A decade ago downtown Raleigh, N.C., combined the worst of both worlds. Now it has become a mecca for millennials. They ride the bus, dine at hip restaurants on once-sketchy streets and walk to concerts at an often-packed amphitheater. Some are also highly sought employees for nearby corporations.
Two high tech employers, Raleigh-based Red Hat and Ft. Lauderdale-based Citrix Systems, have invested millions in new downtown offices because their combined workforce of 1,800, largely made up of millennials, prefer an urban setting like downtown Raleigh.
Tampa Bay Lightning owner Jeff Vinik has said attracting millennials is a key ingredient to the $1 billion waterfront district he hopes to create in Tampa. He’s said it will be home to residents who want to “live, work, play and stay” in the same urban area.
“Live, work and play” is the catch phrase of the moment for urban developers, employers, consultants and city planners, and Raleigh’s success is no secret. Forbes, for instance, puts Raleigh No. 1 among the best places for business and careers and No. 2 among the best cities for young professionals.
So it’s worth a look at what’s happening in this once sleepy Tar Heel town that both sides of Tampa Bay would be lucky to emulate.
The tech effect
In 2013, Red Hat software moved its headquarters from near North Carolina State University outside Raleigh to an empty Progress Energy building downtown. It now employees 1,100.
In October, Citrix, which creates and services business networking technology, moved from the Raleigh suburbs into its cutting edge facility. The city pegs the investment by Citrix and developers at $45 million.
The new building, which is two stories of glass offices above a renovated 1960s brick warehouse, boasts a rooftop garden with wi-fi, a yoga room with heated bamboo floors, a bike sharing program and fitness center. The 700 employees scribble away on white boards in brain storming sessions and wage Nerf gun battles across their wall-free workspace. Average salary: $70,000.
“The perception of what kind of company was going to occupy downtown buildings has completely changed,” said Ken Bowers, Raleigh’s director of planning. “Downtown has historically been lawyers, bankers, insurance and government.”
But as the finance, insurance and traditional office space users are consolidating, technology is growing at warp speed, he added.
Landing Red Hat and Citrix, Bowers said, “has transformed downtown, the office market and prodded more interest from future developers.”
Landing those high-tech companies spurred more downtown development:
• Kane Realty plans an 18-story mixed use tower on 2.5 acres across from Citrix.
•Eighteen hundred residential units with a combined investment worth $314 million are in various stages of development.
•Two new incubator spaces for entrepreneurs and tech startups called Raleigh HQ and ThinkHouse have opened.
•The News & Observer newspaper building, which went on the market in December, is under contract to a yet-to-be-named buyer who plans to raze it and develop the block for mixed use. At one time there were a dozen bids for the dated office building three blocks from Citrix, according to David Diaz, CEO of the Downtown Raleigh Alliance.
“That’s the ripple effect,” said James Sauls, the city’s manager of economic development. “Other people want to be near (the new employers) so they can compete for talent and provide goods and services.”
Investors are taking notice, too. Downtown real estate values are soaring. In December a New York-based investment company paid $68 million for the Citrix office. At a cost of $402 a square foot, the sale marked the highest price paid for real estate on a square foot basis in Raleigh’s history.
The arrival of Citrix and Red Hat are the latest developments in a downtown renaissance a decade in the making.
Diaz points to Raleigh’s Livable Streets Plan, whose roots go back to 2002. The plan called for 197 steps to make the urban core more attractive to residents, employees and employers. Components include the start of a circular bus route through downtown running from 7 a.m. to 2 a.m. with pickups every 10 minutes and a GPS feed for riders to track it. Regulatory requirements were streamlined and consolidated. More public art was added to downtown along with a farmer’s market.
Even before Citrix and Red Hat, more than 500 condos and apartments broke ground, at least 25 coffee houses, bars and restaurants opened, 875 hotel rooms were built and two new office towers went up. Downtown also welcomed a new children’s museum, a modern art museum, an amphitheater and a new convention center.
“The overall plan was a turning point in establishing downtown as a viable place for technology and corporate headquarters,” Diaz said.
His group pegs the investment in downtown Raleigh since 2005 at $2.5 billion.
Through the eyes of millennials
All of this caught the attention of Citrix’s director of real estate Steve Nicholson after his company made its first move into Raleigh by buying a small software firm in the suburbs in 2008.
When Citrix was choosing where to expand among Austin, Texas, Ft. Lauderdale and Raleigh he weighed factors such as direct air connections to customers, quality of telecommunications, ease of travel within the city and incentives from local and state governments.
Beyond the basics, Nicholson said he considered each site through the eyes of a 26 year old.
“The average age of our employees is 26,” he said. “Fifteen years out from today 75 percent of employees are going to be millennials.”
Citrix was also considering locating its software service facility in Research Triangle Park in the suburbs between Raleigh, Durham and Chapel Hill. It has long been one of the country’s hot spots for science, medicine and technology.
But the typical technology whiz today is not the same as he or she was 20 or even 10 years ago. They aren’t as swayed by a sweeping campus and a man-made lake. They want to be in a city, not necessarily as big as New York or Chicago, but with the same offerings.
“I looked at mass transit,” said Nicholson. “Anytime I was in Raleigh, I rode the bus during morning and daytime during all four seasons,” he said. He took note of how punctual it was. While Atlanta has its citywide rail, he felt Raleigh’s bus system, especially the downtown loop, was impressive.
The city’s plans for Union Station, an $80 million transit hub for trains and buses a few steps from Citrix was also a big plus. Set for completion in 2017, it will have restaurants, shops and a plaza. Rail service to Chapel Hill, Durham and Charlotte will be upgraded and faster.
Another factor Citrix considered: environmental awareness, something millennials grew up with. Nicholson checked out things like air quality and recycling. Case in point, Citrix contracts with Raleigh’s Compostnow.org to regularly collect waste from the building’s four compost bins and convert it to soil. Citrix also has a recycling company servicing the office’s 92 recycling bins.
Nicholson said one of the most compelling draws is the enormous pipeline of potential employees. There are numerous colleges within an hour of downtown Raleigh including UNC Chapel Hill, Duke University, N.C. State University and Shaw University.
Why not here?
Millennials are expected to surpass baby boomers as the largest living generation in the country this year, and their growing significance is not lost on Vinik.
“Millennials wanted to live in the urban core, to walk to work. These trends are redeveloping (cities) … this is the perfect opportunity to create this live, work, and play and stay region,” he said late last year in describing his vision for his 40 acres of land around Amalie Arena.
While Vinik and his development group has not visited Raleigh, it is one of the communities they are studying, according to Bill Wickett, spokesman for Vinik’s Strategic Property Partners. “It does serve as a solid example for some of the progressive elements we are considering for development,” he said.
St. Petersburg does not have a similar effort underway. But the examples of Citrix and Red Hat show businesses just need an empty office tower or a warehouse on a couple acres in the right area. There has been steady talk the past two years that Jabil is considering moving its 2,000-employee headquarters from the Gateway area to downtown.
A portion of St. Petersburg’s downtown has the potential for a blank canvas development like Vinik’s should the Tampa Bay Rays leave and vacate the 80 acres occupied by Tropicana Field.
“St. Petersburg could be one of the coolest walkable cities around. It’s far, but you could walk from Beach Drive to the 22nd Street Warehouse Arts District. There’s a lot going on,” said Daniel James Scott, executive director of the Tampa Bay Technology Forum “That’s what attracts a potential headquarters.”
Downtown Tampa and St. Petersburg score both high and low in some of the determining factors Citrix considered in picking downtown Raleigh.
While Tampa International Airport gets high marks for its ease of navigation within the airport, Scott said he regularly hears there aren’t enough direct flights to California or overseas.
TIA spokeswoman Emily Nipps confirmed Tampa has fewer international flights than Miami or Orlando but said the airport has a big initiative to get more. Five weekly nonstop flights to Frankfurt start in September. There are now seven weekly charter flights to Havana. Edelweiss started three weekly flights to Zurich in the past two years. Copa Airlines has eased access to Central and South America.
“We have been working on getting flights to San Francisco for some time now,” Nipps said. “Tampa to San Francisco is the most under served route in the United States, meaning more people travel between those two cities without a nonstop flight than any other route in the country.”
There’s hope a sales tax increase to fund transit will be on the Hillsborough County ballot in 2016. Vinik’s plans call for modernizing Tampa’s street car system and starting a ferry service along the bay.
For St. Petersburg, the light rail train appears to have left the station. A transit initiative to expand bus service and build a light rail line was soundly defeated by Pinellas County voters last year. The county is now focused on expanding bus service.
“That says a lot to somebody from out of town,” Scott said. “They think ‘how innovative can you be if you can’t be innovative about transportation.'”
• Environmental awareness
While St. Petersburg boasts of being Florida’s First Green City with the first solar condo project, it was the last major city in Florida to offer curbside recycling. Tampa has had it for years. Both downtowns are steadily adding charging stations for electric cars.
Vinik has said his district will be lit with energy saving LED lighting. It will also be designed for biking and walking and thus have a smaller carbon footprint.
• Downtown entertainment
St. Petersburg scores well in this category. Craft breweries and restaurants are opening steadily. The Mahaffey theater has undergone a major makeover. The Museum of Fine Arts offers a stream of exhibitions. The Salvador Dali Museum is known around the world. The Tampa Bay Rowdies play downtown, which also boasts 11 acres of waterfront parks for impromptu flag football and frequent festivals.
Downtown Tampa has the often-packed Straz Center. The eight-acre Curtis Hixon Park is a millennial’s dream with outdoor concerts and free yoga. But the options for walking to a restaurant before one of those performances or strolling to get a craft cocktail after are slim in downtown Tampa.
“Wherever you stand in Tampa Bay you are a couple hours to more students enrolled in higher education than anywhere in the state,” Scott said. He pointed to the University of South Florida, University of Tampa, the University of Florida, the University of Central Florida, Florida Polytechnic, Rollins and Full Sail University in Winter Park. Add to that mix the USF medical school that will move to Vinik’s development.
The key for each city, however, is landing a big corporate headquarters.
“It’s all about critical mass and we finally got that,” said Allen Clapp, owner of 311 Gallery a block from Citrix in Raleigh. “You need to get people to recognize that you are in a happening place.”
Staff Writer Jamal Thalji contributed to this report. Contact Katherine Snow Smith at email@example.com or (727) 893-8785. Follow @snowsmith.