Charlotte November 2021 – Key Take Aways
• Mark Fletcher – Bohler Engineering – Data center market booming across the country, especially from buyers expecting better market deals/discounts due to pandemic. Leaving Charlotte to find off-market deals/opportunities, however daily industrial activity on LoopNet seems promising.
• Chuck McShane – CoStar Group – Held State-of-the-Market webinar last week, discussing trends in Charlotte market in the 5 major property types. Saw rise in leasing activity in Q2 thru November and the second largest expansion in the country of 4.3 million sq. feet delivered within last 12 months with 60% preleased, second only to Austin. 8,000 new jobs in finance + professional services were created. UNC Charlotte/Childress Klein Center for Real Estate released State of Housing in Charlotte report with 17% growth on housing for rent. Retail – metrics good, cautious about construction. Hotel – reliant on business travel, remains challenged. Ports in Charleston and Savannah are full, and Charlotte and Greenville are profiting from spill over.
• Joe Marek – Johnston Allison Hord – Office leasing activity is mainly in South Charlotte, surprisingly not Downtown. ULI Emerging Trends report released a positive report this month, with useful information, based off discussions of 2,000 interviews/survey respondents of people in the real estate market. Market is rough but resilient and should continue to do well.
• Neal McElveen – Terracon – Seeing heavy traffic on due diligence side, limited availability of resources with drilling, Keep delays in mind. Difficulty in finding experienced labor too, grads already have offers 6 months out. Supply chain issue – don’t see it slowing. Plenty of in-town activity – warehouse, logistics and cold storage are normally clustered but popping up everywhere.
• Blake Morris – First National Bank – leads Charlotte team for Business Banking Team, located in Downtown Charlotte. Operates as regional bank, more sophisticated than smaller community banks but more relationship-focused than bigger banks, providing commercial real estate & investment loans. Major issues in market include supply rates – there many transactions but rates have not jumped up as thought, only back up to pre-covid, inflation, tied to increased wages. Struggling to find people to hire. Long Beach, CA – container ships cannot make it into port, usually 1-5 waiting ships, currently 100 with 20,000 pieces of cargo each.
• Alexis Kaiser – Jones Lang Lasalle – High-level dense suburban development issues due mainly to capacity & availability. Were denied by planning department in Fort Mill and Rock Hill for a 20 acre site with 110 townhomes. Concord & Union counties facing utility issues as well.
• Patrick Korn – RES – Was involved in land development/permitting for Terracon, transitioned to “green side” as Project Manager for RES. Projects stalled due to reissue of Section 401 of Clean Water Act. All state protocols were rewritten on how to process Section 401 permits, commercial and residential permits barred from inclusion to general 401 and instead required provisional 401, took approximately 8 months to finish. Reissue occurring once again. Delay ongoing, causing major project shutdowns. Unclear exactly how long it will take, however, could be sooner than last reissue.
• David Lach – res – Charlotte Client Solutions manager, 5-man team operating in Raleigh, with pursuits across 25 states, active mainly in NC + SC markets. Environmental permitting tied into real estate market – sites to be restored to achieve compliance with acts.
• Mark Carpenter – CH Land Company – Attorney for 30 years at Moore & Van Allen, turned to real estate development/investment. Has current development in Rock Hill, approved by planning commission and went before city council on Nov. 22. Land prices not lowering but people going further out west because of Apple & announcement of casino in Catawba County. Senses recession pending due to high migration & salary raises.
• Alyson Craig – City of Charlotte – Charlotte future land use policy map – 2040 plan and UDO connection – all regulations can be found in one place, draft came out October 7th, expecting 4 drafts before implementation of actual document. Conducting economic impact analysis on ordinance, working with financial consultant & site designer, looking at 10-15 prototypes and simulations on impact and costs and zoning of today versus tomorrow plus feasibility challenges. Following project schedule, adoption ultimately in July 2022 with effective date TBD. Proposing administrator over all other administrators for clear conflict resolution which would allow predictability in permitting.
o UDO hot topics – April-June allowing duplexes + triplexes in single-family complexes, passed by small margin. Idea is to add more housing by adding more families on one lot – specifications around that (one driveway, parking at rear, side wall specifications, etc.). Various overlays (homes centered on green area) – all must go through council approval, must maintain characteristics pervasive to community.
o Parking requirements split into 3 tiers. Tier 3 passed Transit Oriented Development Ordinance, idea is no parking minimums, assuming market is dictating what that is, but do have parking maximums to increase walking and scooter usage, these types of zoning districts in Uptown area. Tier 2 – sensitive enough for parking but not overparking, smaller centers. Tier 1 – neighborhood, single family areas, no maximum, market will dictate but make sure enough parking available. Tree protection – proposed in UDO to protect 30 inches or higher, single-family lots (not commercial real estate) main cause of tree destruction, no green area requirements, can attain permit if dying or safety issue but costly & requires new tree replacement.
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