6/15/23 Charlotte Mastermind Group Meeting

Charlotte June 2023 – Key Take Aways

 Charlotte is the only major metro with stronger sales rates than 2021. Unlike national buyers, Charlotte buyers are unwilling to sacrifice size and location and are instead stretching their budgets, with 62% doing buydowns, since prices are still more affordable than where they are relocating from. New home volume will decline, and prices will elevate and level out in 2024-2025. (Shaun McCutcheon – Zonda Homes)
 Data reveals a 46% spike in projects handled by public builders, who are better positioned to push volume/spec homes, offer in-house lending and M&A deals. Small builders cannot compete against an already limited and challenging playing field. (Shaun McCutcheon – Zonda Homes)
 Small lot product is the best seller due to smaller homes having better sales rates. Union County and Mecklenburg County have an undersupply on lots. (Shaun McCutcheon – Zonda Homes)
 Zonda Enterprise is a subscription-based app used solely on iPad to aid land development and land acquisition workers in viewing geographical data from state to lot level. The user can filter on multiple datasets related to land, new housing, existing housing, future housing supply, housing inventory, price changes, sales rates and closing values. (Shaun McCutcheon – Zonda Homes)
 There is a large uptick in new commercial healthcare projects, i.e., Bon Secours/Mercy Health merger leading to 35 ambulatory surgical centers for late 2023 and beyond. (Mark Fletcher – Bohler Engineering)
 Data Centers, Life Sciences and Advanced Manufacturing are all outpacing the standard distribution/warehousing sector. This fall should yield more info on SMRs (small modular reactors) that can power data centers and manufacturing plants without plugging into or stressing the current electrical infrastructure. (Mark Fletcher – Bohler Engineering)
 The EV focus alone in the Carolinas is enough to keep a lot of firms busy not just with the primary factories but all the supporting component manufacturing and supply around it. (Mark Fletcher – Bohler Engineering)
 Design/build is close to 70-75% of what we’re seeing now as a delivery method. Jobs need to get done faster and right the first time and many of these are complex. (Mark Fletcher – Bohler Engineering)
 Semiconductor segment getting ready for round 2 of new funding. (Mark Fletcher – Bohler Engineering)
 The uncertainty has everyone in commercial real estate fearful of jumping in. Everyone is waiting for something to change. (Brian Schoeck – Johnston Allison Hord)
 Following a meeting of the Federal Open Market Committee (FOMC), most members are at or above an expectation for two rate increases before the year is out. Financial markets disagree. Someone will be right and the other will be wrong. (Matthew Martin – Federal Reserve Bank)
 The economy has more strength than expected. It is harder for inflation to slow down, and although it is slowing down, it is taking longer than initially thought. (Matthew Martin – Federal Reserve Bank)
 People are unwilling to budge in multi-family until the amounts they seek are met. They are failing to take the discounts that they probably should. The deals that are happening are because people have no other choice. Ones with too much debt are hoping the Fed can bail them out. (Brent Kubitschek – Waterstone Multi-Housing Advisors)
 Incoming industrial supply in the Carolinas is at its highest availability rate in the past 6 years. All these supply built in Charleston, Somerville and Greenville, are taking longer to build and staying on the market longer. (Joe Kinsey – CoStar)
 Office continues to see distress. However, people are continuously tracking the sector, waiting to see who extends or gives back the keys. (Joe Kinsey – CoStar)
 Hospitality performance is strong. Hotel deals are happening. The seller-buyer disconnect seems to have subsided somewhat and developers are very optimistic. Finding funds that are investing in developing is a great issue. (Joe Kinsey – CoStar)