FIRST QUARTER 2015

ECONOMIC DEVELOPMENT REPORTDOWNTOWN RALEIGH

The Downtown Raleigh Alliance produced this quarterly report. The Alliance is an award-winning nonprofit organization whose

mission is to continue to revitalize Raleighs downtown by enhancing its quality of life and contributing to its economic suc-cess (For more information, visit www.youRhere.com). The City of Raleigh is a key partner of the DRA in its economic develop-

ment efforts to revitalize downtown. DRA receives a grant from the city to enhance its tax base by generating new jobs, sup-

porting existing businesses, and attracting new businessesin particular storefront businesses.

For questions concerning this report, please email billking@downtownraleigh.org.

1st QUARTER 2015

Economic Development Report Downtown Raleigh

Disclaimer The information contained herein has been obtained from sources deemed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty, or representation about it.

TABLE OF CONTENTS

ECONOMIC DEVELOPMENT REPORT Highlights ..................................................................................... 1

Real Estate & Population Snapshot .......................................... 2

Historic Trends ............................................................................ 3

First Quarter 2015 Street-Level Business Activity .................... 4

Development in the Planning Stages ........................................ 5

Development Under Construction ............................................. 5

Food/Beverage Sales Tax Revenue........................................... 6

ECONOMIC DEVELOPMENT REPORT

HIGHLIGHTS

Announcements The Downtown Experience Plan is

open for a final round of public

comments until May 13th. The

plan seeks to add green space,

activate streets, improve retail,

increase walkability, add density,

and continue to grow downtown

Raleigh. Details and renderings

can be found at http://

www.raleighnc.gov/business/

c o n t e n t / P l a n U r b a n D e s i g n /

Articles/DowntownPlan.html

Construction Boom Over $677.8 million in projects

are currently under/recently

completed construction ($385

million) or in planning ($292.8

million). Several more major

projects are expected to be

announced in 2015. Each district

of downtown has projects under

construction or planned.

Office Market Construction of the 242,000 sf,

Class A office tower, Charter

Square, was halted for a few

weeks by a tragic accident on

March 23rd. DRA expresses its

deepest condolences to those

lives lost.

Office vacancy was 7.7% (Source:

JLL) for the first quarter in

downtown for Class A and Class B

office space. New projects like

117 Fayettevilles extensive renovation and Charter Square,

will help address the high demand

for office space in downtown.

Retail & Storefront Market During the first quarter, at least 9

new street-level businesses

opened in downtownincluding restaurants, a fitness center, bars,

and a tshirt/clothing shop. At least 10 new street-level

businesses have been announced

and are expected to open during

the next six months including an

ice cream shop, beer garden,

restaurants, and a new three-story

concept from James Beard award

winner, Ashley Christensen.

Since 2010, downtowns retail base has increased by 35% and

restaurants by 19%.

Our analysis of recent retail

vacancies show an average asking

rent of $18 per square foot. With

a range from $16-$25 per square

foot for most vacancies for lease.

Downtown storefront vacancy

continues to be very tight, as few

storefronts are currently available.

With new construction, though,

more supply will be coming online

throughout 2015.

Residential Market F o u r 2 5 D e v o n f i n i s h e d

construction at the end of 2014 to

bring 261 new units to downtown.

There are nine residential projects

under construction, most of which

are expected to be completed in

2015 and will bring many new

residents to downtown. SkyHouse

opened in mid April and brings

323 more units to downtown.

Currently, 1,236 units are under

construction with over 300 more

units planned in the near future.

The overwhelming majority of

these projects is for apartment/

rental units.

Dining & Hospitality Market Food and beverage tax collections

were up 3% in 2015 in the first

quarter for downtown Raleigh

versus the first quarter of 2014

In total , there are 177

restaurants, cafes, and bars/

clubs/lounges in the MSD.

1st QUARTER 2015

Economic Development ReportDowntown Raleigh

1

Downtowns first quarter saw new street-level businesses open, more major construction projects, and several new buildings completed or near completion. 9 street-level businesses opened in the fourth quarter this year ranging

from services to soft goods to restaurants and bars. Construction continued on major construction projects such as

SkyHouse, Charter Square, the L, the Lincoln, Link Apartments, the Edison, and others. SkyHouse has just been

completed as of early second quarter 2015, adding 323 residential units to downtown. Several other projects were

completed in the first quarter, including McClatchy Interactives renovation/expansion of a 30,000 square foot space, while Glenwood South added the 37,000 sf Carolina Ale House and Four25 Devons new 261 unit apart-ment building. In total, Downtown Raleigh has $272.9 million in current construction in the municipal services dis-

trict (MSD) totaling 1,595,552 square feet and with 1,840 residential units under construction or recently complet-

ed. Including under construction and just completed projects, 3,362,466 square feet of space will be added in the

near future to downtown Raleigh.

REAL ESTATE & POPULATION SNAPSHOT

REAL PROPERTY SQUARE FOOTAGE WITHIN THE MSD

DOWNTOWN HOTEL ROOMS

Existing Space

Commercial Office

Retail

Governmental Office/Other

Residential

Other (Education, Religious, etc.)

Total Existing Space

Under Construction/Planned Space

Residential

Commercial Office

Retail

Government/Other

Total Under Construction and Planned Space

Square Feet

6,989,335

1,375,707

6,964,275

3,331,939

5,305,977

23,966,900

3,081,600

357,598

147,829

26,000

3,613,560

Existing Rooms

Planned

1,136

140

RESIDENTIAL UNITS

POPULATION DESCRIPTIVE STATISTICS*

2,811

1,840

4,651

5,975

(Approx) 7,800

14,964

$50,717

6,858

1.80

40%

Existing Units Inside Downtown

Planned and Under Construction (P & UC) Residential Units

Combined Existing, P & UC Units

Residents Within the MSD

Residents Estimated Within Downtown (2014)

Residents Within 1-mile Radius of Downtown Center Point

Average Household Income Within 1-mile Radius of Downtown

Housing Units Within 1-mile Radius

Average Household Size Within 1-mile Radius

% of Residents Within 1-mile Radius With Bachelors Degree or Higher

Economic Development Report Downtown Raleigh

1st QUARTER 2015

2

Sources: DRA Internal Tracking, Karnes, ESRI Business Analyst projections, U.S. Census

P = Planned, UC = Under Construction, A = Announced

HISTORICAL TRENDS 2009 2010 2011 2012 2013 2014 2015

Street-Level Business Openings 39 54 41 38 31 36 9

Street-Level Business Closings 24 26 26 17 15 16 3

Year-End Office Occupancy 91.6% 89.6% 89.9% 89.2% 93.3% 89.9% 92.3%

New Projects Announced 3 2 5 6 4 4 1

Public Investment (millions) $2.6 $0 $0 $75 $187 $0 N/A

Private Investment (millions) $54 $9.6 $106.5 $117.5 $351 $133 N/A

Projects Completed 10 3 5 5 8 5 1

Public Investment (millions) $39.3 $2.5 0 $130 $88 $0 $0

Private Investment (millions) $139.9 $7.4 $22.3 $29.8 $156 $115 $60

Economic Development ReportDowntown Raleigh

1st QUARTER 2015

3

Sources: DRA internal tracking, Karnes

0

10

20

30

40

50

60

2007 2008 2009 2010 2011 2012 2013 2014

Street-level openings and closings (2007-2014)

Number of closings Number of openings

1st QUARTER 2015 STREET-LEVEL BUSINESS ACTIVITY

Business Openings:

Name Type

1. Carolina Ale House Restaurant

2. The Twisted Mango Restaurant

3. Anchor Bar Bar

4. Level Up Kitchen and Barcadium Restaurant/Bar

5. Circa 1888 Bar

6. Gallo Pelon Mezcaleria Bar

7. MADabolic Fitness

8. Pho Pho Pho Noodle Kitchen and Bar Restaurant

9. House of Swank Clothing

.

Business Closings:

1. Aiko Bar and Lounge Restaurant

2. Nutrafit Health services and products

3. Cimos Gifts and books

Economic Development ReportDowntown Raleigh

1st QUARTER 2015

4

Sources: DRA internal tracking,

Economic Development Downtown Raleigh

1st QUARTER 2015

6

DOWNTOWN RALEIGH DEVELOPMENT INVESTMENT

Project Name Investment Project Type Sq. Ft. Res.

Units District

UNDER CONSTRUCTION

Elan City Center Apartments $ 30,000,000 Apartments Not available 213 Capital

Peace Street Townes $ 5,000,000 Townhomes 20,000 17 Capital

200 S. Salisbury (Death and Taxes) $ 3,000,000 Mixed Use 10,903 n/a Fayetteville Street

227 Fayetteville St. $ 8,000,000 Office 101,439 n/a Fayetteville Street

Boylan Pearce Bldg. $ 5,500,000 Mixed Use 31,820 1 Fayetteville Street

Charter Square $ 63,000,000 Office 243,379 n/a Fayetteville Street

Link Apartments $ 30,000,000 Apartments 276,119 203 Glenwood South

The L $ 17,000,000 Apartments 110,000 83 Fayetteville Street

The Lincoln $ 35,000,000 Apartments 318,000 224 Fayetteville Street

Edison Apartments $ 40,000,000 Apartments 290,000 239 Moore Square

Blount St. Commons $ 8,000,000 Townhomes Not available 46 Capital

The Ten at South Person $ 2,400,000 Townhomes 16,824 10 Moore Square

The Gramercy $ 30,000,000 Apartments 168,398 203 Glenwood South

Raleigh Beer Garden $ 2,000,000 Bar 8,670 n/a Glenwood South

TOTAL UNDER CONSTRUCTION $ 278,900,000 1,595,552 1,236

PLANNED

Residence Inn by Marriott $ 20,000,000 Hotel 150,000 145

rooms Fayetteville St.

220 The Saint $ 7,000,000 Apartments 66,000 17 Glenwood South

West Apartments $ 20,000,000 Apartments 270,000 153 Glenwood South

West Apartments II $ 25,000,000 Apartments 286,480 170 Glenwood South

Edison Office $ 80,000,000 Office 315,000 n/a Moore Square

Moore Square renovation $ 12,000,000 Park n/a n/a Moore Square

Union Station $ 79,800,000 Transportation 26,000 n/a Warehouse

Exchange and Market Plazas renovation $ 2,000,000 Civic Space n/a n/a Fayetteville St.

Peace St./Wade Ave/Capital Blvd

bridges/interchanges $ 40,000,000 Infrastructure n/a n/a Capital

Moore Square Transit Center renovation $ 7,000,000 Infrastructure n/a n/a Moore Square

Peace Street street scape project $ 2,000,000 Infrastructure n/a n/a Glenwood South

HQ Raleigh expansion Not announced Office 30,000 n/a Warehouse

TOTAL PLANNED $ 292,800,000 1,143,480 485

PLANNED + UNDER CONSTRUCTION $ 571, 700,000

RECEENTLY COMPLETED

SkyHouse Raleigh $ 60,000,000 Apartments 358,986 320 Moore Square

Four25 Devon $ 35,000,000 Mixed Use/residential 227,400 261 Glenwood South

Carolina Ale House $ 7,500,000 Dining & Bar 37,048 n/a Glenwood South

McClatchy Interactive office renovation/

expansion $ 3,600,000 Office 30,000 n/a Fayetteville Street

TOTAL DELIVERED $ 106,100,000 653,434 581

Sources: DRA internal tracking

1st QUARTER 2015 SALES TAX REVENUE FROM FOOD AND BEVERAGE ESTABLISHMENTS

Economic Development ReportDowntown Raleigh

1st QUARTER 2015

6

Sources: Wake County Tax Assessor

At the end of the 1st quarter, sales tax revenue generated by food and beverage establishments

in downtown Raleigh is up 3% in 2015 over first quarter of 2014.

$350,000.00

$360,000.00

$370,000.00

$380,000.00

$390,000.00

$400,000.00

$410,000.00

$420,000.00

$430,000.00

2014 1st Q 2015 1st Q

Food/Beverage Tax Revenue (YTD 2015 vs. 2014)