3/17/22 Charlotte Mastermind Group Meeting

Charlotte March 2022 – Key Take Aways

• Mark Mucci – Novus Architects, Inc. – Mark leads Novus Architects, Inc.’s hospitality and finance studios. His specialty lies in the hospitality sector, which includes hotels and restaurants. He notes slight changes in responses to the pandemic that include more ways to separate people in public spaces and limit contact, i.e., breakfast buffets and digital hotel keys. Architecturally, most changes have been temporary and have reverted to pre-Covid designs. Material and labor shortage big problem.
• Heather Mucci – Novus Architects, Inc. – Heather is the Regional Finance Director for Novus Architects, Inc. which includes sectors in healthcare, industrial, education and multi-family. She highlights several important projects: (1) Billion-dollar lab and bio-manufacturing space currently under design and construction in Morrisville, NC. (2) Contracts with government (Office of Disaster Recovery) in St. Thomas, USVI, for damage caused by Hurricane Irma in 2019, and (3) Faith communities are finding difficulty in maintaining income revenue/status after the pandemic. Attempting to regenerate membership and reinvent themselves by transforming parts of their land into mixed-use property such as apartments. This creates affordable housing while also giving jobs to its members.
• Russell Hughes – Hughes Realty Advisors – Hughes Realty Advisors is an industry and product-type agnostic, middle market firm. Russell currently sees many attempted investment purchases occurring, as well as a fleet of hard assets across the board in housing, multi-family, offices, and somewhat hotels. He’s finding value focusing on outer realms, i.e., Columbia, Orangeburg, York, etc.
• Brian Schoeck – Johnston Allison Hord – Brian discusses a joint venture between a habitat group and Freedom Communities, a West Charlotte-based non-profit organization, with the purpose of acquiring single family homes in the form of condominiums, to provide affordable housing near the Marlborough area, off Freedom Drive. He continues with a recent announcement of Olde Mecklenburg Brewery’s expansion into Ballantyne.  This will be the largest brewery and entertainment center in all South Charlotte, replacing Uptown’s once-popular Epicentre. He notes South End, LoSo and now Ballantyne are big draws.
• Mark Fletcher – Bohler Engineering – Mark states Bohler Engineering is adding two internal teams within the industrial sector solely dedicated to cold storage and advanced manufacturing. 60% of all growth in the next 7-10 years is in the Southeast and Southwest, with two-thirds of that being advanced manufacturing in the Southeast. Industrial Info Resources (lIR) projects have skyrocketed from 40 to 713 within the last year, a large percentage of those being solar-related. Onshoring/reshoring major problem, with only 10% ability to handle what’s to come. Mark notices uptick in headlines for EV batteries and vehicles but is in disbelief considering the infrastructure is not place for the next 20 years. Massive Statesville paint project which includes 4 rail spurs underway. This is one of five projects for the same client. Massive rush seen previously with semi-conductors but has cooled since considering companies have made choices on where to plant their flags. Examples provided include $17 billion from Intel, almost $42 billion from Micron, both in Ohio, and Project Blue and its consideration of Moncure. Sewage and water becoming fast topic in areas all over South considering infrastructure wasn’t there or ready before. Mark finishes with an announcement of a one-of-a-kind, inaugural I-85 corridor conference, hosted by Interface, here in Charlotte on April 13th.
• Chuck McShane – Costar Group – Chuck notes a shift in how people are viewing entertainment, apparent with the 4 million sq. ft. of available overspace in Uptown and rise of retail activity south of it. The future of retail is more personal, smaller spaces than it has previously been. Free-standing and strip centers have seen vacancies compressed with fastest rate of positive absorption in retail property. Chuck shares that apartment market is down from record lows in Q4, however the record itself is still at record levels. Charlotte is still very much more affordable than the West Coast and Northeast, but in comparison to Columbus and Indianapolis, is starting to lose that affordability advantage. Keep an eye on this when it comes to business recruitment.
• Matt Martin – Federal Reserve Bank of Richmond – Matt begins with mention of Jerome Powell’s recent speech regarding restoring price stability. Inflation increased in the fall, and since December meeting, median forecast for year-end 2022 increased substantially from 2.6% to 4.3%. We can expect slower growth this year at 2.8% along with rate hikes. He explains Russia’s invasion of Ukraine has also spiked the cost of oil, gas, wheat, and other commodities.
• Joe Marek – Johnston Allison Hord – Joe observes the decrease in Covid-related clauses in leases from the peak of the pandemic to its current state. This is reflected in the Survey of Commercial Lease Terms claiming landlords are no longer including it. On the other hand, rent escalation clauses are at a historic high. Tenants need to be wary. Some strategies include shorter lease terms and shorter lease terms with options. Landlords propose fair market analysis at time and tenant either agrees or negotiates.
• Brandon Moore – Crawford Contractor Connection – Crawford Contractor Connection offers adjustment services and has approximately 6,000 contractors in the U.S. and Canada. Brandon is in Atlanta, with a commercial focus on emergency services such as restorations, fires, biohazards, property loss and catastrophes.

Emily Poole – McGuire Sponsel – Emily is a Credits & Incentives Consultant for McGuire Sponsel, whose headquarters are based in Indianapolis and have offices located in Louisville, Atlanta, and Raleigh. Their services include cost segregation, international business services, R&D tax credits and credits & incentives services. Emily, with the help of her alliance network, assists her clients with understanding and navigating the uncertainty and changes that occur within each of their projects. She works in projects of all sizes in a variety of sectors, i.e., precious metals processing, healthcare providers, manufacturing, etc. She mentions the problems costs are creating and the negative effect it’s having on the market.