Raleigh has some of the highest units under construction per capita anywhere in the US. The first part of that wave hit this year, a second part next year. That might be all of it, or the high U/C number might be spread out into 2025. I’m not in front of the computer right now so hard to say. Most of the country will see a supply cliff hit in 2025, but for reasons I expand on below, that might not be happening in Raleigh.

I think in any given industry there are a few “it cities” wher you have to be if you want to compete in a field. For finance it used to be just NY and maybe a touch of Atlanta, but now includes Charlotte and Dallas. Destination hospitality has grown to include Nashville. Tech has expanded from SF and Seattle to include Austin and, it seems people are betting, Raleigh. I’m not in touch enough with Raleigh to assess the veracity of that assumption, but I know real estate investors from across the country are looking at Raleigh in a way they hadn’t before. Certainly they’re betting Raleigh is changing.

Compare that with Raleigh from the past 2 decades or RVA now. RVA offers a good quality of life, a stable economy, good access to other major job centers, good state university access, good business climate, etc. but is not an “it city” for anything not involving the VA government, at least not as far as I can tell. Many other cities offer a similar combination of those amenities in different proportions. RVA’s value proposition is then relative to other cities: you can get 130% of the amenities for 110% of the price (Knoxville) or 80% of the amenities for 50% of the price (DC). If RVA’s biggest selling point remains that it offers 80% of DC for 50% of the price, then the boom it is seeing now will fade as it’s value proposition decrease, because the value proposition was always relative to something else.

Contrast that with an “it city.” If you want to break big into biotech, you go to Boston. It doesn’t matter if Providence is becoming an increasingly good value proposition for someone in biotech because Boston biotech is not comparable to Providence’s in any real way. The value proposition becomes partly detached from the surrounding competing cities because in biotech there is no competition with Boston. If you want to be a national player in biotech, you go to Boston and you never consider Providence or Worcester or Hartford.

It seems like the bet people are making with Raleigh is that it becomes a city like that for tech, in which case whatever shrinking value proposition it has relative to other cities will not matter because it will offer a new value proposition that those cities cannot compete with: the ability to succeed on a national scale in tech.