What Makes Raleigh a Hip and Affordable Place to Be?
Dec 7, 2015
Long renowned for being the site of three leading universities – North Carolina State University, the University of North Carolina at Chapel Hill, and Duke University – Raleigh, NC is emerging as a haven for young renters looking for a hip and affordable place to live and work.
According to a recent study from Fannie Mae’s Multifamily Economics and Market Research Group (MRG), an estimated 24 percent of Raleigh’s population falls in the 20-34 age bracket – so-called Millennials looking to rent apartments or condos in a city that offers culture, affordability, and high-paying jobs.
Kim Betancourt, director of economics for Fannie Mae, who co-authored the study, cites “improving multifamily fundamentals such as shifting demographics, a surge in job growth, and positive net migration,” for the area’s popularity.
“There’s a lot of culture because there are things to do,” Betancourt adds.
What Do Millennials Want?
A study by the American Institute of Economic Research examined eight economic and quality-of-life factors that young people look for in a new city. The top three factors were high density of people with a college degree, a low unemployment rate, and the ability to get around the city without a car. Other factors considered included average salary, cost of rent, competition for jobs, bars and restaurants per 1,000 residents, and racial and ethnic diversity.
Raleigh made the study’s top 10. “College graduates want to know they are moving to a place where they can make a good living and have all amenities nearby,” the study notes.
Raleigh boasts a thriving arts culture of numerous museums such as the North Carolina Museum of Art and the Duke Energy Center for the Performing Arts (which hosts the North Carolina Symphony and the Carolina Ballet), as well as many outdoor pursuits including running, hiking, golf, and biking.
And then there’s the sporting scene. In 1997, the Hartford Whalers pro hockey team moved to Raleigh and became the Carolina Hurricanes, winning a Stanley Cup in the 2005-2006 season.
Duke University and UNC have nationally acclaimed basketball programs and arguably the best and most storied rivalry in all of college basketball.
Public transportation is another big plus for Millennials: Raleigh’s downtown venues are connected to each other by the R-LINE, a free circulator service that features hybrid electric buses that arrive every 10-15 minutes.
Jobs, Jobs, Jobs
However, at the end of the day, notes Betancourt, it’s all about, “jobs, jobs, and jobs.”
The Raleigh/Durham metro area is expected to add an additional 25,000 new jobs in 2015, and the city may see its population grow by 2 percent annually over the next 18 months.
Metros like Raleigh are fairly well diversified in their employment bases, creating a “haven for young, educated, and well-paid workers,” called a “trifecta of solid fundamentals for the multifamily sector” of job growth, demographics and rental housing demand by MRG.
A recent article in Forbes notes the Raleigh metro area posted a 39 percent increase in science, technology, engineering and mathematics (STEM) jobs from 2004-14, “the fastest growth in the nation, albeit from a smaller base than many of the other biggest metro areas.”
That’s not surprising since the area is home to outposts of multinationals such as Bayer, BASF, GlaxoSmithKline, IBM, and Cisco.
Just this past March, biotechnology entrepreneurs discussed a 10-year vision for Life Science Innovation at a conference in Raleigh.
“One of the topics I found most exciting at the conference was the intersection of IT and biotech,” BioResource International CEO Giles Shih, in attendance at the conference, wrote. “I sense that biotechnology is on the cusp of a paradigm shift in data collection and analysis, and many of the companies that will lead this revolution are located here in the Triangle.”
Outside of high tech, companies with the most job openings include PetSmart, Harris Teeter, and Duke University, says Simply Hired.
The metro’s good economic fundamentals have not gone unnoticed by developers of apartments and other multifamily properties. More than 8,000 new rental units became available in 2014, with another 5,500 expected to come online this year.
“The demand is hard to measure, but the potential is enormous,” Gregg Sandreuter, whose company Beacon Development recently completed a 23-story apartment building in downtown Raleigh, tells The News & Observer.
Developers point out that while apartment construction has surged in recent years, the Triangle has continued to add residents. Despite all the new inventory, the average number of apartments per person has remained relatively stable. According to The News & Observer, “the pent-up demand for more urban living options, as well as demographic trends and shifting attitudes about homeownership, have all combined to expand the pool of potential renters.”
Even so, the metro is still affordable compared with others. The average Raleigh rental in the first quarter of 2015 cost $880 — more than 16 percent cheaper than renting in Austin, TX, and 32 percent less expensive than the typical rental in Seattle, according to MRG research.
According to MRG’s study, other affordable metros attracting Millennials and a bevy of multifamily development include Dallas and Houston, both of which also provide young residents with well-paying jobs and low rental costs.
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