The retail market across the Raleigh-Durham region, also known as the Triangle, soared to new heights in 2022 despite significant global economic headwinds. Spurred by population growth and major economic development announcements, 2022 was filled with the groundbreaking and opening of new retail and mixed-use projects across the region.
For the second consecutive year, North Carolina witnessed record-breaking economic development activity. New and expanding companies announced more than 12,700 jobs and more than $11 billion in new investments in the Triangle region alone.
Tiffany Barrier, CBRE|Raleigh
While the urban sectors lagged through 2020 and 2021, they saw a resurgence in 2022 with major tenant announcements for Smoky Hollow (Kane Realty Corp.) such as Midwood Smokehouse, The Crunkleton, Madre, Dose and New Anthem Beer Project.
Downtown Raleigh also featured the delivery of 301 Hillsborough at Raleigh Crossing (Barings), Tower Two of Bloc 83 (City Office REIT) and construction of Seaboard Station (Hoffman & Associates). Downtown Durham boasted major groundbreaking, retailer and restaurant announcements as well, including the groundbreaking of Novus (Austin Lawrence Partners), encompassing 23,000 square feet of ground-floor retail space and 27 floors of high-end residential. American Tobacco Campus reimagined its restaurant mix to announce Five Star, Press, Queen Burger and the soon-to-open Serafine and Ekhaya.
Similar energy spurred across the suburban market with new openings and announcements. Most notable was the long anticipated grand opening of Fenton in Cary. A partnership between Hines and Columbia Development delivered an outstanding product with new-to-market retailers and restaurants in an inviting, stylish and accessible setting.
Jamestown and Grubb Ventures broke ground and delivered the first phase of Raleigh Ironworks, an adaptive mixed-use project off Whitaker Mill Road and Atlantic Avenue in Raleigh. The project features 81,000 square feet of retail space and 184,000 square feet of office space. Retail tenants include Jaguar Bolera, Ponysaurus Brewing, Andia’s Ice Cream, Eastcut Sandwich Bar and local celebrity chef Scott Crawford’s Brodeto.
In the heart of Research Triangle Park, White Point Partners and the Research Triangle Foundation broke ground on Horseshoe at HUB RTP, a walkable urban district with 1,200 multifamily units, 50,000 square feet of retail space and 1 million square feet of office and lab space. The project marks a sea change for a submarket that has historically lacked residential and retail offerings.
Triangle-wide, 415,000 square feet of retail space was delivered in 2022, while preliminary data indicates vacancy rate dropped to 5.8 percent, down 50 basis points year-over-year.
As evidenced by recent leasing activity, the Raleigh-Durham market is a prime target for new retail and restaurant expansions. As capital has tightened for both small and large retail users, they have been forced to be more selective with expansion options, a trend from which the Triangle is exceptionally well-positioned to benefit. Recent new-to-market concepts include Taco Bamba, Rothy’s, Jaguar Bolero, PGA Tour Superstore, Painted Tree, Limani Grille, Woodhouse Spa, Superica, Colletta, Nike Live and Allbirds, among others.
Global economic conditions remain murky leading into 2023. The Raleigh-Durham region isn’t immune to global patterns, and it’s likely the market will experience a lull in the launch of new retail and mixed-use projects of significant scale.
That said, expansion of grocery stores in the market is set to continue with the new Publix-anchored Wallbrook in Rolesville breaking ground this year and Wegmans slated to open in 2025 in Holly Springs. The region currently has approximately 500,000 square feet of retail space under construction and slated for delivery within the next 18 to 24 months.
The investment sales and debt markets have already begun to experience a decline in activity, with anticipation of transactions being down through 2023. However, the fundamentals of the market have assisted in buoying activity to date and continue to portray a positive narrative for the region.
Ranked as the No. 6 best place to live in the country by U.S. News & World Report and No. 4 fastest growing city by American Growth Project, the region continues to offer a high quality of life, strong employment opportunities and an increasingly enticing array of retail, restaurant and entertainment options. The Triangle region and CBRE|Raleigh have strong momentum going into 2023. CBRE | Raleigh completed over 260 retail transactions in 2022, a 10 percent increase over 2021.
— By Tiffany Barrier, CCIM, Senior Vice President of Retail Services, CBRE|Raleigh. This article was originally published in the January 2023 issue of Southeast Real Estate Business.