Apple is pumping the brakes on its long-anticipated campus development in North Carolina, joining other Silicon Valley tech giants in their decision to pause large capital spending projects as they reassess their commercial real estate footprints.
The Cupertino, California-based company confirmed to CoStar News that, while it remains "deeply committed" to its $1 billion expansion in the state's Research Triangle Park, it is extending the timeline for the sprawling development at the corner of Louis Stephens Drive and Little Drive by at least four years. The Raleigh campus is ultimately slated to house at least 3,000 jobs.
“Apple has been operating in North Carolina for over two decades, and we’re deeply committed to growing our teams here,” the company said in a statement. “In the last three years, we’ve added more than 600 people to our team in Raleigh, and we’re looking forward to developing our new campus in the coming years.”
The plans were initially unveiled as part of Apple CEO Tim Cook's 2021 announcement that the company would invest upward of $1 billion over a decade to expand its presence in the region, an investment of which about $550 million would be put toward the project's construction. The tech company has been leasing space in nearby Cary and Durham, North Carolina, for temporary offices until its plans at the Research Triangle Park are realized.
Apple employs about 1,600 people across North Carolina, including several hundred at a couple of data centers it operates in the state.
The company occupies more than 28 million square feet of global real estate, according to CoStar data, about 16.6 million square feet of which is office space.
Building vs. Buying
The decision to pause work on the project coincides with moves from some other large tech companies to aggressively shrink their corporate office footprint and postpone — or scrap — major developments. Amazon last year paused construction on its HQ2 development in Arlington, Virginia, while Google parent company Alphabet has slowed its progress on Downtown West, its more than $1 billion transit-oriented project in San Jose, California.
While high construction expenses and elevated interest rates could have played a role in Apple's move to delay its Research Triangle Park plans, CoStar Director of Market Analytics Nick Leverett said the move "is not a big surprise."
"This has been a very slow process," he said. "People already felt like the Triangle was behind schedule. Then three years goes by with little movement, and now this additional delay."
What's more, in the years since Apple's initial announcement, the greater Raleigh area's office market has been flooded with high-quality options that Apple could more affordably choose from rather than pursue new construction.
"There has been little movement since the announcement in 2021, so everyone was kind of wondering when and if anything would actually happen," Leverett said. "Why pay top dollar to build a brand new campus when there is a lot of high-quality office space available for a lot less money?"
Despite the delay, the Research Triangle Park is unlikely to suffer a major blow given a full pipeline of other corporate investments. Ozempic manufacturer Novo Nordisk earlier this week released plans to invest more than $4 billion in the greater Raleigh area for a 1.4 million-square-foot industrial plant that is expected to create about 1,000 jobs. Fujifilm Diosynth is planning to pump about $1.2 billion into the region for what will be one of the nation's largest biomanufacturing facilities upon completion.
Even so, Apple's presence comes with attractive star appeal that would only further boost demand in the region.
"The Triangle gets a lot of announcements," Leverett said. "There are a handful of other projects that are as big or even larger than the Apple campus in terms of dollar investments, but even though it isn’t as big as some of those, the Apple campus is viewed by many as just as, if not more, important. There is some thought that Apple’s presence could further legitimize the area in the eyes of tech companies and encourage other companies to invest."