The $30 million Edison project in downtown Raleigh is shifting its focus. The owner’s original program had been anchored by a 24-story office tower. Now, developer Gregg Sandreuter’s revised plan features 239 apartments and ground-level retail, but no offices. Coverage in today’s News & Observer can be found here.
Mr. Sandreuter’s project would have company. While I was busy in arbitration last week, there was quite a bit of coverage in the N&O announcing three other significant apartment projects in the City of Oaks — see here, here and here.
Based on market trends prepared by CresaPartners LLC, a tenant-focused commercial real estate firm in Raleigh, Mr. Sandreuter’s move may not be all that surprising. According to CresaPartners, the vacancy rate for Class A office space in downtown Raleigh has risen from 5.5% to 7.3% this year; meanwhile, the vacancy rate for Class A suburban office space is at 15.0%. As long as tenants can find deals in the softer suburban market, and until more of that available space gets absorbed, it is unlikely we’ll see significant office development in the central business district.