Starting with Apple, in 2021, Apple announced they would be building their East Coast Hub in the Research Triangle Park, which is sandwiched between Raleigh and Durham North Carolina.  This campus is massive, with the first phase totaling nearly 900,000 square feet.  It was estimated at over $550M and was set to be completed by the end of 2031.  

To lure Apple, North Carolina provided an investment grant worth up to $845M in tax incentives through 2061 if the company met its’ hiring goals in North Carolina, which involved adding over 2,700 jobs by 2032.  

Since the 2021 announcement though, Apple has been mysteriously quiet on the site and locals had theorized a delay, or even backing out overall, was on the table.  

Well on June 24^th, Apple confirmed the theories, as they have put the start of construction on pause, and are seeking a four year extension to the investment grant North Carolina offered.

Apple has indicated they remain committed to the area, which has been showcased by their hiring of over 600 employees in their leased Cary office since the 2021 announcement, and are excited about building their state-of-the-art facility here in the future.  North Carolina’s Governor has also indicated he has spoken with Apple and feels confident that this campus will be built down the road.

On another note, the electric car manufacturer and competitor to TESLA, VinFast, as paused construction on their future North American Manufacturing Hub just west of Raleigh, as sales in the US market for their vehicles have not been what was expected, and they are likely adjusting to a smaller footprint.

And we have downtown Raleigh.  While some areas like Glenwood South and the Warehouse District are thriving with an infusion of youth, other areas like the Fayetteville St district feel barren, filled with empty offices as the new work from home norms have prevented vacancies from being filled.  

I remember when Fayetteville St was one of the places to be on Saturday nights, which is no longer the case, and Raleigh’s plans to revitalize it can’t come soon enough.

So the question is, what should we make of these announcements, and how does this impact Raleigh’s future economic state?

Quick plug first, if you find yourself needing any real estate assistance in the greater Raleigh area, please don’t hesitate to reach out as we would love to help you!

So, for many locals, Apple’s pause for their campus is welcomed, as it was projected to impact both traffic and housing prices in the area in a major way.  But as far as the outlook of Raleigh’s economic future, it no doubt has an impact.

Apple is the big man on campus.  What Apple does, other companies follow.  See my previous video on the Apple Effect and how it rapidly changed Austin.  

So I don’t believe this is an impact involving just one company.  Apple’s announcement to build its’ East Coast Hub here was big news, but its’ pause signifies a big one for the tech industry who also had eyes on RTP, as any company currently considering joining Apple here is now thinking twice, and wondering, what does Apple know that we don’t?

With Apple being on the cutting edge of the industry and a leader in so many ways, this pause also sheds doubt on the construction of these types of large campuses as many wonder, are these types of work environments outdated?

This ripple effect could certainly be felt down the road by the Raleigh area as a whole, as the tech industry is trying to figure out the best work environment for their employees.

But on the other side, Raleigh has had one of the strongest economies in the nation for years, even without Apple and any added bonus of companies following.  The addition of Apple was set to propel Raleigh into a state of rapid growth, beyond its’ already very strong economy.  

And in all honesty, Raleigh’s infrastructure was not fully setup to handle this growth, and this pause may actually give Raleigh more time to better plan for the impacts of the projected growth.

So even without Apple, Raleigh has a very strong base and bright outlook.  And other industries in the area are expanding as well.  Novo Nordisk, which is the producer of the trendy weight loss drugs Ozempic and Wegovy, has just announced plans to build its’ second manufacturing plant in Clayton, NC at the cost of roughly $4.1B to boost its’ output of these drugs. 

In similar news, Fujifilm announced its’ plans to expand its’ existing Holly Springs, NC footprint by investing $1.2B to create the largest end-to-end cell culture facility in the world, which will add around 680 jobs.

So, the Raleigh area isn’t hurting overall, and while the Apple announcement stings, the outlook in Raleigh NC for jobs and its’ economy continues to be one of the top in the nation.  And overall, anything we can get from Apple down the road is icing on the cake.

While Governor Cooper and Apple have reiterated their commitment to North Carolina and building its’ campus, the writing on the wall does point to at least some modification to the original incentive grant provided by North Carolina.  

This is purely my opinion, but while I do believe Apple will maintain their presence in the area, as they already have 600 employees here, I personally expect to see this investment grant modified in the way of reducing the number of jobs added from the original 2,700, and in turn reducing the amount of incentives provided by North Carolina.  It will doubtfully be proportional, as I’m sure the state will continue to sweeten the pot for Apple to follow through.

It’s also very likely the footprint of their proposed campus reduces in size as well, but I do believe that when it is built, it will be the definition of state-of-the-art and will still be an icon for RTP down the road.

Before finishing up with downtown Raleigh, it is disappointing to see so many for lease signs on many of the buildings, and even some iconic restaurants like Clyde Coopers is moving out of downtown from lack of foot traffic.

Last year at this time, the Downtown Raleigh Alliance’s 5 year development plan for downtown Raleigh displayed some very ambitious planned developments that will really changed the downtown skyline when complete. 

I will be interested to see the updated plans coming out later this summer, as in all honesty, it’s hard to imagine some of those buildings will still be completed given all the vacant office space we currently have.

There is still plenty of construction of mixed-use buildings happening all around the Raleigh area.  But many of these are currently on the outskirts of downtown or in the North Hills area.  So there is still some demand for office space, just not necessarily in downtown at the moment.  I will say though, this is not a problem that is unique to Raleigh, as downtowns all across the country are having similar issues. 

On the bright side, the Warehouse and Glenwood South districts are thriving on the residential and entertainment side of things.  For the Fayetteville District, the Omni Hotel is supposed to be built by 2027 to coincide with the Convention Center expansion, and Raleigh is pursuing the revitalization of Fayetteville Street, which are both great starts to breath life back into the Fayetteville District.

So overall, Raleigh is still in a great place, but certainly has some areas for improvement.  As mentioned, hopefully the pause of Apple will give Raleigh the needed time to address many needed infrastructure updates to be ready for when Apple, or another major company, decides to expand in RTP.

Check out our recent blog to learn more about RTP and the other exciting things to come there!  

I’m Alison Wojnarowski with the W Real Estate Group and please don’t hesitate to reach out if you need any real estate assistance.  

Please reach out via our contact information below:

Phone:  919-504-5265

Email:  alison@thewgroupraleigh.com

Website:  www.thewgroupraleigh.com