago The Research Triangle Park was born from the bold ideas of a handful of ambitious founders. Through collaboration and hard work, an extraordinary economic engine grew from land that was assembled to create a brighter future for the people of North Carolina. Today, RTP is home to 190 companies that employ upwards of 50,000 people. The 7,000 acres that our founders had the foresight to purchase turned out to be the perfect location for life science, biotechnology, and IT companies. In 2014 Lenovo reentered the Park with our biggest lease of the year, bringing over 2,000 employees with them. The number of small companies located in RTP often surprises people— 69% of businesses have 25 employees or less—but it’s something we’ve been paying attention to when it comes to the Park’s redevelopment. This past February we announced plans to begin the first redevelopment in RTP’s history. The starting point will be in a place called Park Center, and our goal is to create an environment that encourages collaboration, innovation and connectivity between the cities in the Triangle and our founding universities. Before too long, new amenities such as restaurants, coffee shops and residential housing will exist in your Park. To get things going, we’re launching a new kind of space we’re calling “The Frontier” in January. It will house mid to small-sized companies and include common areas for anyone in need of space, free of charge.
“The RTP of tomorrow will be built upon North Carolina’s rich heritage that continues to celebrate the vibrancy and brain power the Triangle has to offer.” BOB GEOLAS President & CEO, Research Triangle Foundation
As we continue working towards the future, it’s our goal to make the Research Triangle Park of tomorrow a place built upon North Carolina’s rich heritage that continues to celebrate all the vibrancy and brain power the Triangle has to offer.
69% of businesses 190 companies in RTP employ more than 50,000 people.
in RTP have 25 employees or less.
11
RDU INTERNATIONAL AIRPORT 2014 was a busy year for Raleigh-Durham International Airport. In April, Terminal 1 opened, becoming a new home for Southwest Airlines at RDU. The terminal includes nine gates, new concessions and plenty of power outlets to recharge all of our mobile devices. With the opening of Terminal 1, RDU completes a 15-year construction program that included an 11,000-space parking garage, the $573 million Terminal 2 renovation, and Terminal 1 modernization.
“With our newest investments, we now have the infrastructure to support the region’s air service needs for the next 25-30 years.”
MICHAEL LANDGUTH, A.A.E. President & CEO, Raleigh-Durham Airport Authority
40 8
United Airlines increased its very popular nonstop San Francisco service to two daily flights for a majority of the year. Similarly, Delta Air Lines and American Airlines also increased the number of daily nonstop flights to Los Angeles. We also saw increased service to Cancun, Cleveland, Miami and Nassau throughout the year. Behind-the-scenes, RDU’s air service development team has been hard at work to recruit new nonstop service to several key destinations, including Seattle, Austin, San Diego, Kansas City, San Juan and New Orleans in the U.S. We have also been working with a variety of carriers on establishing nonstop service to either Paris or Frankfurt. This includes putting forth $2.1 million in incentives and working with the community to establish a match for the funds.
non-stop destinations
major carriers
12
Growth was also the theme of 2014. In March, RDU began a seven month long streak of increased passenger traffic. Throughout the year, airlines began increasing the number of available seats from RDU, which were quickly filled as passenger demand for flights from the airport is high.
Over 6 million people traveled through RDU last year.
TOURISM DEVELOPMENT In 2013–2014, Wake County experienced record-setting growth in tourism with 13.26 million person-stays—a 6.8-percent increase over 2012. Moreover, Wake County has outpaced average U.S. growth for the past four calendar years. Attracted by destination marketing efforts, tourists, convention and sports event attendees and other visitors to Wake County generate new business sales, sustain local jobs and increase local tax revenues.
3.65 million approximate room-nights sold by Wake County hotels in calendar year 2013.
As of September 2014, Wake County hotels have enjoyed 16 consecutive months of year-over-year growth in monthly occupancy rates. Looking back at 2013–2014 fiscal year-end, annual hotel occupancy tax revenues for Wake County totaled $19.22 million, and annual prepared food and beverage tax revenues for Wake County totaled $21.79 million. In 2013, visitors spent $2.0 billion on trips to Wake County, and paid more than $191 million in state and local taxes. This tax revenue translates into tax savings of more than $571 for every Wake County household. In 2014, the county welcomed the SpringHill Suites by Marriott Raleigh-Cary, a 130-room hotel near Crossroad Plaza, Cary. As of November 2014, five hotel properties with 575 projected rooms are actively under construction, all slated for completion in 2015. A number of new developments addressing sports- and recreation-oriented visitors are now open or will be opening in the months ahead. These include:
Photo Credit: The Umstead Hotel & Spa
“There are many indicators trending positive for hotels and hospitality and I really am encouraged by what 2015 holds for the growth of the visitor economy.”
• Morrisville’s Triangle Rock Club • Daniel Dhers Action Sports Complex • 30,000 sq ft table tennis training facility (Morrisville) • North Main Athletic Complex in Holly Springs
$2B
spent by visitors on trips to Wake County in 2013.
DENNIS EDWARDS President & CEO, Greater Raleigh Convention and Visitors Bureau
13
DOWNTOWN RALEIGH Downtown Raleigh continues its explosive growth with major development projects, new tech companies, additional storefronts and dynamic outdoor events. With $666 million in current construction and $277 million in planned projects, downtown is building upon its most successful decade in history.
“While the majority of growth will come from residential and office projects, we expect major announcements in 2015 from the hotel and retail markets.”
Construction started on Charter Square, a $54 million, 243,379 square foot, class A office tower anchoring the southern end of Fayetteville St. The strong demand for office space also helped fuel the $92.3 million purchase of One Bank of America Plaza by Highwoods Properties. Several more office towers are already under construction or plan to begin construction within the next year. Downtown also recently added another major tenant with the arrival of Citrix in their new building in the Warehouse District. Nearly 600 employees moved into the building with room for an additional 300. Currently, over 1,800 residential units are under construction in downtown, which will add almost 2 million square feet. Downtown Raleigh is also seeing an increase in storefront businesses and retail with over 40 retail stores and 160 storefront businesses. With low storefront vacancy and fewer closings each year, demand for street-level businesses continues to be very strong.
DAVID DIAZ President & CEO, Downtown Raleigh Alliance
1,800 residential units are under construction, adding almost 2 million sq. ft. of new residential space.
14
Major events continue to bring people downtown. The World of Bluegrass 2014 event broke last year’s attendance record by bringing an estimated 180,000 people to downtown Raleigh. Downtown also hosted the Hopscotch Music Festival, as well as our successful PNC Summer Movie Series, weekly downtown farmer’s market, and numerous events and concerts at venues and public spaces. The Downtown Raleigh Alliance collaborated with the City of Raleigh to fund and manage a new downtown vision plan, the Downtown Experience Plan. Included in the plan is more green space, better connectivity between districts, more density on underutilized parcels, leveraging new investments like Union Station, and improving retail to make downtown an even better shopping destination for its residents and visitors.
MIDTOWN RALEIGH A look back in 2014 on Raleigh’s Midtown saw a year that reflected new energy, continued momentum, and an even stronger activity level. In the shadows of construction cranes there is more activity than ever in just about all areas of Midtown: more residents, more office workers, more hotel guests, more dining options, and more shopping bags. The Triangle is attracting newcomers that want access to a safe and walkable environment with outdoor dining, late night activities, and a range of seasonal events that encourage social interactions. We believe that North Hills, the heart of Raleigh’s Midtown, is attracting new residents to engage with their community. Looking toward 2015, the outlook for North Hills remains very strong. • Midtown is home to almost three million square feet of office space including the headquarters for First Citizens and Captrust Financial as well as numerous tech firms, law practices and professional service firms. • Over 1,300 urban style residences in Midtown are nearing fill up with two more projects breaking ground in 2015 that will add several hundred more residences adjacent to restaurants, retail and entertainment. • Midtown has one of the largest concentrations of hotel rooms in the Triangle. In addition to the Renaissance at North Hills and Hyatt House, North Hills will break ground on a new AC Hotels by Marriott for a 2016 opening.
“The outlook for North Hills remains very strong. More new openings, ground breakings, construction cranes, and just more things to do.” JOHN KANE Chairman & CEO, Kane Realty Corporation Executive Committee, Midtown Raleigh Alliance Board
• Many new retailers will be opening in 2015 joining J. McLaughlin, Lululemon, REI and recent arrivals Anthropologie, Lou & Grey and Vineyard Vines. • The one year anniversary of the Midtown Park will be celebrated in April along with the return of 300+ events including the weekly Summer Beach Music series, Midtown Farmer’s Market, Bluegrass Series, and Friday Night Tributes.
18-story “Tower Two” is under construction adding 300,000 sq. ft. of office space in spring of 2016.
15
RESIDENTIAL REAL ESTATE The Wake County residential real estate market is consistently recognized as one of the best in the country. As a result of our economic performance, work force competitiveness, quality of life and population growth, 2015 should be another strong year in the post-recession “new normal.”
“2014 home sales reflected a renewed confidence in the market with strong resale activity, the resurgence of new construction and an uptick in corporate moves.”
MARY KAY PENDERGRAPH
The last 12 months generated moderate increases in home appreciation and average sales prices across Wake County, despite an inventory shortage in many areas and price ranges. Experts anticipate a slight increase in average home appreciation over the next five years, further strengthening seller equity and resulting in more properties for sale. If this pent up demand-to-sell eases in 2015, we could see a return to 2013 sales levels (the strongest year since 2007). Traditionally, a stronger economy means an increase in mortgage interest rates; however, with the most recent news from the Federal Reserve, we believe 2015 rates will remain at near historic lows—barring unforeseen circumstances. Much attention has been given nationally and locally to foreclosure sales over the last few years. In 2014, Wake County continued to absorb any oversupply of distressed inventory. We anticipate foreclosure transactions will return to pre-recession levels of 5-6% of the total market by mid-2015. With these indicators in mind, we approach 2015 enthusiastic about yet another great year for residential real estate.
General Manager/Sr. Regional Vice President, Fonville Morisey Realty, a Long & Foster Company
$272K 13,000 16
average sale price on residential properties in 2014. residential properties sold in Wake County, as of September 2014.
COMMERCIAL REAL ESTATE Market real estate fundamentals continue to improve and, in fact, are exceeding expectations throughout Wake County in all commercial real estate building types and in virtually all Wake County submarkets: Office: With a healthy regional employment growth, office absorption levels are at rates not seen since pre-recession levels. The office vacancy rates continue to decline—below 15% for the overall office market—with Class A space dipping below the 10% vacancy level. Rental rates continue to increase and new supply, while on the way, will not be substantially available until mid-2015. Warehouse: Warehouse absorption is at record-breaking levels. Overall market vacancy is now in the mid-teens, with the highest quality 24'-clear warehouse vacancies being well below the 10% level, causing rental rates for such high–end warehouse product to be rising quickly. Flex: Flex product absorption also is on the rise, with vacancy rates in this product type dipping to the 13% range.
“Area employment and population growth figures are healthy; vacancy rates are declining; rental rates and new development are rising, and investment is very active.”
Retail: Retail leasing is also extremely active, at absorption levels not seen since pre-recession levels, driving retail vacancy below 5%. Given the active retail market, the development pipeline is robust, driven by grocery storeanchored developments. Due to the healthy nature of each of the commercial category types, investment sales of all types continue to be very active—with investors from around the globe taking notice of the Triangle area and aggressively attempting to acquire investment properties.
$510M
value of non-residential permits in Wake County (through August, 2014, a 120% increase over 2013.
SKIP HILL Vice President, Highwoods Properties
17
2015 ECONOMIC FORECAST The economy continued to grow in the Raleigh and Triangle regions during 2014. The areas have been expanding employment at almost twice the pace of the nation during the last four years. The areas are noted for their high-skilled based industries, nationally-recognized teaching and research universities, dynamic entrepreneurship, and pleasant climate. Students, workers, and businesses want to be in Raleigh and the Triangle, and the positive features of the areas are reflected in the upbeat economic growth numbers.
“The strongest local employment growth will be in professional and business services, education and health services, and leisure and hospitality.”
About Dr. Michael L. Walden Walden is a William Neal Reynolds Distinguished Professor at North Carolina State University. For 37 years he has taught, researched, and spoken about the North Carolina and Triangle economies. The author of nine books and 300 articles and reports, Walden broadcasts a daily radio program, writes a biweekly column, formulates a monthly leading index for the state, develops biannual economic forecasts, and does scores of annual meetings and presentations across the state. Among his awards are the North Carolina Board of Governors Award for Excellence in Public Service, the Order of the Long Leaf Pine, and the Holladay Medal for Excellence from North Carolina State University.
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The growth that Raleigh and the Triangle have experienced during the last four years is expected to continue in 2015 for several reasons. First, the national economy is forecasted to continue its expansion, and possibly at an accelerated rate. Growth in the broadest measure of the national economy —gross domestic product (GDP)—jumped during the second half of 2014. Surveys show consumers are increasingly optimistic about the economy and willing to spend. Plus, there are beginning indications that wage growth may start to increase. The lag of wage growth since the current economic expansion began in mid-2009 has been an ongoing negative factor for the economy. A second reason for optimism about the local economy is the housing market. After being battered by the Great Recession, the housing market has been steadily improving since 2012. This is especially the case in the Raleigh and Triangle regions. Residential and non-residential construction, sales, leases, and prices have all demonstrated improved conditions in recent years. There has been some concern that the rate of increase—especially in prices —has slowed. However, this is a natural result of the large improvements from low bases set during the recession. As improvements have been registered, it is logical the rate of gains will slow. Lastly, the local economy will continue to benefit from its national reputation as an outstanding area for living, working, and retiring. Statistics suggest that almost half of the area’s population growth in recent decades has been due to in-migration of households from other states. This includes households
moving to Raleigh and the Triangle for college, for work, or for pleasure. This in-migration took a pause during the recession but is now returning to be a major force in the area’s post-recessionary growth. But also forecasted are gains in construction and manufacturing jobs. The improvement in construction employment follows rebounds in the residential and office markets. The addition of manufacturing jobs will be related to growth in the area’s strong technological, pharmaceutical, and instruments industries. Of course, there are always dangers and uncertainties associated with any economic forecast. Potential dangers originate mainly from geo-political circumstances and include concerns over international terrorism, instability in the Middle East and Eastern Europe, and rivalries in East Asia among China, North Korea, Japan, and the U.S. Current uncertainties center on nearzero economic growth in the European Union and significantly slower growth in China. Both markets are important for U.S. and Triangle exports and financial interactions.
#2
FASTEST GROWING LARGE U.S. CITY FROM 2010 TO 2030 (Raleigh, NC) – United Nations Population Division, August 2014
Statistics suggest that almost half of the area’s population growth in recent decades has been due to in-migration of households from other states. In-migration from other states Natural growth and in-migration from within North Carolina
There will also be a spotlight in 2015 on the U.S. Federal Reserve. In 2014 the Federal Reserve announced the end of its bond-buying program— termed quantitative-easing—and its intention to slowly withdraw support of the financial markets. This policy shift will be tricky, as it runs the risk of prompting significant increases in interest rates and potential pullbacks from equity markets. If these two events occur, it could cause economic growth in 2015 to be much more modest than expected. Still, if there are regions in the country that have the make-up and dynamism to weather economic risks and issues, it is Raleigh and the Triangle. With a core economy built for the 21st century on higher education, technology and innovation, and an inviting and fun lifestyle, Raleigh and the Triangle will continue to shine as top areas in the country for growth, forward-thinking, and “good living.”
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Contact Us Office Location 800 S. Salisbury St. | Raleigh, NC 27601 Mailing Address PO Box 2978 | Raleigh, NC 27602-2978 Phone 919.664.7048
Economy + Business is compiled by Wake County Economic Development, a program of the Greater Raleigh Chamber of Commerce. This publication is an economic review of 2014 and forecast for 2015 published annually during the final quarter of the year.
Fax 919.664.7099
For more information, please contact:
Web Addresses www.raleighchamber.org | www.raleigh-wake.org
Adrienne Cole, Executive Director Wake County Economic Development acole@raleighchamber.org
Twitter @RaleighChamber | @RaleighWake
www.raleigh-wake.org