In downtown Raleigh’s historic Creamery building, employees of southern California software maker BuildOps are settling into their new office digs, as workers commence construction of the Capital City’s tallest apartment building.
The development represents the positive headlines sought by downtown Raleigh boosters. The Downtown Raleigh Alliance’s third-quarter market report cited rising demand for office and living space, retail outlets opening faster than they’re closing, more unique visits downtown and $1.5 billion in projects under construction.
The spending reflects efforts to energize growth after city leaders unveiled a five-year plan last year addressing challenges for downtown Raleigh, as it competes for investment against other cities and elsewhere in town. Next month, the Raleigh City Council is going to hear a rezoning request by Kane Realty seeking to construct buildings as tall as 37 stores in Raleigh’s affluent, fast-growing North Hills.
“The Triangle is on most everyone’s map at this point,’’ said Will Gaskins, the alliance’s economic development chief. That notoriety gives downtown Raleigh the opportunity to lure residents and businesses seeking to rub elbows with state government, visit museums, parks and restaurants operated by nationally recognized chefs, and basically live the downtown vibe.
“We compete in different ways,’’ Gaskins says. “As a region, it’s good to offer different assets and services. The downtown offers transportation systems; we do not have traffic congestion that some of these other places do.’’
Redevelopment in edgy areas such as Glenwood South is drawing “predominantly people of working age with college degrees or beyond,’’ Gaskins said. About four in 10 people living downtown are between 20 and 34 years old who combined with downsizing retirees are driving apartment demand, he said.
Some projects are mixing housing, retail and office space. The completion of the Holston at the Weld added 283 apartments and more than 5,500 square feet of ground-level retail space. Slated for completion in 2028, Highline Glenwood will be the city’s tallest apartment building, with 306 luxury units, including 16 penthouses.
Highline Glenwood is part of the redevelopment of the Creamery building where BuildOps, the maker of software for commercial building contractors, opened its third corporate office after Los Angeles and Toronto.
“We did a survey of our team, and everybody wanted to be downtown,’’ BuildOps CEO Alok Chanani said in October when the office opened. “They wanted the vibrancy; they wanted the industry. They wanted to be able to walk everywhere.”
More than 43,300 people are employed within a one-mile radius of Capital Square, according to the alliance’s quarterly report.
Downtown gained 11 storefronts in the quarter, with the opening of 21 restaurants, bars, shops and other outlets and the closing of 10 establishments. Amid climbing food and beverage sales and downtown visits, nearly 30 storefront openings are forthcoming.
The downtown office market is also improving, with the net absorption of 43,785 square feet of Class A space in the third quarter, the alliance said. From a year earlier, the average asking rent remained steady at $39.72 a square foot. The Class A occupancy rate of 86.3% ranked the lowest among major submarkets in Raleigh and Durham, according to the alliance.
The office market is recovering from the pandemic, described by last year’s report about downtown Raleigh as “profoundly disruptive’’ to “business as usual’’ in areas such as office leasing.
Relocation demand “has picked up in the last year or two as things have stabilized,’’ Gaskins said. “Companies that have been delaying decisions or have been sitting on existing leases are now thinking about relocations. We’ve seen that level of continued expansion in our market.’’
As of September 30, downtown Raleigh had 6.4 million square feet of office space with 22% available, according to CBRE data. Over the past five years, nearly 900,000 square feet of new office space as been added in the market, according to the downtown alliance.
By comparison, midtown Raleigh had 4.1 million square feet with 24.5% available, and north Raleigh had 5.7 million square feet and 21.7% listed as available. Midtown includes the North Hills market, which has attracted many corporate offices over the past 15 years.
