Charlotte Booms Beyond Multifamily
A solid 2013 set the stage for optimism and even talk of a boom in all of Charlotte’s property types this year, not just multifamily, according to our panelists at the fourth annual Charlotte State of the Market yesterday. (Sorry, multifamily... at our age we just don't want to be a one-asset class market.)
At the heart of the recovery, they explained, is job growth, which has outpaced the national average as Charlotte’s key industries—financial services, for one—have begun expanding in earnest. That’s been good for multifamily, but at last has started benefiting other property types. (People's favorite thing to do once they start making money is spending it.) Even retail, so sluggish for so long, is seeing stepped up absorption and development, much of it as a component of mixed-use infill projects (and not just in small chunks). About 200 real estate pros came to the Omni Charlotte for the event.
We snapped CohnReznick partner Cristi Lewis, who moderated, and Crescent Communities regional director for the Southeast Ben Collins. Retail, office, and hospitality have heated up as the local economy outpaces much of the rest of the nation. But multifamily’s still golden. Charlotte’s seen 2% to 3% job growth each year for the last three or four years, which isn't an overheated situation, but enough to sustain demand for apartments. According the Ben, Crescent delivered about 4,500 units in the Charlotte market, and about that many of the company’s units have been absorbed.
BECO South prez Chris Epstein and SilverCap Partners partner Will Stevens. In the office market, there’s been decent net absorption, Chris notes—a steady pace, though not as strong as the recovery from previous recessions, such as the early '80s or 2000s. (Though we are all wearing nicer clothes than we did during those recoveries.) When he moved here in March ’10, people were scared for the future of Charlotte, he says, but the market's turned around. Will says that the capital markets in the Southeast has recovered dramatically in the last 12 to 18 months, but the key now (for the next 12 to 18 months) is whether fundamentals will catch up with pricing, or fall flat.
Will and Aston Properties prez George Dewey. In retail, George says, it’s a tale of two cities. In the aftermath of the recession, 90% of the new jobs in the state have gone to Charlotte and Raleigh. His company’s Charlotte properties are nearly 100% leased, but in smaller markets, retail centers are having trouble reaching 90%. So the development pipeline, especially larger multi-tenant, grocery-anchored projects, are focused on urban areas, where a lot of retail is also going into mixed-use projects. That’s where the demand for retail space is going to be for the foreseeable future.
Merrifield Patrick Varmillion managing partner Jim Merrifield and Lord Aeck Sargent principal Mark Lange. The Charlotte industrial market has turned a corner, Jim says, with absorption at 2M SF last year on a base of 34M SF, or 6% in one year—a huge number. He’s expecting to see a lot of development in the industrial sector, with rents bumping up enough to justify the growth, unlike in the office market. Mark says that Charlotte has benefited during the recovery from its masterful city planning, which has long been one of its strengths. (Just like ancient Rome.) For example, there’s a vision for Uptown and for transit-oriented development, and they’re coming to pass, he says.
We stopped by the Baker Audio Visual booth, one of our event sponsors, and snapped the company’s Dave Davis and Debra Eicher. Founded all the way back in 1953, the company is nationwide in scope, doing AV at exec boardrooms, sports stadiums, videoconferencing, houses of worship, and more.