The end of 2021 in Raleigh-Durham was marked by robust retail leasing and an increased level of investment sales in our suburbs and infill trade areas. Downtown Raleigh, Durham and Chapel Hill have lagged in activity, although each urban environment started to see a resurgence by mid-year, and notably Downtown Raleigh ended 2021 with record retail leasing activity.
Population growth and major economic development announcements are driving these positive trends. Apple, Google, FujiFilm, several life sciences companies and most recently Toyota (just east of the Raleigh-Durham region) have highlighted economic expansion. Strong demand and a healthy retail construction pipeline have held retail vacancy to 7.1 percent despite headwinds from the COVID-19 pandemic.
Charlie Coyne, CBRE|Raleigh
The healthy retail development pipeline includes several new mixed-use projects. Cary will see one of the largest active mixed-use projects in the Southeast deliver this year when Fenton opens in the spring. Hines and Columbia Development are currently finalizing the first phases of the project. Spread over 92 acres, Fenton will initially include retailers such as Pottery Barn, Williams-Sonoma and Superica, as well as apartments and office space.
Over in Research Triangle Park (RTP), the Research Triangle Foundation and White Point Partners have announced Horseshoe at Hub RTP. Horseshoe will include 125,000 square feet of food, beverage and creative office space overlooking a central plaza and water feature in the heart of RTP. Site work has commenced, and the project is scheduled to deliver in 2023.
While the Raleigh-Durham suburbs hum along, Downtown Raleigh is another major node for retail-oriented mixed-use development. Kane Realty Corp. delivered Smoky Hollow last year, Fallon and Barings are in the process of finalizing 301 Hillsborough as the first tower in the Raleigh Crossing development and Hoffman & Associates has Seaboard Station under construction.
One of the most exciting trends of 2021 was the repositioning and redevelopment of enclosed mall and big box retail properties in our market. The year started with the surprise announcement of Epic Games buying Cary Towne Center. The video game developer is now in the process of converting the former 1 million-square-foot enclosed mall to its global headquarters.
Invitae Corp. also plans to lease the entire Morrisville Outlet Mall now known as The Stitch. The life sciences company will occupy almost 250,000 square feet of converted retail space.
Northpond Partners and Loden Properties recently closed on South Hills Mall in Cary for a massive redevelopment. Plans are expected to be announced in the coming months.
Within a period of 11 months, Raleigh-Durham had announcements of three former enclosed malls completely transform roughly 2 million square feet into adaptive reuse and redevelopment opportunities. This conversion movement has occurred within single-tenant big box properties, as well as with former grocery stores. The former Kroger on Six Forks Road in Raleigh and the former Kmart just south of Downtown Raleigh in Garner will be converted to lab or creative office space.
While Cary Towne Center and Morrisville Outlet Mall’s retail days are over, the Raleigh-Durham market is closely watching retail redevelopment plans for University Place in Chapel Hill, Northgate Mall in Durham and Crabtree Valley Mall in Raleigh, which is currently on the market for sale. Crabtree Valley Mall will likely trade this year and should be the catalyst for a major redevelopment of the iconic Raleigh asset.
Investment sales activity has also been seen for grocery-anchored and power center asset types. Publix-anchored Amberly Place in West Cary and Heritage Village in Wake Forest were sold in 2021, and Olive Chapel anchored by Lowes Foods in Apex is expected to close very soon.
This run of sales activity has even flowed into power centers, which have fallen out of favor in recent years. The recent trade of Beaver Creek Crossings in Apex and pending sale of Plantation Point in Raleigh reinforces the strength of the Raleigh-Durham retail market.
— By Charlie Coyne, Senior Vice President, Retail Services, CBRE|Raleigh. This article originally appeared in the January 2022 issue of Southeast Real Estate Business.