3/16/23 Charlotte Mastermind Group Meeting

Charlotte March 2023 – Key Take Aways

• PACE Equity is a funding source under the PACE program and has similarities to equity but is actually a long-term payout debt with an attractive fixed rate and is mortgage free. It’s not an increase in taxes or expenses, but an elected debt that a person takes to build a project or refurbish a building. It appears as a line-item special assessment on tax bills and can be combined with NMTC, HTC, TIF, Ground Leases, Opportunity Zones and more. PACE Equity is available throughout the nation, yet North Carolina is currently next in the process to be on board. The program funds overruns and otherwise saves projects that go sideways or south. Furthermore, David’s company handles the 87 steps that are required to deliver the financing which includes energy engineering, the coordination with the capital stack and the legislative approach, making it as easy as possible for his clients. (David Oliverio – PACE Equity)
• Bohler Engineering is currently heavily involved in multi-family and industrial. Within industrial, advanced manufacturing and cold storage are holding up and data centers are through the roof. (Mark Fletcher – Bohler Engineering)
• Two half-billion-dollar projects for life sciences are also underway – one in the Research Triangle Park (RTP) area and the other has yet to be determined. Charlotte, Greenville, Birmingham and Huntsville areas under consideration. (Mark Fletcher – Bohler Engineering)
• Companies, such as Toyota in Greensboro and Tesla in Austin, seek short supply chains and expect component facilities to be no more than 40 miles from the companies’ plants. (Mark Fletcher – Bohler Engineering)
• Clients are using CoStar database mainly to seek out short-term loans and distress sales. (Joe Kinsey – CoStar Group)
• New “Fund Search” feature on CoStar expected to launch at the end of the month. It will give insight into what funds are out there, what power they have, where people are looking and what their appetite looks like. (Joe Kinsey – CoStar Group)
• On the analytics side, multifamily inventory continues to heat up with new records hitting every month. Currently, 28,000 units (approximately 14% expansion) are under construction within the metro area. Rents have decreased since last summer, but since the beginning of 2023 have stabilized. Chuck projects they’ll be sluggish for the next year or two. (Chuck McShane – CoStar Group)
• The lack of new construction and demand for retail across the US has caused its lowest vacancy rate ever. (Chuck McShane – CoStar Group)
• Continuing to see an awful slide in vacancies for office as well, as more sublet space comes online, particularly the older buildings and in Uptown. (Chuck McShane – CoStar Group)
• It appears to Gates the break in business for the month of January was not cause for concern after all. Clients seemed to have taken a break to reassess and figure out how things work. New contracts are now in the making for the month of March. (Gates Grainger – Investors Title Company)
• Demand for car washes and automobile repair type services are spiking. (Joe Marek – Johnston Allison Hord)
• Joe reminds the members of RPN of Johnston Allison Hord’s resources for those who may need them. He highly recommends JAH Law’s environmental attorney that was recently recognized as being one of the legal elite within North Carolina, Suzanne Todd who specializes in condemnation and zoning issues for the past 30 years, and Todd Ware who has a solid practice in helping his clients develop natural resources. (Joe Marek – Johnston Allison Hord)
• RPN appreciates its invested members and is proud to welcome new markets in the Twin Cities, Tampa, Cleveland, Cincinnati and Milwaukee. (Rick Lackey – REAL Professionals Network)
• Terracon continues to stay busy dealing with phase one multifamily and brownfield related sites. (Neal McElveen – Terracon)
• Although growth continues, the challenge remains to find experienced workers. (Neal McElveen – Terracon)
• The industry is booming, primarily because of all the euphoria surrounding the federal dollars funding EV charging. Go-Station, Inc., is overwhelmed with the interest and complexity of projects from developers to see how they can monetize EV charging in a multitude of ways. Because of this, the company can be discerning about where they start and who they take on as clients. (Ray Addison – Go-Station, Inc.)
• The office market is at a point where vacancy is questionable coming out of the pandemic. The long-term effects of the pandemic will finally be revealed, as tenants will either renew or release their leases. (CJ Wilson – Marcus & Millichap)
• The banks are entrenched and are mainly lending to existing customers only, especially those with interests in industrial. These loans are limited by debt-service coverage ratios. (Clyde Nelson – Medalist Capital Advisors)
• Jeff is CEO and General Counsel at the Nichols Company, a commercial real estate services firm with 17 in-house brokers. Services include property management, development, construction services, entitlements, rezonings and virtual real estate brokerage. (Jeff Alexander – The Nichols Company)
• Jeff notices listings are picking up but slowing down on the underwriting side with many asking for additional extensions. (Jeff Alexander – The Nichols Company)
• Tobe works with University City Partners to invest resources in shaping public spaces and planning for a better-built environment in the University City area. He helps larger office campuses understand the atmosphere they’re in and brainstorm creative ways to shape their future. (Tobe Holmes – University City Partners)
• Recently awarded $32 million from the government for work on the US Virgin Islands. It can be used towards anything that rebuilds that area, I.e. a grocery store, a park, the destruction caused by a hurricane, etc. (Heather Mucci – Novus Architects)
• Car washes, cold storage, medical and emergency departments are hot beds of activity right now. (Heather Mucci – Novus Architects)
• The labor pressure for architecture is causing pricing to go up. The jobs demand skilled designers and architects and require review from municipalities. Municipalities are taking longer causing longer wait times for permits. Heather believes it’s a confluence of these and many different factors that are causing such stagnation in the industry. (Heather Mucci – Novus Architects)