Banktown is a boomtown these days. Apartments are sprouting everywhere, office tower construction is back uptown and rents are rising as people continue to flock to Charlotte. And a panel of experts said this week that they expect the growth to continue.
The eighth annual commercial real estate forum sponsored by accounting firm GreerWalker LLP and law firm Katten Muchin Rosenman LLP was held Monday at the Ritz-Carlton. The almost 500 attendees and the buoyant mood were themselves indicators of how well things are going right now - no more talk of cliffs and our falling off them.
"It's been really remarkable to watch how Charlotte has progressed," said DTZ chief economist Kevin Thorpe. "We're actually starting to see the local commercial real estate markets thrive."
Here are some of the panel's key points:
- Eye opening chart of the night: This graphic totally surprised me. Charlotte's office absorption tracks the growth of travelers at Charlotte Douglas International Airport almost perfectly. Both likely reflect the health of the local economy and business travel.
- Apartments look like a bubble, but aren't yet: The panelists agreed that Charlotte is building a ton of apartments (all you have to do is look around on any drive in Charlotte and you're sure to see a few under construction). So is it a bubble? Thorpe said no. "Multifamily will overbuild briefly. Vacancy will hit 9 percent," said Thorpe. That's almost double the current rate. But with population growth estimates strong - especially Millenial renters - there will soon be enough demand to tighten vacancy rates up quickly. "Most of those apartments will be rented," said Thorpe. The real question: What happens when all those Millenials (myself included!) hit prime home-buying age in five to seven years? That's when things could get interesting.
- There's still plenty of unmet need for office space: Demand for office space has been growing in Charlotte faster than new deliveries for four straight years, Thorpe said. Vacancies have tightened up and rents have moved up. But Walker Collier III, a partner at Trinity Capital Advisors, said his firm doesn't have much of an appetite for spec offices. They're looking for an anchor tenant to kick off Trinity's planned 14-story tower at S. Tryon and Morehead streets. Collier also said his firm is looking for suburban office parks to invest in, which he said have been underbuilt in recent years as people flock to center city areas.
- Charlotte needs way more industrial space than it has: "Charlotte is way under-building industrial right now," Thorpe told the audience. "Severely under-building." Rents for industrial space jumped 5.1 percent last year and could grow by double digits this year, Thorpe said.
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15 comments:
"BANKTOWN" -- really? Charlotte has a lot offer- and naming us for tall buildings full or worker bees stripped of most of their personal identity and loyal only to a business that shows no loyalty to them or its customers really puts Charlotte in a bad light-
"But Walker Collier III, a partner at Trinity Capital Advisors, said his firm doesn't have much of an appetite for spec offices. [...] Collier also said his firm is looking for suburban office parks to invest in, which he said have been underbuilt in recent years as people flock to center city areas."
I would be delighted to see non-spec office buildings built in the suburbs. Does such a thing exist, or did he mean something else?
Hi Patrick, I believe he was speaking about acquiring existing office parks, not building spec parks in the suburbs. Sorry if that was unclear.
Please stop using the "Banktown" moniker. No one outside of the Observer uses that term. We have exactly one major or regional bank headquarters here, and even that one is just in name only, as all the executive officers are resident in other cities. The days of Charlotte having a Napoleon complex need to be put to rest.
So the Banktown moniker is not that popular...duly noted.
so the _real estate_ board says the boom is likely to continue. seems legit
Not to beat a dead horse, but...
Banking is hugely important here. But so are energy (Duke Energy and its vendors that have flocked 'round like Toshiba and Areva), retail (Belk), healthcare (CMC/CHS), aviation (CLT & UTC Aerospace and Curtiss-Wright) and North American hq like Electrolux and Ingersoll-Rand (who?), also manufacturing like Siemens. Not to mention NASCAR.
We have a nominally hq bank and the so-called East Coast hq of a San Francisco-based bank. Plus a handful of investment bankers/private equity shops.
Why don't we just call ourselves Charlotte?
We're # 9 on the just-released list of America's fastest-growing cities.
I'd say we're more boomtown than banktown.
Let's invite all these people to live here, hire them, build apartments and office towers for them, yet don't improve the roads from when they were built 30 years ago. Brilliant! I grumble because I'm a Charlotte native who has worked here my entire life, and have to sit in traffic with people who moved here 5 minutes ago. Very frustrating. Stop the growth without proper infrastructure.
Spring market for Residential real estate has already started!!
I am also a Charlotte native and have spent over 30 years working in the downtown area. I will offer a suggestion to our city/county officials..PLEASE consider a local tax on employees/residents who live outside Mecklenburg county but work in Charlotte. The purpose of this tax would be to fund road improvements. I bet at least half of the downtown workers at major corporations do not live in Mecklenburg county. Many of them are SC residents who are contributing to traffic congestion, especially on I-485. It is not fair to burden the residents of Mecklenburg county with ever increasing property taxes when there are other options available. A number of states are utilizing a local tax to help fund services such as roads improvements that benefit everyone living in the area.
As a banker who moved here because of the various synergies present, I wouldn't exactly bury the moniker yet. A number of other potential cluster starters are noted, but until they are truly creating a spectrum of spinoffs, then the chamber and natives will probably be judged by the perception of the primary industry group. Yes, dead horse I'm sure. Love being here, but please import some intelligent traffic engineers too and not toll roads! An idiot could add another lane to I-77.
Lets not get off subject here - the article is about the current health of commercial real estate - which is probably THE most important marker for the overall health of the area. I was very intrigued by the airport v absorption pic -thanks Ely.
To set the record straight - and beat another dead horse - I-77 is controlled and funded with STATE and FEDERAL money....as is I-485...hence the 'I' in front of the number.
We (charlotte) have some influence on what happens, but simply "importing intelligent traffic engineers" isn't going to fix the problem. I somewhat agree that we have our own issues in Meck to deal with regarding traffic...but that's a whole different discussion. 14 years ago, I chose to buy a house that would allow me to walk/bike to work. The solution starts when each of us understand our individual impact. Having lived here for 30 years doesn't entitle anyone to a dedicated lane free from all obstacles. Our impact is nothing more than the sum of our use.
Pretty soon, the metrics will be out and everyone will share their appropriate percentage of tax to support the overall infrastructure. Enjoy Union/Cabarras/Iredell/Cornelius/ York/Mint Hill/Matthews mil rates while you can. Grandpa has already assured us the only thing you can count on outta life is death and taxes.
Ely, thx again for the article on the state of commercial real estate.
Hey Ely - Remember to call Greystar.
Thanks.
Yes, Charlotte is steadily and rapidly growing. As a transplant who has been here for about 10 years I can see how much Charlotte has grown in just a relatively short time frame.
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