This week I had the privilege to attend Raleigh’sUrban Land Institute’s (ULI) Real Estate Trends 2016meeting. The event was centered on ULI’s recent 2016 Real Estate Report and how Raleigh fit in across the nation.
Heavy weight speakers included heads of the ULI from Washington DC, executives from Raleigh real estate leaders at Highwoods REIT, Federal Capital Partners and even Raleigh City Mayor Nancy McFarlane.
The report (seen here) talked about national economic trends, office space reductions, millennial’s residential patterns and transportation issues/changes in cities.
But what caught my attention was how Raleigh was stacking up against other US cities. Most media sources I had seen (from Forbes to USA Today) had Raleigh and NC as tops in the country and “No. 1-2 Places” to live, work/do business, retire, go to school, raise a family etc.
The ULI report showed different numbers, especially concerning commercial real estate and development. Instead of ranking in the Top 3, Raleigh/Durham fell to the lower single digits and even teens at some points.
Although the Raleigh/Durham economy was ranked highly, when it came to investment, capital availability, investor demand and local outlook, Raleigh consistently fell 5-8 spots behind some of our “fiercest” competitors aka AUSTIN, NASHVILLE (and kills me to say, but maybe Charlotte too).
The question for me became, how can Raleigh keep rising in the ranks and keep improving against the competition? Mayor McFarlane brought some great issues to light. Her top concerns for the Triangle were:
Traffic and Transportation plans: Raleigh is growing like crazy but roads are not keeping up. Better transportation is needed to sustain growth (unlike Austin TX, who decided to not build more roads….and now have major traffic backups)
Airport: Corporate Headquarters want more international presence at their airports, RDU airport isn’t cutting it yet with 2 trans-Atlantic flights.
Water and Resources: As a County, the City of Raleigh will continue to need investment in water resources to support the 63 new residents/a day moving into the county.
Downtown Retail: Urban is the new cool with Downtown Raleigh coming alive. Outside of restaurants and trendy bars, Raleigh is missing retail & luxury shop destinations especially along Fayetteville St.
City/Government Owned Sites: Raleigh has a plethora of old government and city owned blocks. These need to be addressed and re-developed to their highest and best use to better the city.
The panel of real estate leaders also brought some good insight into how Raleigh was viewed “inside” and “outside” of the state.
For local Highwoods COO Ted Klinck, Raleigh assets are not strong enough to sell above replacement costs. aka Office buildings need to have some deferred maintenance or future improvements for investors to get a good return on future value if they purchase and improve Raleigh product.
In Atlanta,Eastdil Secured’s Mike McDonaldsays investors are acting like 2006, they will pay TOP DOLLAR for trophy assets in trophy markets….and Raleigh doesn’t rank amongst these groups (who instead turn to Austin or Texas).
At the end of the day, I think it is great to even have Raleigh MENTIONED in the top 10 or 20 of US markets. The memories of the recession and down economy are not far from the minds of most business owners and employees.
What I hope is that Raleigh can continue to look to better itself and the region. The media may continue to play sweet tunes, but true investor and capital sources say Raleigh and the Triangle aren’t at “the top” quite yet.