Or the economy will tank and these will all get canceled, delayed, or scaled down. That’s always my worry, especially as we seem to be on the cusp of a ton of new projects.
We’re due for an economic depression so that could be.
It’s a valid worry. The recession did a doozy on Raleigh after the 2008 economic meltdown.
I think if that happened and all this got canceled, I’d just move to a bigger city like Denver or Austin. Or Nashville (Raleigh+). I looked into Raleigh in 2008, convinced by the tons of upcoming projects that it was about to be quite the up-and-coming place, and I’d get to watch it all happen. Moved here in 2009, and then spent 10 years watching projects get canceled or scaled back. It’s been rough, watching a random project or two a year make its way into existence. I feel like we’re finally hitting that tipping point, so I get nervous it’s going to happen all over again.
How depressing that sounds.
Given the max capacity is ~20 stories, not much to tip. More like shoving point
I command everyone to end the talk of an economic downturn, lol! Keep the Karma positive and we will get these suckers built.
It is realistic to expect another crash honestly. Raleigh could become the city with the worst luck ever if it happens this year. If we get most of the big stuff in by the middle of next year, I think that will be sufficient to ‘crash-proof’ downtown’s growth somewhat.
Crash-proof? If the economy tanked for a significant chunk of time, say 2+ years of slowdown, we’d have a bunch of desolate towers that the developers can’t pay the checks on. I’d rather Raleigh be at 90%+ occupied than to have a bunch of nice pretty buildings, sitting empty, scaring away future developers from the Raleigh area for decades.
I won’t deny any possibility in this administration, but the '08 crash was triggered by over speculation in residential real estate specifically, and most signs are pointing to a totally different type of cool off this go round. Regarding housing, we sort of have underspeculation in the sense that builders cant meet spec demand ($300-$400k) Housing already dipped in Q3-Q4 '18 into recession territory then bounced back a bit in Q1 '19 because the fact is we still need to build a ton of residential to keep up with demand and these little market corrections/cool offs actually help bring prices down temporarily from simple supply/demand, especially labor. The interesting thing to watch will be the Funds rate and CRE capital markets. A small economic dip could prove advantageous for developers with deep pockets as labor/commodity prices come down, land inflation slows, and yet they have cash/equity to pump into new projects. I could be totally wrong but personally I don’t see another '08-'11 happening anytime soon.
Building unneeded towers is how crashes start. Raleigh’s developers have been doing their part by being cautious but we suffer the effects of unbridled development in places like Miami or wherever as well.
Raleigh is nowhere remotely close to the situation Miami went through in 2008.
While nobody has a crystal ball the broad consensus appears to be that yes a recession/softening is likely in the next 2 years but the mechanics are very different from the great recessions which was a once in a lifetime kind of event.
For Raleigh particular I am optimistic due to the fundamentals job growth, tech growth, population growth and frankly by comparing our offering value/price to the rest of the country. What helps too is that the slated developments are by several different groups - in state and more and more out of state (Fallon Boston, Aquisition Group CA, NY developer behind CAM etc). It was before my time but I think 2006 the pipeline was dominated by local developers
And funny enough, look at Miami now… The recession hurt them for what… 5 years?
I’m going to presume that this is in response to the idea of a bunch of empty shiny towers. I can tell you that the tens of thousands of empty condo units after the 2008 crash in Miami were predicted to halt construction for 2 decades in Miami. Well, after 5ish years of banks sorting out what to do, all of those units were scooped up on the cheap and invigorated DT Miami and Brickell in a way that I’m sure that nobody expected. More is being built today (or since the recession) than before it. The way they are paid for has changed as well, and more are to come. Then again, Miami’s market is completely different from Raleigh’s. But, my point is, not doing anything or slowing down development out of fear of the worst case scenario is way worse than being assertive and aspirational.
Miami was overbuilt at stupid high prices. Raleigh’s example was Bloomsbury where condos did not sell at all until they were auctioned for about 55% of their original list price.
Sure there are regional differences, but the last two boom and crash cycles (dotcom and mortgage lending) which more or less overlap downtown Raleigh’s modern redevelopment both halted construction in DTR. Economic crashes have effects everywhere because the things that cause them are national trends and national level institutions or occurrences (banks/lenders, corporations/jobs, developers/builders, energy costs, droughts, wars, etc)
Yes. I understand Miami. I have a foot in each city.
IMO, Bloomsbury was the wrong product for the market before the crash. At the discounted prices, they were good buys. At their original prices, not so much.
Remember, The Quorum was also caught with its pants down. I’d rather have that building there than never have had it built out of potential market fears. My point is that you can’t live in fear or you will be immobilized.
Indeed. A healthy, steady, middle ground for the national and local economies would be best if it’d ever stick to that. Get good stuff and a good regular pace. The guys with money can even build cheap on spec if they want during bust and make a huge gain later…didn’t Kane keep building through both recessions? I imagine when the national developers capital dries up, Kane will keep chugging in downtown despite the national picture.
Maybe the above awesome conversation on “DTR Economics” should be moved into its own thread?