617/21 Charlotte Mastermind Group Meeting

Charlotte June 2021 – Key Take Aways

• Brian Schoeck, Champion of the Charlotte Mastermind Group and head of the Real Estate Practice at Johnston Allison & Hord kicked off the meeting with a reminder of the upcoming Happy Hour at Olde Mecklenburg Brewery on June 22. He went on to comment there will be a lot of focus on the 2040 plan for the city as there seems to be a few different thoughts coming from the key players influencing the plan. There likely will be further discussion regarding allowable building heights, how to bring in more affordable housing and spending on infrastructure. The plan also considers doing away with single family rezoning which could open up some older neighborhoods for redevelopment.
• Joe Marek, also a Partner at Johnston Allison Hord, notes there is an increase in office leasing activity, with roughly 30% back in the office, likely growing to 60% after Labor Day. He also notes that a number of landlords are negotiating to tie rent increases to CPI due to their anticipation of continued increases, but it likely evens out over longer term leases regardless. He also noted landlords are asking tenants to now have business interruption insurance, and looking for more security either via security deposit or guaranty. Lastly, a number of retail tenants are trying to remove the continuous operation clause, but at a minimum increasing notice and cure times.
• Joe Kinsey with CoStar Group says brokers he is trying to connect with are all quite busy. He’s also been meeting with hotel clients who say traffic is up. The land market is crazy with developers looking to expand into outlying counties due to lack of availability.
• First time Member attendee, Chuck McShane, also with CoStar Group, commented that vacancy rates are going to remain high due to the amount of speculative development; rents will also remain flat due to the same.
• The team from Terracon – Neal McElveen, Patrick Korn and Tanna Thomas – first commented on their own firm’s return to work plans with most coming in 2 to 3 days a week with that hybrid environment likely continuing past Labor Day. Materials availability and pricing is having a significant impact with projects being put on hold; further, some developers are sitting on projects due to the same. To complicate, permitting and approvals are sluggish because so many are in the market. Labs are also backlogged with heavy activity. The key all around is enhancing communications to manage expectations for all parties involved.
• Bohler Principal Andrew Moriarty says every sector is busy – some more than others, but all busy. He seconds the woes of Terracon with the availability/pricing/timing of materials – the combination is making some deals hard to pencil out. Finding people has been a limiting factor for their growth; they are also seeing employees move to developers as they seek to bring talent internally so they are solely focused.