Downtown Raleigh economic recovery accelerating, but still shy of pre-pandemic levels
Raleigh’s economic health burgeoned over the past three months, accelerating its yearlong resurgence, according to a third-quarter market report by the Downtown Raleigh Alliance.
Compared to some markets around the world, the city has rallied back from the pandemic’s lowest doldrums. But economic metrics must still improve if the city is to regain the momentum it had before COVID-19.
“If you read the Q3 report, it’s pretty consistently really positive,” said Will Gaskins, director of economic development and planning at the DRA. “We’re headed in really good direction and the outlook is good. But we’re just not quite there as far as being back to fully pre-pandemic levels.”
Across retail, housing, residential and other downtown sectors, data show dramatic improvement from the pandemic’s worst months in 2020. Hundreds of thousands of square feet are currently under construction to accommodate new retail and office spaces, and several million more are in planning. The cumulative investment for all of downtown’s new and forthcoming real estate exceeds $4 billion.
“It’s really encouraging on that front to see just the strength of some of the fundamentals of the market,” Gaskins said.
Between high vaccine accessibility, minimal pandemic restrictions and new downtown offerings, pedestrian traffic increased 126% compared to last year — a strong sign of revived activity.
“This quarter was one where we saw some significant movement or announcement in some of those segments of the market that have been in a little bit more of a pause globally, and so that’s one really exciting takeaway,” Gaskins said. “...We’re still in recovery mode, but we are still consistently seeing positive numbers.”
Market highlights by the numbers
Retail, food and beverage
Since the start of 2021, 48 downtown storefronts opened or expanded — 14 of them in the third quarter. Some businesses have closed, though, making for a net growth of 32 businesses this year and 10 in the last three months. Raleigh’s downtown growth rate for 2021 is 71% higher than 2020’s, year-to-date.
Almost 99,000 square feet of retail space is under construction, which could house more than a dozen retailers yet to be announced.
Food and beverage sales made a substantial recovery in Q3, growing 5% over the previous quarter and 143% over the same time last year. From 2010 to 2019, food and beverage sales increased 8.4% annually.
Office space
Several major office spaces were completed or renovated this year, including Tower Two at Bloc[83], 421 N. Harrington and First Citizens Bank Building. By end of year, almost 300,000 square feet of new space will be available in the Raleigh Crossing building.
Office building occupancy decreased in Q3 to just below 90%, but in-office activity may have increased based on parking deck usage. Across nine downtown decks, occupancy rose to 29% from 24% in the previous three months.
Residential
Two new apartment developments, Platform and 400H, broke ground in Q3. They will include 684 units between them. More than 5,000 units are under construction or in planning, which will more than double the number of apartments completed since 2015.
