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Population growth is a direct result of the lifestyle advantages we enjoy in the Triangle region, which include our mild climate as well as educational opportunities and future employment options. People continue to move to the area, with approximately 225,000 new citizens expected by 2015. These new citizens expect jobs and recent estimates indicated an increase of approximately 12,500 jobs in 2012. It’s not the high job growth of the late ’90s through mid-2000, but it was an improvement over the last three years.
With so many new people coming to the Triangle, and many unable to sell their homes in depressed markets, the need for apartments has grown considerably. The Triangle apartment market has been on fire with the latest report indicating a vacancy rate of 5.5 percent. In addition almost 6,000 apartment units are currently under construction. The combination of population growth, housing demands and disposable income are key ingredients to our vibrant retail market.
In 2011, there was an increase in retail construction of approximately 900,000 square feet, resulting in minimal absorption and continued vacancy at 6 percent. In 2012, construction dropped to just over 300,000 square feet and despite vacancies in strip centers, overall vacancy dropped to 5 percent. More than one million square feet of space is currently under construction with most of the activity in the Apex and Holly Springs submarkets.
Grocery-anchored developers are revisiting the market and reviewing sites they considered three years ago. Among them is Publix Super Markets, which is opening its first store in North Carolina in Charlotte. We expect to see a Raleigh store open by year-end 2014. According to the Triangle Business Journal, the nearly $60 million Bradford development project in Cary is one of the favored sites.
The Cary submarket had the highest level of demand during the early part of 2012. A few of the tenants expanding in the area included the delivery of a 41,000-square-foot Ross Dress For Less at the Park West Village power center at the intersection of Cary Parkway and Highway 54. With the opening of the second phase of Park West Village, several additional tenants were added, including Chili’s, Noodles & Co., and Lime Fresh Mexican Grill, as well as Gander Mountain’s first entry into the Triangle with a 50,000-square-foot building. A 70,000-square-foot movie theater is currently under construction at this center. Cary also had a 27,000-square-foot REI added at Devonshire Place taking a space formerly occupied by Books-A-Million.
In Raleigh, Arhaus Furniture opened in one of the largest shopping centers, Crabtree Valley Mall, replacing a space formerly occupied by Crate & Barrel, Footaction and Deb. There was also strong activity in Emporium Plaza in the North Raleigh area as Babies “R” Us moved out and relocated to a new building they will share with Toys “R” Us at Poyner Place. Tuesday Morning opened two new stores: one at Beaver Creek Crossings south of Cary in Apex, and another 16,500-square-foot store at the Food Lion-anchored Edgewater Place in Raleigh.
Rental rates are on the rise with an average rate of $22 per square foot. Some retail centers like Cameron Village in Raleigh are asking $30 to $34 per square foot, depending on the size and use. However, in other submarkets, like the East Raleigh Knightdale area with the highest retail vacancy rate in the Triangle at just over 9 percent, rental rates are at $12 per square foot. With the exception of the East Raleigh submarket, overall absorption has remained positive at 2 percent.
– Hunter Stewart, MBA, Broker with NAI Carolantic Realty