Tue. Feb 20th, 2024

Cary’s Fenton development will add the 11th PBR Cowboy Bar in the country, slated to open in 2023.

Cary’s Fenton development will add the 11th PBR Cowboy Bar in the country, slated to open in 2023.

Max Touhey | www.metouhey.com

Turns out consumers are eager to return to in-person shopping after all.

Despite economic headwinds and ongoing labor and supply-chain challenges, brick-and-mortar stores in the Triangle are making a comeback, according to the latest data from CBRE Raleigh Research.

While the landscape is ever-changing — as evidenced by last week’s Tuesday Morning store closures in the Triangle and elsewhere — the region’s retail sector, in general, has emerged from the pandemic with “substantial momentum,” say analysts. Vacancy rates ended at 5.6% — down .7 of a percentage point year-over-year.

Construction activity “remains healthy,” with roughly 423,000 square feet of retail space delivered in 2022 and another 514,986 square feet under construction in the fourth quarter.

Local retail property sales reached $741 million in 2022 — the “second-highest annual total on record,” the report said.

“We’re starting to see a healthy pipeline of new mixed-use and grocery anchored developments,” director of retail services Charlie Coyne said. Downtown Raleigh and Durham are “rebounding as well.”

The market’s resurgence follows a painful shift for retailers that began prior to 2020 with the rise of e-commerce and changing consumer preferences. A wave of bankruptcies by debt-burdened retailers, including Neiman Marcus and J.C. Penny, led to substantial store closures, both nationwide and in the Triangle.

But on a micro level, Raleigh-Durham’s market has remained resilient. Limited construction, and the repurposing of large blocks of vacant space for alternative use, has helped bring supply and demand back in line, say analysts.

Graph shows Raleigh-Durham’s submarket vacancy rates. CBRE Research

Tenant activity remains strong.

In Raleigh, Kane Realty’s Smoky Hollow project off of Peace Street near downtown attracted tenants such as Midwood Smokehouse, The Crunkleton, Madre, Dose and New Anthem Beer Project. Mixed-use developments such as Raleigh Crossing, Bloc [83] and Seaboard Station, the report noted, also drew “substantial retailer interest.”

In central Durham, Capitol Broadcasting Company’s American Tobacco Campus revamped its restaurant lineup to include Five Star, Press Crepes, Coffee & Cocktails, QueenBurger and soon-to-open Seraphine and Ekhaya.

The rebound can be felt in the Triangle’s outlying areas as well.

After several pandemic setbacks and construction delays, the first phase of Cary’s Fenton development held its grand opening last June. The project, a partnership of Hines, Columbia Development and USAA Real Estate, brought a mix of new-to-market retailers and established brands like Athleta, Sephora, Radiant Waxing, Southern Tide and Williams Sonoma.

Jamestown and Grubb Ventures also delivered the first buildings at Raleigh Iron Works, an adaptive mixed-use project off Whitaker Mill Road and Atlantic Avenue in Raleigh. It’s already secured several retailers for the development’s first phase. Among them: Jaguar Bolera, Ponysaurus Brewing, Andia’s Ice Cream, Eastcut Sandwich Bar and local celebrity chef Scott Crawford’s Brodeto.

Chart shows select construction activity CBRE Research

In Research Triangle Park, construction has begun on a trio of office and retail buildings called Horseshoe at Hub RTP and 1,200 multifamily housing units. It marks a sea change for a submarket that has historically lacked residential and retail offerings.

In the meantime, grocers are once again ramping up expansion plans, with the Publix-anchored Wallbrook Marketplace scheduled to break ground in Rolesville and Wegmans planning to do the same in Holly Springs in 2023.

Of course, analysts add, Raleigh-Durham isn’t immune to current headwinds.

“It’s likely the market will experience a lull in the launch of new retail and mixed-use projects of significant scale in the near term,” the report said.

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Chantal Allam covers real estate for the The News & Observer and The Herald-Sun. She writes about commercial and residential real estate, covering everything from deals, expansions and relocations to major trends and events. She previously covered the Triangle technology sector and has been a journalist on three continents.


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