ECONOMIC DEVELOPMENT REPORT DOWNTOWN RALEIGH …3rd QUARTER 2019 Economic Development Report—Downtown Raleigh Disclaimer – The information contained herein has been obtained from

Q3-2019

ECONOMIC DEVELOPMENT REPORT

DOWNTOWN RALEIGH

The Downtown Raleigh Alliance produced this quarterly report. The Alliance is an award-winning nonprofit

organization whose mission is to continue to revitalize Raleigh’s downtown by enhancing its quality of life

and contributing to its economic success (For more information, visit www.downtownraleigh.org). The City

of Raleigh is a key partner of the DRA in its economic development efforts to revitalize downtown. DRA

receives a grant from the city to enhance its tax base by generating new jobs, supporting existing busi-

nesses, and attracting new businesses—in particular storefront businesses.

http://godowntownraleigh.com/

3rd QUARTER 2019

Economic Development Report—Downtown Raleigh

Disclaimer – The information contained herein has been obtained from sources deemed to be reliable. While we do not doubt

its accuracy, we have not verified it and make no guarantee, warranty, or representation about it.

TABLE OF CONTENTS

ECONOMIC DEVELOPMENT REPORT Highlights ..................................................................................... 1

Real Estate & Population Snapshot .......................................... 3

Historic Trends ............................................................................ 4

Third Quarter Street-Level Business Activity ............................. 5

Development Pipeline ................................................................ 7

Food and Beverage Tax Revenue ............................................12

Cover photo by Flyboy Aerial Photography


Highlights

3rd QUARTER 2019


1

Downtown Raleigh’s Third Quarter of 2019 saw new street-level businesses

open and strong growth in food and beverage sales. More major construction

projects have begun and been announced while others near completion.

Development Pipeline

Projects totaling at least $2.3 billion have been delivered in 2015-2019,

are under construction, or were planned/announced for downtown in the

near future. There are also several more major development projects that

have not announced their total investment figures. More than $1.04 billion

in projects has been completed since 2015. Projects under construction in

Downtown Raleigh currently total $666 million and over $500 million in

projects announced with more projects announced and yet to release in-

vestment totals.

Public investment remains a vital component of downtown’s growth, as

$200 million in public projects are underway, planned or have been com-

pleted in the past three years. The grand reopening of Moore Square cele-

brated its renovation and immediately kicked off consistent community

use of one of Downtown Raleigh’s great public spaces. Other public pro-

jects include Capital Boulevard/Peace Street bridges and interchanges,

still underway on the north side of downtown.

Retail & Storefront Market

Downtown’s much-anticipated, first grocery store, Weaver Street Market, opened in September. Holly Ai-

ken, a women’s accessory and gift boutique, has returned to Raleigh with a store inside DECO Raleigh.

And Edge of Urge has also opened a new retail concept, RENEW House of

Self-Love. Downtown continues to serve as a hotspot for prominent chefs

and restaurateurs, as Poole’side Pies from Ashley Christensen and Jolie

from Scott Crawford opened in the past quarter, and the owners of Brewery

Bhavana and Bida Manda will be launching a new concept, Luang Prabang

Laotian Grill and Garden Bar, at The Dillon. Other notable additions include

Square Burger, Reuben’s NY Deli, Sweet Tea and Cornbread Grill and Eat-

ery, and Riddle Raleigh. Downtown has also added a new music venue with

the opening of Tin Roof.

During the third quarter, 14 new street-level businesses opened in down-

town. Overall, 169 storefront businesses have opened since the start of

2016. At least 19 more street-level businesses have been announced or

confirmed and are expected to open during the next few months, including retail, restaurants, and bars.

Downtown Raleigh Alliance has partnered with Wake Tech for a pop-up program. The program serves to

provide a downtown storefront space that attracts entrepreneurs from diverse backgrounds. The first

business to pop-up in the space is The Nutty Bavarian, which opens in late October.

$666 Million Under Construction

$1.04 Billion Recently Completed

$525 Million Announced

35 New Storefront

Businesses in 2019

$2.3 Billion Delivered, Under Construction, and

Planned

8 New Food Hall Vendors in 2019


Highlights

3rd QUARTER 2019


2

Residential Market

Construction is underway on 1,019 residential units in downtown. FNB Tower has

239 units currently under construction and is nearing completion. Phase I and

Phase II of Kane Realty’s Smoky Hollow project are both progressing and will bring

417 and 283 units to the market, respectively. The Fairweather has 45 units under

construction and serves as downtown’s first condominium project since before the

Recession. The second phase of West + Lenior was recently completed, adding nine

more units to downtown’s inventory. Since 2015, 2,426 units have been delivered

and 1,522 units are currently proposed for the near future.

Dining & Hospitality Market

Downtown Raleigh set a new record in the third quarter of 2019 with $66.8 million

in sales. September was the highest food & beverage sales month ever recorded in

downtown at over $24.8 million. Additionally, Warehouse District sales alone were

up 62% in Q3 of 2019 over Q3 2018 and are up 63% this year over last year. Over-

all, Glenwood South still accounts for the largest portion of downtown’s food and

beverage sales, bringing in nearly 32% of all sales. There are now more than 200

restaurants, cafes, and bars/clubs/lounges in downtown.

In the hotel market, demolition and site clearance for The Willard is underway. This

will bring a 147-room hotel to Glenwood Avenue. Origin Hotel, also located in Glen-

wood South, currently has 126 rooms under construction. Renovations continue

on The Longleaf Hotel, which is transforming the former Days Inn on N. Dawson

Street into a 57-room boutique hotel.

Office Market

Office occupancy continues to be strong in downtown at 95.5%, according to JLL.

Downtown Raleigh has seen a total net absorption of 239,818 square feet so far in

2019. Downtown Raleigh has a Class A average asking rate of $35.58 per square

foot and an overall asking rate of $34.89 per square foot.

New Development News

Preferred Office Properties submitted plans for 121 Fayetteville, which would bring a 32-story tower and

additional parking to the north end of Fayetteville Street. Plans for the office building feature 375,000

square feet of rentable space, including 10,242 square feet of retail. Phase 1 of 301 Hillsborough at Ra-

leigh Crossing has broken ground. This project will add 287,252 square feet of office space and 12,500

square feet of retail to Downtown Raleigh. Plans were submitted for new development at Seaboard Sta-

tion on the north end of downtown. Phase 1 includes 96 housing units, a 150-room hotel, and 12,000

square feet of retail.

Two major projects recently approved for rezoning to build high-rises up to 40 stories are Kane Realty

Corp.’s Smoky Hollow Phase 3 and GoTriangle's new Raleigh Union Station Phase II project, known as

RUS-BUS, which will feature a mixed use tower and regional bus facility in the Warehouse District.

1,019 Residential units

under construction

95.5% Office occupancy rate

10.8% growth in food and

beverage sales in 3rd Quarter 2019 over 3rd

Quarter 2018

$66.8 million in food and beverage sales in 3rd Quarter

2019, a new record for downtown

2,426 Residential units

Delivered since 2015

Downtown Dashboard

3rd QUARTER 2019


3

18,826 Residents within one

mile of downtown core

95.5% Office occupancy rate in Q3 2019

(JLL)

10.8% Growth in food and beverage sales in Q3 2019 over Q3 2018

10,877 Population estimated

in downtown

6,889 Downtown

Residential Units

1,522 Units currently

planned

50.8% of residents with

Bachelor’s Degree or Higher

2,426 Units delivered

since 2015

1,019 Units under construction

1.75 Average household

size within 1-mile radi-us

$68,992 Average household

income within 1-mile of downtown

48,000 Employees estimated

in downtown

85 Employees per acre, densest office market

in region

269,100 Square feet of

co-working space in downtown

239,818 Net absorption square

footage YTD (JLL)

$66.8 million in food and beverage

sales in Q3 2019

227 Restaurants and

bars in downtown

40+ New retailers since

2014

16 James Beard Award Nominations since

2010

1,266 Existing rooms in

downtown

330 rooms Rooms under con-

struction

74.9% Hotel occupancy in

2018

3.4 million Visitors to top

downtown attractions in 2018

47% Increase in visitors

since 2007

7,479,214 Commercial office

space

1,444,720 Retail space

6,964,275 Government office/

facility space

5,330,977 Other: educational,

religious, institutional

25,471,919 Total existing space

31,628,850 Combined existing, under construction

and planned

2,544,778 Under construction

Sources: DRA, U.S. Census, Greater Raleigh CVB, STB Travel, CBRE Raleigh

33.8 Median Age for residents within

1-mile radius

Residential Market and Demographics

Office Market

Dining & Hospitality Market

Tourism & Hotel Market

Real Property Square Footage Within the Downtown MSD


3rd QUARTER 2019

4

Sources: DRA internal tracking, JLL

Storefront and Development Trends

Historical Trends Q1-Q4

2011

Q1-Q4

2012

Q1-Q4

2013

Q1-Q4

2014

Q1-Q4

2015

Q1-Q4

2016

Q1-Q4

2017

Q1-Q4

2018

Q1-Q3

2019

Street-Level Business Openings 41 38 31 36 29 46 40 46 35

Street-Level Business Closings 26 17 15 16 15 30 23 22 23

Net Gain 15 21 16 20 14 16 17 24 12

Year-End Office Occupancy 89.9% 89.2% 93.3% 89.9% 89.4% 88.6% 94.7% 94.9% 95.5%

Public Investment started or

underway (millions) $0 $205 $187 $0 $91 $169 $137 $137 $37

Private Investment started or

underway but not completed

(millions)

$106 $117 $351 $133 $261 $242 $288 $290 $629

Projects Completed 5 5 8 5 15 10 3 14 5

Total Investment completed

(millions) $22 $160 $343 $115 $260 $200 $104 $298 $154

Data provided in partnership with:

3rd Quarter Storefront Business Activity


3rd QUARTER 2019

5

See next page for announced businesses coming soon.

Business Openings in 3rd Quarter:

Name Type

1 Weaver Street Market Retail

2 Renew House of Self Love Retail

3 Holly Aiken Retail

4 Jensy Organics Retail

5 Tin Roof Bar/Restaurant/Music Venue

6 Riddle Raleigh Restaurant

7 Square Burger Restaurant

8 Sweet Tea and Cornbread Grill and Eatery Restaurant

9 Jolie Restaurant

10 Reuben's NY Deli Restaurant

11 Poole'side Pies Restaurant

12 Black and White Coffee Roasters Coffee Shop

13 BREW Coffee Bar Coffee Shop

14 Sass Nails Service

1 The Raleigh Mini Donut Company Food Hall

2 Alimentari at Left Bank Food Hall

Business Closings in 3rd Quarter:

1 Designed for Joy Retail

2 18 Seaboard Restaurant

3 Pho Pho Pho Restaurant

4 Growler USA Restaurant

5 Living Kitchen Restaurant

6 Pharaoh's Restaurant

8 Pizza La Stella Restaurant

7 BREW Coffee Bar Coffee Shop

1 Carroll's Kitchen Food Hall

2 Cocoa Forte Food Hall

3 Quintessential Candles Food Hall

4 The Cookie People Food Hall

5 That's Good Chocolate Food Hall

Business Closings in Early 4th Quarter:

1 Xoco Restaurant


3rd QUARTER 2019

6

Announced Storefront Businesses (Coming Soon)

1 Publix Retail

2 Saxapahaw General Store Retail

3 Flying Mayan Restaurant

4 Luang Prabang Laotian Grill and Garden Bar Restaurant

5 Blowfish Restaurant

6 Standard Beer and Food Restaurant

7 Rush Bowls Restaurant

8 Sam Jones BBQ Restaurant

9 Zambrero Restaurant

10 Chef Katsuji Tanabe Concept Restaurant

11 Rainbow Luncheonette Restaurant

12 (ish) Delicatessen Restaurant

13 Iris Coffee Lab Coffee Shop

14 Pink Lamp Lounge Bar

15 Johnson Street Yacht Club Bar

16 Wine and Design Bar, Coffee Shop, Events

17 The Vault Craft Beer Brewpub

18 Shred415 Fitness

19 Current Wellness Wellness Center

1 Longleaf Swine Food Hall

2 Sweet Peas Urban Gardens Food Hall

3 Primal Cuts Food Hall

4 Pazza Pasta Food Hall

5 Aunty Betty's Food Hall

3rd QUARTER 2019

7

In 2019, new projects have been announced that will bring significant changes to Downtown Ra-

leigh. Completed projects have delivered residential units along with Class A office and retail space.

Several more projects are nearing completion over the next few months such as FNB Tower, Origin,

and The Saint.

Downtown Raleigh Development and Investment

Completed in 2019

Project Name Investment Project Type Square Footage

Housing

Units/Hotel

Rooms

District

Metropolitan Apartments $ 52,500,000 Apartment 274,959 241 units Glenwood South

One Glenwood $ 86,000,000 Mixed-use (Office/

Retail)

212,500 (office) n/a Glenwood South

14,914 (retail)

West + Lenoir Townhomes

Phase II $ 1,734,216 Residential 13,349 9 units Warehouse

Moore Square Renovation $ 13,000,000 Park renovation n/a n/a Moore Square

Tin Roof $ 842,949 Restaurant/Music

Venue 7,526 (retail) n/a Glenwood South

Total $ 154,077,165 212,500 (office) 250 units

22,440 (retail)

3rd QUARTER 2019

8


Under Construction


Housing

Units/Hotel

Rooms

District

Peace St/Capital Blvd $ 36,900,000 Infrastructure n/a n/a Capital

Longleaf Hotel $ 6,500,000 Hotel 20,812 57 rooms Capital

The Saint $ 23,000,000 Townhomes n/a 17 units Glenwood South

Origin Hotel $ 22,702,726 Hotel 4,000 (retail) 126 rooms Glenwood South

Peace (Smoky Hollow

Phase 1) $ 150,000,000

Mixed-use

(Residential/Retail) 51,600 (retail) 417 units Glenwood South

FNB Tower $ 118,000,000 Mixed-use (Office/

Residential/Retail)

152,000 (office) 239 units Fayetteville St

11,010 (retail)

107 W. Hargett $ 4,000,000 Retail/Office renova-

tion

17,634 (office) n/a Fayetteville St

3,780 (retail)

The Fairweather $ 12,679,746 Mixed-use

(Residential/Retail) 1,836 (retail) 45 units Warehouse

Sir Walter Apartments

(Renovation) $ 15,000,000 Senior Housing 20,000 (retail) 18 new units Fayetteville St

Rainbow Upholstery

Building $ 2,859,105

Retail/Office Renova-

tion


5,760 (retail)

Tower II at Bloc 83 $ 108,000,000 Mixed-use (Office/

Retail)


30,000 (retail)

Smoky Hollow Phase II Not Announced Mixed-use (Office/

Residential/Retail)

225,000 (office) 283 units Glenwood South

41,142 (retail)

Raleigh Crossing

Phase 1 $ 160,000,000

Mixed use (Office/

Retail)


12,500 (retail)

The Willard Not Announced Hotel 3,860 (retail) 147 Rooms Glenwood South

Wells Fargo Capitol

Center (Renovation) $ 7,000,000 Office Renovation n/a n/a Fayetteville St

Total $ 666,641,577 937,176 (office) 1,019 units/

185,488 (retail) 330 rooms

3rd QUARTER 2019

9


Completed in 2018

Project Name Investment Project type Square Footage

Housing

Units/Hotel

Rooms

District

Poyner YMCA $ 3,000,000 Service 28,000 n/a Fayetteville St

The Dillon $ 150,000,000 Mixed-use (Office, Resi-

dential, Retail

210,000 (office) 271 units Warehouse

52,000 (retail)

10Arros $ 1,805,000 Townhomes n/a 10 units Moore Square

Union Station $ 111,400,000 Infrastructure 26,000 n/a Warehouse

Guest House $ 850,000 Hotel 4,756 8 rooms Moore Square

Morgan St. Food Hall $ 2,000,000 Retail/Restaurant 22,000 (retail) n/a Warehouse

Junction West $ 4,200,000 Office/Event Space Ren-

ovation 9,473 n/a Warehouse

Revisn $ 6,540,000 Residential n/a 48 units Glenwood South

Transfer Co. $ 19,000,000

Retail/Restaurant 42,000 (retail) 15 units Moore Square

The Ware Townhomes

Total $ 298,795,000

210,000 (office) 344 units


3rd QUARTER 2019

10

Note: these projects are subject to change and should be considered estimates based on public information. Additionally, several projects have not finalized their investment total. As such, planned investment dollars are likely higher and project costs likely to change.


Proposed


Housing

Units/Hotel

Rooms

District

The Nexus Not announced

Mixed-use (Office,

Retail, Residential,

Hotel)

327,375 (office) 414 units/ Fayetteville St


Seaboard Station

Phase 1 $ 250,000,000

Mixed-use

(Residential, Retail,

Hotel)

12,000 (retail) 96 units/ Seaboard/

Person St. 150 rooms

Seaboard Station

Phase 2 Not announced

Mixed-use

(Resdential, Retail) 45,000 (retail) 549 units

Seaboard/

Person St.

Hilton Garden Inn/

Homewood Suites Not announced Hotel 1,810 (retail) 259 rooms Fayetteville St

Raleigh Crossing

Phase 2 Not announced

Mixed (Residential/

Hotel/Retail) 7,000 (retail)

136 units Glenwood South

169 rooms

Courtyard Marriott $ 30,000,000 Hotel n/a 179 rooms Fayetteville St

Home2 + Tru Raleigh Not announced Hotel n/a 190 rooms Fayetteville St

The Edge $ 75,000,000 Mixed-use (Office/

Retail)

242,000 (office) n/a Moore Square

8,300 (retail)

Fourth Ward Not announced Residential n/a 10 units Warehouse

City Gateway $ 70,000,000 Mixed-use (Office/

School)


52,672 (school)

South Street Condos Not announced Residential n/a 87 units Warehouse

400 H $ 100,000,000 Mixed-use (Office,

Retail, Hotel)

144,410 (office) 216 units Glenwood South

16,935 (retail)

St Mary's Townhomes Not announced Residential n/a 6 units Glenwood South

Nash Square Hotel Not announced Hotel 4,224 (retail) 190 rooms Warehouse

City View Townes Not announced Residential n/a 8 units Warehouse

121 Fayetteville Not announced Mixed-use (Office,

Retail)


10,242 (retail)

Total $ 525,000,000

1,232,915 (office) 1,522 units

153,511 (retail) 1,401 rooms

3rd QUARTER 2019

11

3rd QUARTER FOOD AND BEVERAGE SALES IN DOWNTOWN

Food and beverage sales for downtown were up 10.8% for 3rd Quarter

2019 over 3rd Quarter 2018. Downtown restaurants and bars are continu-

ing their strong performance over the past seven years as 3rd Quarter

2019 is up 84.7% compared to the 3rd Quarter 2012.

Sources: Wake County Tax Assessor

3rd QUARTER 2019

12

YEAR-TO-DATE FOOD AND BEVERAGE SALES IN DOWNTOWN

Downtown’s food and beverage sales are up 8.8% for 2019 compared to

the first three quarters of 2018. The first three quarters in 2019 are up

79.2% over the first three quarters of 2012, showing rapid growth in down-

town’s food and beverage sales.


3rd QUARTER 2019

13

MONTHLY FOOD AND BEVERAGE SALES IN 2018 AND 2019

Downtown monthly food and beverage sales continue to steadily grow. Sep-

tember has been the highest grossing month in 2019 and highest sales

month ever recorded in downtown, exceeding $24.8 million. Every month

of Q3 2019 was greater than in Q3 of 2018.


3rd QUARTER 2019

14

FOOD AND BEVERAGE SALES GROWTH BY DISTRICT

Commercial districts throughout downtown experienced growth in food and

beverage sales in 2019 compared to 2018. In the Warehouse District, sales

were up 63.3% so far in 2019 over 2018. The Warehouse District has seen

considerable growth in restaurants over the past year including Morgan Street

Food Hall, A Place At the Table, O-Ku Sushi, Oak Steakhouse, Heirloom

Brewshop, and Barcelona Wine Bar.


3rd QUARTER 2019

15

FOOD AND BEVERAGE SALES DISTRIBUTION BY DISTRICT

Third quarter saw the Warehouse District increase its share of downtown’s

food and beverage sales from 8.7% in 1st Quarter of 2019 to 13.8% after

the 3rd Quarter of 2019.

Glenwood South brings nearly one third of all downtown food and beverage

sales with the Fayetteville Street district accounting for the second most

sales among districts at 29.5%.

Source: Wake County Tax Assessor

Documents

ECONOMIC DEVELOPMENT REPORT DOWNTOWN RALEIGH …3rd QUARTER 2019 Economic Development Report—Downtown Raleigh Disclaimer – The information contained herein has been obtained from