Kane Realty Obtains $85M in Financing for Raleigh Development
The community in the North Carolina capital’s West End district will include retail space.
Kane Realty Corp. has obtained $33.6 in joint venture equity and a $51.4 million construction loan to develop West End II, a multifamily property in the West End neighborhood of downtown Raleigh, N.C. The 252-unit project is part of the redevelopment of the former Clancy & Theys Construction Co. headquarters.
Raleigh-based Kane’s limited partner equity commitment for the project comes from an institutional South American investment fund. A national life insurance company provided the construction loan. The entire financing was facilitated by JLL Capital Markets. Further details pertaining to the identities of the equity backer and the lender could not immediately be learned.
West End II, at 510 W. Cabarrus Street, is the second phase of Kane’s redevelopment of the site. The first phase, the 442-unit Platform, offering 26,000 square feet of ground-floor retail, is currently in lease-up. The redevelopment will also include 4,000 square feet of flexible-use ground-floor retail space.
Designed by Dwell Design Studio, West End II will offer one-, two- and three-bedroom options, with an average unit size of 827 square feet. Common amenities will include a fitness lawn with a resort-style sundeck, a 24-hour mail room, an indoor and outdoor fitness center, and coworking spaces and conference rooms. Downton Raleigh offers a number of restaurants, art galleries, studios and various bars and night clubs.
Kane has been busy with developments in its hometown in recent years. Last year, the company kicked off development of Rockway Raleigh, mixed-use project adjacent to Dorothea Dix Park, a major green space in the area. The 355-unit project is slated for completion this fall.
Development to slow
The funding needed to develop even apartment buildings is still relatively hard to obtain, slowed by the higher cost of borrowing and tightened lending standards. Lending associated with multifamily properties dropped 29 percent quarter-over-quarter in Q1 2024, and 7 percent year-over-year, according to the Mortgage Bankers Association.
As an apartment market, however, Raleigh is unusually robust, with demand outpacing most U.S. markets, Avison Young reports. The wider Triangle market is among the fastest-growing U.S. rental markets, with the number of rental households growing 14.3 percent between 2020 and 2023, according to data from Avison Young.
Even so, development is slowing down in the area. Inventory is set to grow 10 percent in 2024, but a decline in multifamily permitting is expected to lead to a decline in delivery totals in 2026 and 2027. In Raleigh-Durham, multifamily permitting decreased 23% year-over-year in the first quarter of this year.
