By Vice President of Business Development Heidi Nielsen
The
Raleigh/Durham/Chapel Hill area, also known as the Research Triangle, is experiencing
significant development, primarily driven by the growth of the Hub RTP
mixed-use development. This dynamic region is one of the fastest-growing metros
in the Southeast. It continues to attract national attention for its thriving
innovation ecosystem, high quality of life, and robust academic and healthcare
institutions. Anchored by three major research universities—Duke University,
the University of North Carolina at Chapel Hill, and North Carolina State
University—the Triangle is a magnet for talent, technology, and
forward-thinking investment.
The Research
Triangle Park (RTP), one of the largest research parks in the United States,
plays a central role in shaping the region's economy. It houses more than 300
companies in biotechnology, pharmaceuticals, IT, and clean energy, including
industry giants like IBM, Cisco, and Biogen. The area's strong tech sector is
further bolstered by continued investments from companies like Apple, which has
plans to build a $1 billion campus in west Raleigh that is expected to bring over
2,700 high-paying jobs to the area by 2030. While the development is currently
on hold, the Greater Raleigh Chamber seems optimistic about it.
The Hub RTP
is a 100-acre, $1.5 billion mixed-use development transforming RTP into a more
walkable and destination-oriented area. The development will include a new 250-key
Renaissance hotel, 1,200 residential units, 50,000 square feet of meeting
space, over a million square feet of office and lab space, and 16 acres of
parks and green space.
In recent
months, several other major announcements have signaled continued momentum:
- Eli Lilly committed to investing an additional
$450 million to expand its RTP manufacturing facility, creating more than
100 new jobs.
- Fujifilm Diosynth Biotechnologies is
progressing with construction on a $2 billion cell culture facility in
Holly Springs, expected to open in 2025.
- VinFast, the Vietnamese electric vehicle
manufacturer, continues development of its $4 billion manufacturing
facility in Chatham County, slated to be operational by 2026.
Healthcare is
also a major pillar of the region's economy, with Duke Health and UNC Health
serving as two of the largest employers and nationally ranked medical providers.
These two institutions announced plans for the state's first freestanding
pediatric hospital. The 500-bed children's hospital is expected to cost around
$2 billion and break ground in 2027. WakeMed is also undergoing a $1 billion
expansion plan, including a new hospital campus in Garner and major upgrades to
its flagship Raleigh location.
The area also
benefits from leisure and group demand. The three major universities in the
area generate significant hotel demand from sports, academic events, and alumni
and parents' weekends. The region also has several museums, cultural
attractions, sporting events and festivals. The Raleigh Convention Center will
undergo a major expansion that will increase its footprint by 300,000 square
feet; the project is expected to be completed in 20208.
Year-to-Date
Trends: RevPAR for
the trailing twelve months ending in March 2025 grew by 5.6%, this was driven
primarily by rate growth, which was at 4.9%, and marginal occupancy growth.
With respect to hotel class, the luxury and upper upscale segments experienced
the largest RevPAR change, at 8.4%, while the upscale and upper midscale
experienced a 4.5% growth and the midscale and economy sectors only noted a
0.7% growth.
Source: CoStar
New
Supply: According to
CoStar, nine properties (comprising roughly 1,000 keys) are under construction
in the market, accounting for 3.2% of its existing inventory. In 2024, approximately
740 keys have opened, which is on par with the rolling three-year average room
delivery. Over half of the hotels under construction are in the RTP/Airport
submarket. A recent notable opening was the 153-key Oberlin Raleigh, Curio
Collection by Hilton, which opened in December in the Raleigh Crabtree Mall
submarket. The most highly anticipated new hotel will be the 550-key Omni
Raleigh Hotel, which will serve as the headquarters hotel for the expanded
convention center. Once approved, this hotel is expected to break ground in early
2026.
Transactions: Given the challenging capital market
environment and conditions in the debt markets, sales continue to lag historical
data. In 2024, 11 hotels transacted in the area, with a transaction volume of
$94 million. As of the end of March 2025, three transactions had taken place,
totaling $53.5 million in sales volume. This does not include one sale that did
not disclose pricing.
The Research
Triangle market is undergoing a profound transformation driven by innovation,
strategic development, and long-term investment across key sectors. The
convergence of higher education, life sciences, advanced manufacturing, and
healthcare continues to attract companies, capital, and talent, reinforcing the
region's reputation as a dynamic growth engine in the Southeast. While
transaction volume remains tempered by broader capital market headwinds, hotel
performance and new supply indicators signal confidence in the market's future.
As infrastructure projects like the Hub RTP and convention center expansion
take shape, and as major employers scale their presence, the Triangle is poised
for continued expansion in both hospitality demand and economic output, making
it a compelling destination for developers, investors, and visitors alike.
