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Charlotte City Council Committees Discuss Density, Adaptive Reuse Incentives

Yesterday was "First Monday," the day when Charlotte City Council holds its four regular committee meetings.  After all the discussions, they gather together in the evening to give the Council a full review and discuss any other pertinent matters.  Here are some highlights:

Transportation, Planning, & Development
 
Planning Director Alyson Craig provided a presentation containing a staff recommendation in response to a referral made by the City Council earlier last year. It's important to note that the Council adopted the 2040 Comprehensive Plan in 2021 which called for broader allowance of higher-density dwellings throughout the city.  The adoption of the Unified Development Ordinance (UDO) followed in 2022 and permitted the development of duplexes and triplexes in single-family neighborhoods.  After complaints from some neighborhood groups, who seem to have been deemed by the leadership as having the most influence on a plan already debated by experts, the Council directed staff to develop proposals aimed at slowing and potentially repealing these provisions.  Further discussions will take place at the next two UDO Advisory Committee meetings to be held next week and the week after.

Jobs & Economic Development

Economic Development Director Tracy Dodson provided a presentation on a potential pilot project involving the proposed conversion of one or more buildings in Uptown.  Staff will have additional discussions and come back to the Council with a menu of incentive options that may include tax increment financing, tax increment grants, and other similar related tools.

2024 Resolutions for Office Owners and Brokers

Originally published on February 2, 2024, by Hayim Mizrachi, CCIM, for NAIOP.

As we start a new year, the office outlook is still mixed. Although more companies are requiring employees to be in the office some days per week, we are far from the high occupancy that many central business districts enjoyed before 2020. Companies are still figuring out their workplace strategies – how often to bring in employees and how to better use their space for the reality of work today.

At the same time, financing and refinancing office loans for owners is increasingly difficult. Every margin matters: How the property is managed and what improvements can be made may be the difference that prevents a forced early sale.

So, in the near term, we must find a new equilibrium in how office space is positioned. My colleagues from CORFAC International offices around the world shared what they’re seeing in the office sector and how office owners and brokers need to respond.

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NAIOP New Jersey: Let’s get the Next Energy Master Plan Right

Originally published on February 7, 2024, by Dan Kennedy for NAIOP.

Commercial real estate developers and owners recognize the important role they must play in combating the effects of climate change. In my state, New Jersey, residential and commercial buildings account for the second-largest share (26%) of greenhouse gas emissions, while 87% of residential buildings and 82% of commercial buildings rely on natural gas for heating spaces and water.

To address climate change, Governor Phil Murphy (D) has issued an energy master plan to achieve this with an unrealistic goal: converting New Jersey into a 100% clean energy economy by 2035. The governor has directed this plan to be updated in the coming year. 

NAIOP New Jersey is approaching the governor’s initiative as an opportunity to improve an unrealistic policy document that has done little to achieve its lofty goals. Critically, this is an opportunity for our industry to make a meaningful contribution toward an energy policy that is realistic, achievable and addresses the threat we all face from climate change.

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New Podcast Released! - Douglas Welton, Chair of the Charlotte/Mecklenburg Planning Commission

Originally published on January 30, 2024, by the Real Estate and Building Industry Coalition.

Thinking outside the box doesn’t aptly describe the way Douglas Welton, Chair of the Charlotte Mecklenburg Planning Commission, approaches the idea of change. For him, he doesn’t even see a box.  He sees an open landscape of ideas, opinions, and solutions just waiting to be deconstructed and rebuilt into something new. 

After a fun lighting round that opened some entertaining personal dialog, this episode went deep into the issues Charlotte faces today.  With growth at the forefront, and policymakers searching for the best way to stay ahead of future problems, Douglas believes it will take more than just following old ideas to move us forward. It will take trust between policymakers and developers, and an atmosphere where everyone is free to ask, “why can't we do this a different way?”  

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US Office Affordability: How Much Space Can You Rent for $120k/Year?

Originally published on January 23, 2024, by Ioana Ginsac for NAIOP.

As the office sector transforms in response to evolving work trends and the flight-to-quality movement, businesses continue to seek the best office spaces that can suit both their needs and their budgets. For most, the perfect choice may lie in a compromise between location clout and asset quality.

Leveraging recent CommercialEdge data on average asking rents in 160 U.S. markets, CommercialCafe explored several approaches to how much office space a hypothetical yearly budget of $120,000 (or $10,000 per month) could rent.

PRIORITIZING LOCATION: BALANCING THE BUDGET IN THE LARGEST US CITIES

First, the analysis looked at what footprint options rose to the top when prioritizing location. Specifically, the CommercialCafe report started by delving into how much office space that hypothetical budget could rent in the 50 largest U.S. cities out of the total 160 markets that were surveyed.

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Leveraging Technology to Enhance Relationship Building

Originally published on January 16, 2024, by Rebecca Randolph for NAIOP. 

As the business landscape continues to evolve, it’s key for relationship builders in all industries to reconsider the ways they connect and engage with both new and existing clients. In our fast-paced, digital world, new technologies have transformed how companies do business, including how they attract new prospects, foster relationships, create trust and maintain relevance. While these new technologies are rooted in the basic principles of relationship building, business development professionals should take a close look at these new methods to consider how they can help reinforce their current approach to support their company’s growth and longevity.

A MULTICHANNEL APPROACH

In the wake of the COVID-19 pandemic, companies across the globe sought out new platforms for conducting business, collaborating, and connecting with colleagues and peers. Although these technologies, such as Zoom and Microsoft Teams, had been in existence for several years, they quickly became the go-to solution for staying connected regardless of physical location. While these platforms remain relevant in the post-pandemic world, they are no longer the only option for maintaining connectivity and collaboration. After many months spent separated from society and the physical workplace, most individuals are eager to reconnect in person.

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Congress’ Full Plate and Election-year Politics Will Make 2024 a Busy Year

Originally published on January 17, 2024, by Eric Schmutz for NAIOP.

Iowa Republicans held their 2024 presidential caucus on Jan. 15, and as expected, former President Donald Trump won with 51% of the votes cast. Florida Governor Ron DeSantis placed second with 21.2% and former South Carolina Governor Nikki Haley placed third with 19.1%. Businessman Vivek Ramaswamy, after receiving 7.7% of the votes, suspended his campaign and promptly endorsed Trump. Former Arkansas Governor Asa Hutchinson received less than 200 votes and also suspended his campaign, but has yet to endorse another candidate. 

The current delegate totals among the candidates stand at Trump with 20 delegates, DeSantis with 8, Haley with 7, and Ramaswamy with 3. A candidate needs 1,215 delegates to win the party’s nomination. The action now moves to New Hampshire where Republicans will hold their first presidential primary on Jan. 23, and then to South Carolina where the first Democratic primary will be on Feb. 3 and the Republican primary will be on Feb. 24.

Unless a major shakeup occurs, we will likely see a repeat of the 2020 race between President Joe Biden and Trump. If so, it will be the first time a former president has run as his party’s nominee for a non-consecutive presidential term since 1892, when former President Grover Cleveland (D) defeated incumbent President Benjamin Harrison (R) in a rematch.

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Steadfast Advocacy Remains Critical in a Difficult Congress

Originally published on December 20, 2023, by Aquiles Suarez for NAIOP.

As 2023 comes to a close and we look ahead to the challenges facing commercial real estate in 2024, it is clear that persistent advocacy on the public policy front will be more important than ever to ensure that the interests of NAIOP members are protected. This is true of course at the state and local level, but it is at the federal level, where government gridlock has been most on display, that maintaining our strong advocacy will be critical.

As some media reports have already noted, this Congress will be one of the most unproductive since the Great Depression. Just 20 pieces of legislation have been signed into law. Narrow partisan majorities in the House and Senate, and continued dysfunction in the House Republican conference in particular, have made advancing legislation in this Congress an even bigger challenge than usual. For three weeks, Congress lost valuable time while the drama surrounding Speaker Kevin McCarthy unfolded, with Republicans finally settling on the fourth candidate to vie for the spot. While the House did manage to pass debt-ceiling increases and government funding measures that were “must-pass” bills, the only other bills that Congress seemed able to digest were those renaming post offices and those with no opposition at all.

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State Elections Are Important to Commercial Development

Originally published on January 3, 2024, by Toby Burke for NAIOP.

The political battle over the presidency and the control of both chambers on Capitol Hill is expected to garner most of the attention of the national media this year. While the outcome of these campaigns will have significant implications on policy debates at the national level, they should not overshadow or minimize the important political races for control of state legislatures and gubernatorial offices across the country. The outcome of these more grassroots races in comparison to control of state capitols may be more reflective of the policies of importance to the American people.

Republican governors currently hold a 27 to 23 advantage over Democrats heading into 11 gubernatorial elections later this year. The 11 states holding gubernatorial races in the fall are Delaware, Indiana, Missouri, New Hampshire, North Carolina, North Dakota, Utah, Vermont, Washington and West Virginia. Except for Montana, North Dakota (to be determined), Utah, and Vermont, the incumbents are either term-limited, not seeking re-election or seeking another elected office. North Carolina is expected to be one of the most competitive this year because Democrat Rory Cooper is unable to seek reelection based on term limits and the recent Republican successes for statewide and presidential offices.

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The Promise of AI: Transforming the Construction Industry

Originally published on January 9, 2024, by Todd Burns and Andrew Volz for NAIOP.

The potential for artificial intelligence (AI) to transform businesses, industries and society has been mounting for decades, but recent advancements have moved the science from niche to mainstream. The technology’s proficiency in writing, drawing, coding and composing has driven corporate leaders to consider both the opportunities and threats that AI presents for their future.

For commercial real estate, it’s clear that strategically embracing AI could transform the sector. In JLL’s 2023 Global Real Estate Technology Survey, investors, developers and corporate occupiers ranked AI and generative AI among the top three technologies expected to have the greatest impact on real estate over the next three years. Less clear, however, are the details of what exactly comes next. Respondents indicated the least understanding of AI and generative AI when compared to other surveyed technologies such as blockchain, virtual reality and robotics.

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2024 Candidate Filing is Complete - Primary Election to be Held March 5th - Here is the Complete List

The list is complete!  Candidates who filed are competing for important seats on the County Commissions, the State Legislature, and the U.S. Congress.  Click the links below to familiarize yourself with the candidates:

NAIOP Research Foundation: Slow Rebound Expected Ahead for Office Space Demand

Originally published on December 15, 2023, by Marie Ruff for NAIOP.

The tale of the office market in 2023: it was neither the best of times nor the worst of times. This year has continued to be one of recalibration and reevaluation for office space usage across the U.S. While some companies have called employees back to the office full-time, others have embraced the transition to being fully remote and others are somewhere in between. But what does the data show about office usage now and what’s ahead? In a recent NAIOP webinar, the authors of the recent office space demand forecast published by the NAIOP Research Foundation explained their research findings.

The forecast’s authors – Hany Guirguis, Ph.D., professor, of economics and finance, Manhattan College, and Michael Seiler, DBA, visiting research scholar, Federal Housing Finance Agency; visiting professor (MIT); and J.E. Zollinger Professor of Real Estate & Finance, College of William & Mary – started off with a high-level look at the economy. The U.S. economy avoided a recession in 2023 and real gross domestic product (GDP) has now expanded for the fifth straight quarter. “It’s nothing to brag about but it’s not as bad as some of the doomsayers say,” Seiler said.

Seiler explained that the Federal Reserve’s continued efforts to quell inflation by raising interest rates have been effective but at the expense of economic growth. After peaking at 9.1% in 2022, the inflation rate has declined to 3.1% every year, according to the U.S. Bureau of Labor Statistics. And the national unemployment rate, currently at 3.9%, “has been trending in the right direction: quite low and quite stable,” Seiler said.

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Federal Grants May Result in More Rail Options for North Carolina

This is big news when it comes to the impact on growth and real estate development strategies.  According to a recent article, featured in Axios Charlotte, North Carolina is receiving a 1.09 billion dollar federal grant, the largest ever received by the North Carolina Department of Transportation (NCDOT), toward the S-Line, a passenger rail line from Raleigh to Virginia.  Additional dollars will be allocated to plan and develop rail corridors between other cities, including "high-speed" rail linking Charlotte and Atlanta.  Other corridors to be studied and planned are those between the following cities:

  • Charlotte and Kings Mountain
  • Fayetteville and Raleigh
  • Wilmington and Raleigh
  • Winston-Salem and Raleigh
  • Salisbury and Asheville

For additional details, read the full article here: 

 

Mega federal investments will revolutionize
passenger rail out of Charlotte

NAIOP Charlotte Elects 2024 Board of Directors at 2023 Annual Meeting

NAIOP Charlotte, the Commercial Real Estate Development Association, held its 2023 Annual Meeting: What the Future Holds on Tuesday, December 5, 2023, at The Terrace at Cedar Hill, where we elected the 2024 Board of Directors. 

We awarded the 2023 Award of Excellence to Dale Stewart, PE, partner at LandDesign. Dale gives time and energy to NAIOP Charlotte and humbly serves others in the community without concern for recognition or compensation. He champions the commercial real estate industry on a national, state, and/or local level and passionately seeks to be a change agent, even in the face of diversity. 

­The meeting concluded with insights from The Differentiators’ Jim Blaine as he provided a pulse on what’s going on at the federal, state, and local landscape levels and the potential impacts in North Carolina and Charlotte. 

2024 Board of Directors

President - Dan Melvin, LandDesign
President-Elect - Sagar Rathie, Crescent Communities
Secretary - Nick Matus, Bank of America
Treasurer - Bobbi Jo Lazarus, Elliott Davis
Immediate Past President - Steve McClure, The Spectrum Companies
Past President - Welch Liles, Asana Partners
*For a full list of the 2024 NAIOP Board of Directors, visit http://www.naiopclt.org/board-of-directors.









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Candidate Filing for 2024 Has Begun and Continues Until Noon on Friday

Your future leaders are coming into view!  Candidate filing for elected office opened at noon on Monday, December 4th and remains so until noon on Friday, December 15th.  Candidates who decide to run will be competing in 2024 contests for positions from County Commissioner, to State Legislator, U.S. Congress, and all the way up to U.S. President.  Click the links below to see who has filed so far and begin to familiarize yourself with the candidates:
 
Mecklenburg County Board of Elections - Candidate List
 
Iredell County Board of Elections - Candidate List
 
Cabarrus Board of Elections - Candidate List

Gaston County Board of Elections - Candidate List

Union County Board of Elections - Candidate List

How Rising Construction Costs are Impacting Real Estate Development

Originally published on December 5, 2023 Doug Faron for NAIOP.

In today’s environment, there are countless barriers to new commercial real estate development opportunities, including rapidly rising borrowing rates, increased constraints on banks, growing insurance costs and geopolitical risks, to name a few. On top of that, a major constraint to development today is the rising cost of construction. The upward trajectory of construction spending itself can be attributed to many factors including inflation, labor costs, rising insurance rates, materials and even permitting costs. As the cost to build becomes more expensive, developers are grappling with how to deliver high-quality buildings on time and within budget.

As a result, to achieve deadlines and stay within budget, developers must generate solutions to the industry dilemma of rising construction costs. In this article, we will dive into what’s driving construction spending, how these costs are impacting developers and solutions for maintaining development momentum.

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Congress Avoids Government Shutdown but Must-Pass Legislation Remains

Originally published on December 6, 2023 Eric Schmutz for NAIOP.

For the first December in recent years, Congress is no longer facing a government shutdown deadline. Prior to the Thanksgiving recess, Congress approved a two-tiered appropriations package. This “laddered” approach primarily funds domestic programs (such as housing, agriculture, transportation and infrastructure) until Jan. 19, 2024, and the remaining programs, including defense and homeland security, until Feb. 2, 2024. Year-end 2023 is not without its share of must-pass legislation, however.

Before Congress adjourns for the holidays, House Speaker Mike Johnson (R-LA) must convince his conference to approve the $886 billion National Defense Authorization Act, reauthorizing legislation for the Federal Aviation Administration (FAA), and Section 702 of the Foreign Intelligence Surveillance Act (FISA). In addition, the House must reach an agreement with the Senate and President Joe Biden on aid packages for Ukraine, Israel and Taiwan that House and Senate Republicans say must include border security funding. With six legislative days left on the schedule, the House appears to be adding to their busy schedule by approving impeachment inquiries for Biden and Homeland Security Secretary Alejandro Mayorkas.

Adding to Johnson’s challenges, the House voted 311-114 last week to expel Representative George Santos (R-NY), making him the sixth member in history to be expelled from Congress and shrinking the already narrow and fractured Republican majority in the body.

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Being Heard: Developing from the Inside Out

Originally published on November 20, 2023 by J. Byron Brazier for NAIOP.

When you travel to a different country, you expect to encounter a different landscape, culture and customs. But in many parts of the U.S., communities mere blocks or miles apart feel like wholly distinct worlds. Take Chicago: Its beautiful architecture and stunning lakeshore belie the staggering economic disparities among neighborhoods and real estate developments. 

In Lincoln Park, a community on Chicago’s North Side, the median income is $123,044 and 85.6% of residents have a bachelor’s or graduate degree. Nearly 80% of Lincoln Park’s residents are white. Ten miles south, in the Woodlawn community, the median income is $28,794 and 26.1% of residents have a bachelor’s or higher degree. Eighty percent of Woodlawn’s residents are Black. 

Drive through Lincoln Park and you’ll see high-end workout facilities, a range of shops and restaurants and an enormous Whole Foods. Drive through Woodlawn and you’ll spy far fewer amenities. Of these two communities, you can probably guess which has enjoyed large-scale, sustained investment and which has experienced underinvestment and systemic inequities. 

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Slow Rebound in Office Space Demand Expected in 2024

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q4 2023.

Key Takeaways:

  • The office market continues to face stiff headwinds as office utilization has remained relatively flat over the last year, as evidenced by mobile phone location data and building-access records.
     
  • The U.S. economy has defied many economists’ forecasts for a recession in 2023, but office-using employment growth has stalled. Nonetheless, with a recession now appearing less likely, employment growth should continue next year, and firms may be more willing to commit to leasing space than they have been in 2023.
     
  • As office leases expire, tenants are trading space for quality, leasing smaller spaces in newer buildings with modern amenities to draw workers to the office.
     
  • By contrast, the largest increases in vacancies since 2020 have been concentrated in a small proportion of the most functionally obsolete office buildings, which tend to be poorly located and poorly amenitized. Few of these buildings appear likely to remain in use as offices, barring significant renovation.
     
  • New construction has slowed, but given the lag between starting construction and delivering new office space, projects begun in earlier years continue to reach the market, with 17.1 million square feet delivered over the last two quarters. Combined with negative 12.3 million square feet of net absorption over the last two quarters, these completions have contributed to a rising national average vacancy rate, which reached 18.4% in the third quarter, the highest rate since 1992.

Given these trends, net office space absorption in 2024 is expected to be 5.7 million square feet. Moving forward, the forecast projects that net absorption will total approximately 4.5 million square feet during the first three quarters of 2025.

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Charlotte Douglas International Airport is a Huge Economic Driver!

 

Charlotte Douglas International Airport is bracedfor the impact of more than 900,000 travelers over Thanksgiving.  To put that into context, it's nearly the population of the entire City of Charlotte.  Here are a few more interesting facts:

  • Terminal opened May 2, 1982
  • 118,000 daily passengers
  • 21,000 parking spaces
  • 6,000 acres of land
  • 2022 stats - 47,758,605 passengers, 505,589 arrivals & departures, 207,608 tons of cargo
  • 179 nonstop destinations
  • 36 international destinations

For an interesting discussion about the airport as well as the activities of American Airlines, please take a few minutes to listen to the REBIC podcast with Tracy Montross, Regional Director of Government Affairs for American Airlines.  

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