5/20/21 Charlotte Mastermind Group Meeting

Charlotte May 2021 – Key Take Aways

• Tracy Dodson, Assistant City Manager, City of Charlotte provided an informative overview of how the City is executing a customized, coordinated approach to their economic growth.
• Brian Schoeck is seeing clients that are coming to him to ask for help with their holdings and help with potential tax impacts; they are thinking through their asset sales vs. long term lease impacts.
• Joe Marek said that office is generally down, he is seeing more and more subleasing and negotiation of existing lease terms. He has been hearing some chatter about inflation and landlords and investors are focusing on CPI clauses in order to adjust rent going forward. With the ease in restrictions, there is a lot of momentum in the market.
• Material price increases and delivery delays have been problematic, even to the point of being deal breakers according to Chris Woods. Still very busy and seeing even more data centers and mission critical deals. Money is starting to flow for hotel developers, which he believes is a positive sign.
• Daniel Hines says that there is so much work coming in the door right now that they are having to mitigate the work and try to direct clients where they can be served most successfully. They are seeing a fair bit of interest and with grocery anchored shopping centers. Publix is actively looking for opportunities. Scheduling is a challenge due to the time frame for materials to arrive on site.
• Neal McElveen says that phase 1 and due diligence is picking up steam, they are seeing a good amount of industrial, multi-family and ‘quiet’ non-disclosure activity. Lot of different things happening, precursor for what is coming as far as construction activity is concerned.
• Patrick Korn is still dealing with permitting issues on wetland sites, the process has been encumbered by regulatory “fog.” Land is getting hard to development because of constraints and the current regulatory framework.
• Joe Kinsey reports that the industrial market is still strong. He has been working a lot with land developers and home builders using their platforms to buy sites. Seeing a spike in office tenants searching for space, hopefully this is an indicator of deals coming. Even though office activity if up there is about 20M SF of office space available with 2M SF of sublease space.
• A year ago, prices, particularly travel had fallen and now we are seeing a transitory element in inflation. He is keeping an eye on whether there will be ‘longer legs’ to this. Wages are moving a fair amount. The 10yr rate jumped last week but has come down a bit. (Matt Martin)
• The insurance market is very tight right now and carriers are increasing rates for 5 – 20% due to the massive amount of natural disaster claims. Covid led to a lot of new exclusions in the insurance industry as well. (Mike Moore)
• Brian Bode has been focusing on life sciences as there is a lot of capital in that arena. With regard to senior housing and the isolation caused by Covid, those developments that were professionally managed and allowed for in-house activities really added to the quality of life for those residents during the pandemic.
• Steve Wilson says that things slowed a bit at the initial part of Covid, but starting in September they have been extremely busy, mainly transactions. Covid primarily affected retail and hospitality property types followed by office. Industrial, multi-family, storage and data centers picking up during Covid. Fear of interest rates increasing is a key factor in the amount of work they are seeing.