Developers plan to begin construction in the coming days on SkyHouse Raleigh, a gleaming 23-story luxury apartment tower that represents the latest step in downtown Raleigh’s evolution.
The $60 million project, first proposed 16 months ago, will mirror other SkyHouse-branded high-rises under construction in Austin, Texas, Orlando, Fla., Houston, Dallas and Atlanta. The tower will be tallest all-residential building in the region, and its units will be aimed squarely at an affluent, younger generation of renters seeking to be just steps from downtown’s increasingly lively bar and restaurant scene.
“Good things happen to those who wait,” said Gregg Sandreuter, the Cary developer who acquired the land for the project back in 2007. “This building is the first of its kind in the Triangle. It’s really a big-city, urban building. I think it’s an exciting building block for all the good things happening in downtown.”
The SkyHouse development group also includes the Novare Group of Atlanta, NGI Investments and Batson-Cook Development Company.
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The tower is the first phase of Edison, the ambitious office and residential project that Sandreuter first proposed before the economic downturn. Sandreuter had originally planned to build two office towers and two smaller residential buildings on the site, which covers an entire city block.
But he revised the project after the recession sapped demand for new offices and condominiums. It now includes plans for a single 13-story office tower and two apartment complexes – $155 million in new investment that will make Edison one of the largest projects in downtown’s history.
It will also be Sandreuter’s largest project to date. He was also the developer behind two other downtown projects: The Dawson on Morgan, a 66-unit condominium project completed in 2005, and West, a 170-unit condo project near Glenwood South.
Sandreuter said construction of the second Edison apartment building, a 224-unit, six-story complex, is expected to begin in the first quarter of next year. The office building will require 25 percent to 50 percent of its 315,000 square feet to be preleased before it moves forward.
‘A shot in the arm’
SkyHouse, which will be kitty corner from Moore Square and across Blount Street from City Market, promises to transform the landscape of an area that only recently has drawn the attention of developers.
“This part of the downtown, in particular, has not seen a lot of new construction or even new announcements,” said David Diaz, president of the Downtown Raleigh Alliance. “…I think it’s going to be a shot in the arm for this area.”
The SkyHouse announcement comes just a few months after developers announced plans for The Lincoln, a 224-unit apartment complex that is to be built on a two-acre block just east of Moore Square.
Diaz said SkyHouse should give a boost to downtown merchants.
“Apartment dwellers are more likely to spend more money on a day-to-day basis in the downtown than an office worker,” he said. “…It’s not just the scale of the project that I think is beneficial, but I think the type of tenant.”
SkyHouse joins a growing list of new apartment complexes that have either recently opened or are now under construction in central Raleigh. Investors have been rushing to build new units all over the Triangle, where vacancy rates have been falling and rents rising.
The inventory of apartment units in the Triangle is expected to expand by 6.8percent over the next 12 months, the fastest rate of expansion of any market in the country, according to MPF Research, which analyzes apartment data in 100 U.S. metro markets.
Luxury in downtown
But SkyHouse will be the first apartment project to break ground in the heart of downtown – a notable distinction given that the apartment vacancy rate within one mile of downtown is just 5percent, according to Karnes Research and the Triangle Apartment Association.
Given its cost structure and luxury amenities – the building will have a pool on the top floor that will be 230 feet above street level – SkyHouse is also likely to charge some of the highest rents in the city. The building will also include 5,400 square feet of retail.
The developers have an extremely aggressive construction schedule, as the building is expected to be completed by the fourth quarter of next year.