Tag Archives: multi-family construction

New Condo Construction In Downtown Raleigh May Be Five Years Away, But The Multi-Family Rental Market Is Scorching Hot Today

This article from today’s News & Observer takes the temperature of downtown Raleigh’s current condo market, essentially making the case that while it’s still frosty, it’s at least no longer arctic.  The story counts the remaining units left to be sold in the four most-recent downtown developments and provides this chilly forecast:

Based on the recent pace of condo sales, it’s conceivable that the remaining new units will be sold by summertime.  After that, the only option for people seeking a downtown condo will be to purchase one that’s been previously occupied.

And that is likely to remain the case for years to come.  Given recent history, and the fact that banks now flinch at the mere mention of the word “condo,” it is highly unlikely that any new projects will be built in the downtown area for at least another five years.

In sunnier news, the multi-family rental market should remain hot now that the Raleigh City Council has approved a 250-unit mixed-use project on Oberlin Road.  For more on the state of Raleigh’s multi-family rental market, see my October 23, 2011 blog post here.

November 4, 2011 Update:  Raleigh’s multi-family construction boom appears to be part of a national trend.  According to Mark Obrinsky, Chief Economist for the National Multi Housing Council (“NMHC”), strong demand for rental housing is driving increased multi-family activity in most markets: “Powerful demographic trends along with changing attitudes about homeownership and tighter mortgage underwriting continue to drive a shift toward renting, which is fueling a ramp up in new construction.”   The NMHC’s October 27, 2011 news release can be found here.

November 6, 2011 Update:  More evidence of the multi-family construction boom can be found here, from the Charlotte Observer’s “Development” blogger, Kerry Singe.    The “Coming Rental House Wave” report mentioned in Ms. Singe’s blog post  can be found here.

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Multi-Family Rental Is “In,” Office Space Remains “Out” in Raleigh Commercial Real Estate Market

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.

Image by Sura Nualpradid via FreeDigitalPhotos.net

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