By Hilary Reaves and Jill Mertens - As someone who has been tracking the downtown condo market for more than a decade, the numbers and prices can be somewhat predictable, so I was pleasantly surprised to find something that stood out. While we all tend to know instinctively that new development can drastically change an area, the kind of impact isn’t always clear. So I enlisted the help of my colleague Jill to test the numbers.
The warehouse district of Downtown Raleigh has completely changed over the past few years. Prior to the Dillon and the new Union Station, condos at Park Devereux and Dawson sold within a fairly predictable price range. The Martin Place Condos were built in 1997 and there are only 12 of them. They’ve traditionally sold for under $300/ft ($278/ft for 2015), and the turnover is quite low. Only one a year, or none at all, as there were in 2016 and 2014. But low and behold - suddenly in 2017 the price per SF jumped to a average $348/ft.
The Dillon complex has brought stores like Urban Outfitters, restaurants like Oak Steakhouse, O-Ku Sushi, Barcelona Wine Bar and – soon, the Weaver Street grocery store. The new train station and the Morgan Street Food Hall are also welcome additions. So Jill dug deeper to see if all this new activity also drove an increase in the rest of the condo buildings.
In 2017- when the Dillon was announced, average sold $/sq ft for condos in the warehouse district increased a whopping 11.29% over 2017- thanks in large part to a huge bump in the value attributed to the oldest units at Martin Place condos. Living through construction was surely not fun but owners at Martin Place were rewarded financially for the inconvenience.
Construction may have dampened the interest in the area for a period of time. During the primary construction year of 2018, condo values in the area increased- but at a rate (4.41%) a bit below that of condos in ITB overall (6.28%). But perhaps after the big jump, the rest of the prices fell in line with the more traditional rate.
Now that construction is complete and facilities are open, YTD 2019 condo values in the warehouse district have gone up 6.21% over 2018 - which is more than 4 percentage points more than that ITB overall (now at a year-over-year increase of 1.95%
It’s worth noting that the volume of condos we’re talking about are pretty low in the warehouse district, compared to a couple hundred overall ITB, so perhaps not the most statistically significant data. But those in the area can feel the difference from the before and after the new development. The warehouse district is truly buzzing with activity where old warehouses once stood vacant. Clearly buyers value the proximity to all that the Warehouse District has to offer.