By Daniel Flynn, Research Analyst
Cushman & Wakefield recently published a report examining “Cool Streets” across the country. The report featured locales that boast the right mix of grit, vibrancy, and a young, talented workforce. Cool Streets nationwide are acting as an incubator of sorts for what will likely become the hottest new retail, dining, and workspace concepts of tomorrow.
Mounting pressure from e-commerce has put brick and mortar retail in the hot seat, and competition for talent in the workforce is at an all-time high. Both employers and retailers are being forced to abide by the cautionary tale told in the original report from Cushman & Wakefield: Ignore cool at your own peril.
While “coolness” is ultimately a matter of subjective taste, it would be widely agreed upon that Downtown Durham- whose slogan is “find your cool”- boasts some of the coolest streets in the Triangle.
Durham’s workforce has drastically evolved over the past 30 years as the region has shifted from blue collar to a knowledge based economy. More than half of Durham’s workforce in the 1980’s worked in the tobacco and textile industries. Since then both industries have almost completely disappeared from the area, replaced by Health Care, Professional and Technical Services, and Education. Durham’s emergence as a cultural hub for arts and creativity has driven the area’s evolution into an up-and-coming destination to live, work, and play which has catalyzed white-collar job growth.
In the majority of Cool Streets surveyed for the national report, restaurants and drinking establishments were recognized for their contribution to the atmosphere and overall appeal. Durham’s reputation as a brewing hot-spot and recent recognition as “The Tastiest Town in the South” by Southern Living Magazine has generated tourism and interest from outside investors. In 2014, the Food and Beverage industry collected 27% of a total $830.8 million spent by tourists. Tourist spending within the Retail Trade sector accounted for 17.9% of the same figure. As a result of the ever-increasing list of attractions, the city of Durham saw its population swell by 30% between 2000 and 2013.
Durham’s rise as a destination for art, music, technology, and medicine has led to increased demand for all types of commercial space. Run-down warehouses and abandoned mills have gradually been transformed into mixed use campuses, corporate offices, entertainment venues, retail and residential units. In the early 2000’s, the redevelopment of the American Tobacco Campus brought more than 1,000,000 SF of upscale, urban renewal space to the area. The success of this project and flourishing local economy triggered inventory of Class A office space to more than quadruple since 2002 to a growing total of 2,389,547 SF today. Projected population growth of approximately 36% in the Durham metro over the next 25 years will continue to fuel physical and economic expansion Downtown.
Currently in the Submarket:
- 434,000 SF of office space under construction
- 670,687 SF of office space proposed or slated to begin construction (555 Mangum Street, the Cordoba Renovation, and Five Points Center)
- More than 650 hotel rooms have recently opened or will open shortly
- 692 multifamily units currently under construction with an additional 292 units proposed
- 911 multifamily units delivered since 2015
These upcoming deliveries will come as a relief for tenants in Downtown Durham. Class A office vacancy has lingered below 1.0% since Q4 2015, finishing 2016 at 0.65%. Overall (A, B, C) office vacancy has remained below 5.0% over the same time period in the Bull City. With landlord’s in the driver’s seat, asking rates have skyrocketed and are now the highest in the Triangle, with Class A space asking $29.29 on average.
Click here to download our infographic in your web browser.
For more information, please contact Cushman & Wakefield Raleigh-Durham.