How Raleigh recovered from the Covid-19 pandemic

RALEIGH, NC – One Monday morning, employees arrive at Raleigh software company Pendo and grab coffee at a barista provided by the company. Later, for lunch, Pendo sends them down the street with $ 15 vouchers that they can use in a local food hall, where they can throw axes for fun while ordering lobster, tacos or fish and chips.

In 2020, the pandemic emptied Raleigh’s central business district. Some businesses in the center kept plywood boards to cover their windows for several months after protests after George Floyd’s death triggered vandalism in the center. More than 10,000 tourism jobs were lost in the surrounding county, giving a major blow to one of the country’s strongest economic regions.

Now Raleigh is back. The metropolitan area rose to No. 3 in an annual survey of U.S. labor markets conducted by The Wall Street Journal after ranking as No. 21 in 2020. By 2021, its civilian workforce grew by more than 30,000, and there were large gains in wages as well as jobs. The leisure and hospitality industry grew as business and travel restrictions were lifted. Several big name companies announced major expansions, financing or plans to build new activities in the region, from Fortnite manufacturer Epic Games Inc. to technology giants Apple Inc.

and Alphabet Inc.’s

Google.

One of the companies participating in this revival is Pendo, a software company that started in this city nine years ago. In 2021, it hired about 450 new workers and completed work on a new headquarters that fills the top five floors of a new tower in the center. Pendo’s name is at the top of the building.

“Last year was a big leap for us,” said Pendo CEO Todd Olson.

The region’s recovery also attracted new residents and helped spur one of the hottest real estate markets in the United States. Home values ​​rose by 29.4% in 2021, according to an analysis by real estate firm Redfin,

which was the seventh largest jump in the country.

By mid-2021, the county surrounding Raleigh added an average of 67 people a day, according to government estimates. Meanwhile, larger, more expensive population centers like New York City and San Francisco experienced declines.

Patrick Roberts, who in 2021 moved to the Raleigh suburb of Holly Springs, NC, from Albany, NY, with his wife and three children, is one of these newcomers. He and his wife had previously lived in the Raleigh area, and when his job as technology sales director became completely remote, he asked his manager if he could return. They paid $ 55,000 over the offer price for their new home, he said.

“My wife and I always knew that if we ever had the opportunity, we would return to North Carolina,” said Mr. Roberts. “It was our happy place.”

In 2021, Patrick and Liz Roberts moved from Albany, NY, to Holly Springs, NC, with their children Olivia Roberts, Owen Roberts, and Aubrey Roberts. They were among many newcomers to the Raleigh area the year the labor market recovered.

Raleigh has long been ranked as one of the country’s best regional economies thanks to lower cost of living compared to places like New York, its many area universities and the momentum around Research Triangle Park, a 7,000-acre complex formed in the 1950s by local leaders and academics , who wanted to expand beyond agriculture, furniture and textiles.

The park is located in the geographic center of three powerful local institutions: North Carolina State in Raleigh, University of North Carolina in Chapel Hill, and Duke University in Durham. Park researchers have invented AstroTurf, the anti-cancer drug, the barcode and the technology that helped with the development of mobile phones. The universities that surround it – along with others in the area – produce about 42,000 graduates annually, according to the Raleigh Chamber of Commerce, and many students stay to pursue job opportunities. Many other local industries benefit from this ecosystem, especially tourism, hospitality, restaurants and retail.

These forces still worked in Raleigh’s favor before the pandemic. The number of workers in the technology industry increased by 4.2% year-on-year from 2015 to 2019, according to the Brookings Institution, or a total of 5,179. It was among the highest for medium-sized cities.

But Raleigh proved to be just as vulnerable to the toll of the pandemic as other cities around the country. Many local employers closed their offices as they sent workers home, and local hotels, retail, and restaurants suffered from a lack of business travel. Overall, jobs in the Raleigh metro area fell by about 12%. The local tech industry was unable to catch up; it added only 131 workers in 2020.

Research Triangle Park is a major job generator for the Raleigh area. Pictured here is an entertainment space built by cargo containers that recently opened in the park.

When Covid-19 vaccines became widely available and the state began to reopen in 2021, the region broke back. Raleigh’s metropolitan area added nearly 10,500 jobs in the leisure and hospitality industry, according to Moody’s Analytics, and a total of 29,800 across all industries. Jobs in transport and utilities increased by 45% compared to February 2020, driven by a boom in e-commerce spending. Wages increased as the demand for these services increased and the number of vacancies became challenging to fill.

A number of announcements from local and national technology companies in 2021 promised even more jobs in the coming years. Epic Games, the local producer of the video game hit “Fortnite”, bought a mall and said it would be a new headquarters campus in 2024. Apple said it would build a new 1 million square foot campus in Research Triangle Park in 2023, and Google said it would locate a new Google Cloud engineering hub in nearby Durham.

“These tech jobs are high-paying jobs,” said Matthias Kehrig, an economist at Duke University. “If you have more people living in the area, they will also create demand for other services.”

In downtown Raleigh, several signs of the city’s turn are visible. The plywood boards covering storefronts by 2020 are gone and people are filling restaurants and shops during the work week. Within several blocks are hundreds of technicians who use various office space. Some are in co-working space provided by startup host Raleigh Founded, which has 1,400 members representing 465 companies spread across four locations.

“We’ve seen a huge influx of teleworkers. It happened before Covid, but the pandemic just hit the gas on it,” said Jess Porta, Raleigh Founded CEO.

Others are with Red Hat, an open source software company that started in Durham and is now owned by International Business Machines Corp.

It employed about 450 people last year and it currently employs about 2,500 workers in the region. It depends on the area’s universities for career-ready employees, said Tim Humphrey, IBM’s senior head of state in North Carolina, and supports the computer science program at Shaw University, a historic black university in Raleigh.

“We have a good pipeline of talent,” said Mr. Humphrey.

Launched in 2013, Pendo recently moved into its new 150,000-square-foot space on Hillsborough Street, which offers great views of the city. Mr. Olson, Pendo’s CEO, said there was a slight slowdown for his business in 2020 when the pandemic first hit, but the company was able to return within a quarter. It gained more than 500 customers last year, and its addition of about 450 employees gave it a total workforce of about 1,000.

To lure workers back downtown, Pendo installed a coffee shop as well as a pizza oven that produces fresh slices on Thursdays.

“I think the future of modern offices does not chain people to desks,” said Mr. Olson. “It creates opportunities for people to experience the benefits of working with people face to face.”

Write to Bryan Mena at bryan.mena@wsj.com

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