2/16/23 Charlotte Mastermind Group Meeting

Charlotte February 2023 – Key Take Aways

• Many factors contribute to Rowan County’s overnight interest from developers and companies looking to expand or relocate. The completion of construction on the I-85 removed the 25-minute delay to Charlotte, turning it into a great advantage from a labor standpoint. Every part of the county receives rural broadband, with Salisbury being the first city to first offer 10 gig per second internet connections. Unlike other neighboring counties, the Yadkin River provides Rowan with water and sewer infrastructure. Initially primarily and publicly funded, involving the private sector and creating a pro-business board of commissioners at the county level helped achieve tremendous growth and reputation as a business-friendly community. (Rod Crider – Rowan Economic Development Council)
• The guiding principles of quality of life, increasing prosperity and reducing poverty has broadened the number of stakeholders engaged in common economic growth efforts, which include homeless shelters, the NAACP and Social Security. Poverty levels are currently down 22%. (Rod Crider – Rowan Economic Development Council)
• Rebranded selves back in 2016 to educate people about what the county had to offer and why Rowan is a good location, not only to live, but for business investment and attraction. The county is promoting job opportunities and educational collaborations with four colleges to work on workforce development and talent acquisition, especially in manufacturing. NCMI is a partnership between Rowan-Cabarrus Community College and industry partners to close the manufacturing skills gap through workforce training and certification. Participants in the program can become a certified production technician in just eight weeks, with guaranteed job interviews and classes are completely free. Additionally, participants can choose from daytime or nighttime classes through May 3, 2023. The average wage in Rowan is $50,000/yr. (Rod Crider – Rowan Economic Development Council)
• Macy’s to open a 1.4 million sq. ft. facility off exit 68 on I-85 in 2024. (Rod Crider – Rowan Economic Development Council)
• Mark reports that picking better clients who value Bohler Engineering and vice versa has worked extremely well for the company. They are very busy, getting three RFP’s for advanced manufacturing a week. For the Carolinas, efforts are split between data centers, advanced manufacturing and life sciences. Multi-family has taken a pause, for the most part. (Mark Fletcher – Bohler Engineering)
• Mark believes the Southeast isn’t currently equipped with enough rooftops to handle the builds that have yet to come. Trying to see if the private equity sector can match up with the multi-family sector to get things going where they’re needed, i.e. Toyota’s new $1.29 billion automotive battery manufacturing plant in Greensboro. (Mark Fletcher – Bohler Engineering)
• More multi-family listings are being added at what clients claim to be decently reasonable. (Joe Kinsey – CoStar Group)
• Older office buildings in Uptown are being constructed with amenity floors and updates in order to reduce the cost of construction and compete with the newer builds in South End. Conversions are being considered, which would cut the buildings in half, putting multi-family or condos above with office below. (Joe Kinsey – CoStar Group)
• Office leasing sizes are down considerably since pre-pandemic. The “sweet spot” now is 8k-11k. (Chuck McShane – CoStar Group)
• 500k and larger industrial spec buildings are about 20% available, whereas the 100k and below infill industrial is almost impossible to find with only about 3% available. (Chuck McShane – CoStar Group)
• Multi-family rents are leveling off due to excess supply coming online. Asking rents are still down from last summer. With record levels of supply and about 20,000 units currently under construction, will probably be a slow couple of years for rent growth in multi family. (Chuck McShane – CoStar Group)
• There is some distress with Bed, Bath and Beyond, Party City and Tuesday Morning, which could mean potentially vacant space coming online. Chuck thinks that space, however, will lease quickly by tenants who are healthy. (Chuck McShane – CoStar Group)
• Buyers and sellers are further disconnected due to the drastic shift in market. Russell predicts this will not improve for another 6 months. (Russell Hughes – Hughes Realty Advisors)
• Russell is seeking an investor for a two-acre industrial property with granite cutter in Lowell, NC, for $700k and an 8.8% cap rate. (Russell Hughes – Hughes Realty Advisors)
• Seeing activities and opportunities but some, more than before, are falling out. Crazy busy with closings, however. As long as multi-family remains consistent, they’ll be fine. (Gates Grainger – Investors Title Company)
• The I-85 is exploding with industrial and manufacturing projects. 18 million sq. ft. is expected to come online this year alone. Along this corridor, Choate Construction is building a half million sq. ft. for Home Depot distribution, 600,000 sq. ft. for Best Buy distribution, and Sherwin-Williams 800,000 sq. ft. facility in Statesville. (Scott Harris – Choate Construction Company)
• Construction challenges include financing, supply pricing, material availability and project scheduling. These ultimately become dealbreakers since a project cannot start if it has to stop. (Scott Harris – Choate Construction Company)
• Scott announces NASCAR’s relocation from Uptown Charlotte to Concord. The new production facility will offer more space and will be a far more efficient resource for the industry at large. (Scott Harris – Choate Construction Company)
• The bank is very cautious on CRE deals over the next six months, some even placing moratorium on CRE. Bankers don’t like that word because they want deals to happen. Steve’s Chief Credit Officer is waiting to see how things shake out before proceeding. (Steve Fletcher – HomeTrust Bank)
• Existing client relationships are much more likely to consider new deals on a deal-by-deal basis. (Brent Kubitschek – Waterstone Multi-Housing Advisors)
• The Carolinas love the demographic and economic growth, especially for Charlotte and Raleigh, but there is enormous institutional demand for the secondary tier of cities, like Greensboro and Greenville, SC. Folks are figuring if they begin developing now and finish within the next two years, they’ll be ahead of any economic catastrophe coming down the pipeline. (Brent Kubitschek – Waterstone Multi-Housing Advisors)