Report: New companies, projects driving more changes to Triangle’s skyline

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Commercial real estate activity across much of the Triangle is “robust” with vacancy rates down from a year ago and new construction being leased or bought for a wide variety of uses from restaurants to retail. Adding to the buzz: Some high-profile companies are coming, but other than rumors about Meta coming to Durham the newcomers weren’t mentioned by name.

So reports commercial real estate firm CBRE Raleigh in  a new report about the region’s ever-changing skyline that was published Thursday.

“Record” retail leasing is taking place especially in Raleigh where downtown is “experiencing a revival in food and beverage growth” after being hammered by the impact of the COVID pandemic. CBRE’s report tracks economic activity for the first six months of 2022.

The report says a “booming local economy” combined with continuing “in-migration” of new residents are combining to “drive retail resurgence in Raleigh-Durham.”

“With over 40,000 sq. ft. of pending retail leases, the submarket is poised to register stronger leasing activity in 2022 than it witnessed in the previous three years combined,” the report says.

Nearly 330,000 square feet of new construction continues while more than 383,000 square feet of commercial space was “absorbed,” CBRE points out, thus not leaving a lot of space readily available even as constructions continues or is planned for office towers as tall as 40 stories like those being considered at North Hills.

The growth is taking place despite rising inflation, supply chain issues and the possibility of a recession. The commercial property vacancy rate has declined to 6.7% from 7.1% a year ago, but CBRE says it is “carefully watching as high construction costs and the impact of rising
interest rates on national debt markets cause some developers to delay or shelve new retail and mixed-use projects. Additionally, national retailers’ earnings are being hindered by rising product and upfit costs, supply chain issues and labor shortages.”

“Raleigh-Durham’s retail industry has continued to show its strength in 2022,” said CBRE Director of Retail Services Charlie Coyne. “We are witnessing both suburban and urban trade areas showing resilience despite challenges related to staffing, construction costs and supply chain issues.”

CBRE is not alone in reporting more growth. A project pipeline report from Wake County Economic Development says more growth could very well be coming. As of May 31 (the latest data available), Wake County was being considered for 33 possible projects, nearly 17,000 jobs and investments totaling $6.8 billion.

New business, entertainment coming

A new report recently cited the Triangle as one of the country’s hottest markets for business growth, that information coming closely on news CNBC had ranked North Carolina as No. 1 for business.

Retailers and other businesses are obviously watching Raleigh-Durham for growth.

Says CBRE: “Many national and regional tenants are focused on Downtown Raleigh, including new-to market-brands in the restaurant and entertainment industry. Several of these brands are close to executing leases that should be announced in the second half of 2022 at projects like Seaboard Station, Smoky Hollow, Raleigh Crossing at 301 Hillsborough and Bloc [83].”

All the activity is especially good news for “[e]ven Downtown Raleigh’s Fayetteville Street District which is seeing strong ground-floor activity.”

While new tenants weren’t disclosed, CBRE is actively involved in lease negotiations and represents properties across the region so the report’s information is hardly to be based on just hunches.

Bullish on Durham

Real estate action also is strong in Durham with several projects moving ahead and speculation continuing that Facebook parent Meta might choose to open an operation in the Bull City.

The report notes:

  • “Central Durham is also witnessing strong construction activity and leasing momentum. Google, GlaxoSmithKline and Clorox have made major office commitments to Central Durham, and Facebook parent Meta is reportedly planning a major presence in the
  • “Developers remain active with high-profile mixed-use projects: Collett Capital delivered Atlas Durham in Q2 2022, renovations continue at Brightleaf Square, Camden Durham will deliver in 2023, and Austin Lawrence Partners recently broke ground on
  • “Most notably, Hines and Capitol Broadcasting Company will expand American Tobacco’s massive campus with the construction of new retail, office and multifamily space. The Fresh Market has signed on to anchor the retail portion of the project.
  • “Investment activity has also been strong. Sterling Bay and Acram group closed on the Heritage Square redevelopment site at record pricing late June.”

Spreading the wealth

Cary is also growing with a number of projects, including the ongoing demolition of the Cary Towne Center where the new global headquarters for Epic Games will be built.

“Cary in particular is witnessing significant activity,” CBRE says.  “Hines and Columbia Development opened phase one of Fenton in June. Fenton is one of the largest mixed-use projects to be delivered in the United States this year and features an impressive line-up of retailers and restaurants, including Williams Sonoma, Pottery Barn, Lululemon, Superica and Colletta.”

Original Article Source: WRAL TechWire