The Raleigh/Durham retail market consists of approximately 41 million square feet and serves a population of about 1.75 million people. Raleigh, Durham and Chapel Hill comprise the “Research Triangle” metropolitan region, which is continuously ranked among the best areas in the nation to live and work. The retail market has an overall low vacancy rate and remains relatively healthy despite the lingering recession.
A period of remarkable growth has slowed and only a handful of new developments opened in 2011. These include Park West Village, a 373,748 square feet power center located in Morrisville at Highway 54 and Cary Parkway, and the 57,511-square-foot Market at Colonnade, a shopping center anchored by Whole Foods and located on Six Forks Road in north Raleigh. Another notable project is the renovation of the 200,000-square-foot Waverly Place in Cary.
Few new development opportunities are expected in the near future and positive absorption of vacancy for anchor and shop space has been encouraging, as centers have continued to strengthen albeit at lower rental rates. Job growth drivers are simply not there to support the rapid retail growth the area experienced prior to the recession.
Trends in the marketplace include expansion of discount chains such as Walmart, T.J. Maxx, Ross Dress For Less and Dollar Tree. New tenants to the market include Five Below, Gander Mountain, North Face, Fleming’s Steakhouse, The Container Store and Nordstrom Rack.
Success stories include North Hills, a 835,575-square-foot mixed-use development located at the Interstate 440 Beltline and Six Forks Road in Raleigh which J.M. Kane continues to expand with retail and residential components. It’s brought the addition of many popular new tenants such as Brighton, World of Beer, Pure Barre, Lulu Lemon Athletica, Relax the Back, The Spectacle and Mia Franchesca’s.
Cameron Village, a 629,216-square-foot retail center located near downtown Raleigh is expanding with “The Residents at Cameron Village”. This multi-story mixed-use development includes 282 apartments and ground level retail and is now under construction by Crescent Resources. A highly anticipated two-story Chick-fil-A will open this year.
Expansion of existing centers such as Wake Forest Crossing II, will continue to add retail space to the marketplace in 2012. Areas of heavy residential and retail growth have generally followed the expansion of Interstate 540. The northern quadrant of this roadway is complete from U.S. 64 to Highway 55 on the West side of Raleigh. I-540 construction continues as a toll road around the western quadrant and new retail will follow including Parkside Town Commons, planned by Kite Realty.
We don’t believe the recession will have a long-term effect on how the retail market is developed. Basic supply and demand principles and retail following new rooftops will apply. Areas of high residential growth, such as Wake Forest, Cary, Morrisville and Holly Springs, will continue to grow due to their proximity to employment centers at Research Triangle Park via I-540. The Triangle will remain high on the list of areas that developers favor due to the diversity of its employment base.
— Banks A. Hunter, CCIM, is the president of Raleigh-based Hunter & Associates.