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Around the Region Plus

  • Mecklenburg County proposing development fee increases in FY 2025 Budget - In partnership with the HBAGC we are initiating meetings with key staff at Mecklenburg County to discuss the potential impact of these proposed fee increases.  Here is the Land Use and Environmental Services Agency (LUESA) presentation that was provided to the Mecklenburg County Board of Commissioners on April 23, 2024.
  • Gastonia Looking for Feedback on Micro-Transit Fares - The City of Gastonia will host a public hearing on a fare increase at its regular City Council meeting which begins at 6 p.m. on May 7 and will be held at Gastonia’s City Hall, located at 181 S. South Street, Gastonia.  Additional information may be found here.
  • Town of Waxhaw Proposed Land Reservation Text Amendment - The Town Board of Commissioners has introduced Text Amendment 14-2024 purportedly to address reserving future school sites but could have the impact of curbing growth in an already difficult building environment.

New Report: A Rebound in CRE Sentiment

The NAIOP CRE Sentiment Index for April 2024 is 52, a rebound from the September 2023 reading of 46, indicating that respondents expect conditions for commercial real estate to improve over the next 12 months. 

 

Key Findings:

  • Respondents have a positive outlook for every component that comprises the Index except for construction costs, which they expect to be higher next year. This marks a turnaround in sentiment for most CRE fundamentals, which was negative for almost every Index component in September.
     
  • Respondents are now much more optimistic about capital market conditions than they were in September. The outlook for the availability of debt, the availability of equity and first-year cap rates improved more than for other measures. This shift is likely due to an expectation that interest rates will fall over the next 12 months. In response to a question that is not used to calculate the Index, developers and building owners indicated they expect interest rates to be lower than they had predicted in September.
     
  • Respondents also expect demand for commercial real estate to improve slightly. Their outlook for occupancy rates and effective rents rose, with both measures now suggesting some improvement over the next year. Open-ended comments suggest that most respondents expect favorable demand for industrial, retail and multifamily, whereas office will likely continue to struggle.
      
  • Developers and building owners now expect their deal volume to grow slightly over the next year. This is an improvement from September, when they had projected a decline in activity. Their expectation of handling a higher dollar volume of new projects and acquisitions reflects an improving outlook for capital availability.
View Full Report

New Member Spotlight! Dan Melvin - LandDesign

Dan Melvin, PE, serves as a Principal at LandDesign, where he oversees a team of consulting civil engineers specializing in land development projects of varying scales and complexities. With extensive experience in Charlotte, Dan possesses an in-depth understanding of the region’s infrastructure and regulatory challenges, enabling him to devise practical solutions tailored to his clients’ needs.

Dan’s ability to cultivate strong relationships with clients and regulatory authorities is key in advocating effectively for projects within the local development community. His involvement in public-private partnerships has provided him with valuable insights into the development process, enhancing his approach to project management and problem-solving.

Outside of LandDesign, Dan serves as the President of the NAIOP Charlotte Chapter, where he works to support the interests of commercial real estate developers and owners. He also serves as a development representative on the Charlotte Water Advisory Committee, providing insights and guidance on water infrastructure issues that influence both current and future developments.

Dan holds a degree from Florida State University and resides in Charlotte with his wife, Laura, and two sons, John and Charles.

Charlotte City Council Limits Housing Options

Last night the Charlotte City Council voted to approve UDO text amendment 2024-043, effectively limiting the ability for builders to provide housing products to moderate income buyers.  We have reported regularly on this topic in recent weeks through other editions of our "2 for Tuesday."  This action has led to even greater uncertainty within the building community and will likely translate into higher housing prices, at least in the short term.  Staff is planning to file another measure that will serve as a substitute for the option that was widely utilized by the industry and effectively eliminated by Council.  This new text amendment will likely be filed on Thursday with a public hearing slated for mid-June and a Council vote on June 24th.  We are currently working with staff to ensure this is a viable tool and that it will assist our members in providing the housing types necessary to meet critical supply demands.

Charlotte Mecklenburg Planning Commission to Consider UDO Text Amendment

Tonight at 5:30 pm, the Charlotte Mecklenburg Planning Commission will take action on UDO text amendment 2024-043 aimed at curbing the use of Conservation Subdivisions for new development.  This action will be to either recommend approval or denial of the proposed amendment.  The meeting will be held in Room 267 of the Charlotte Mecklenburg Government Center, 600 East 4th Street, Charlotte, NC.  If you cannot attend in person, you can visit the City's YouTube page to follow the action.

Passage of the amendment will effectively eliminate the use of this provision and is one of three interrelated matters currently before the council:

  1.  Conservation Subdivision Amendment - will result in less density and is currently scheduled for a May 20th council vote.
  2.  Addressing the matter of Duplexes and Triplexes in existing neighborhoods - will result in less density, "Clean-up" Text Amendment 3 adds prescribed conditions to duplexes and triplexes in the N-1 zoning category (see page 15-2), the public hearing scheduled for May 20th.
  3.  The creation of a Compact Development category (to replace conservation subdivisions) - could allow higher density developments under certain circumstances, still conceptual.

We are encouraging Members of the Charlotte City Council to take action on these provisions simultaneously so they may better consider the big picture as it relates to housing affordability.  

Top 30 Mid-Sized U.S. Cities for Green Commuting

Originally published on April 24, 2024 by Matthew Preston for NAIOP.

With many returning to offices, sustainable commuting options are back in the spotlight. With this in mind, a recent study from CommercialCafe explored which mid-sized U.S. cities (populations between 220,000 and 500,000) are leading the way in offering eco-friendly commutes. By focusing on this specific size range, the analysis provides insights beyond major metropolises and allows for more fair comparisons of green commuting practices.

To order to identify the leaders in green commuting, the study analyzed several key factors including public transportation ridership, walking and cycling rates, carpooling engagement, access to EV charging stations, and the promotion of pedestrian and cycling commuting with green amenities and attractive urban environments.

Read on to discover the top 30 cities and gain insights into the best performing examples of sustainable commuting in action.

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To Transform the Nation’s Downtowns, We Need the Public Sector

Originally published on April 29, 2024, by Jay Biggins for NAIOP.

In the wake of the coronavirus pandemic, many downtowns across the country remain disquietingly vacant. Office towers that once hummed with activity are a bit quieter, the hallways emptier. The U.S. has the highest office vacancy rates – 18.4% – since 1992. Some levels of hybrid and remote work are here to stay, and now the commercial real estate landscape faces some tough decisions, offering both challenges, which are clear, and unique opportunities, which are less well-defined but coming into focus.

Where companies used to require space for virtually all their workers, hybrid work models mean fewer people in the office and, thus, less need for so much square footage. Now, all across the nation’s downtown areas, developers and owners are asking what the future of the “office” looks like. How do we utilize the space that’s available?

The biggest obstacles confront Class B and C office buildings, often in less desirable locations, lacking amenities and/or technology. These properties have the emptiest space, and many have no viable future as office space.

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North Carolina is the #6 state in U.S. for CRE development

North Carolina is the sixth highest-ranking state in the U.S. for overall contributions of commercial real estate to state GDP with $44.1 billion, $19.1 billion in direct spending, $16.7 billion in personal spending, and 312.1 million jobs supported in 2023 (the most recent data available).

  • Industrial (includes manufacturing): North Carolina ranks #4
  • Warehouse: North Carolina ranks #7
  • Retail: North Carolina ranks #7

The data is from “Economic Impacts of Commercial Real Estate, 2024 U.S. Edition” published annually by the NAIOP Research Foundation.

Nationally, the impact of new commercial real estate development in the U.S. continues to grow.

The combined economic contributions of new commercial building development and the operations of existing commercial buildings in 2023 resulted in direct expenditures of $913.1 billion and the following impacts on the U.S. economy:

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November Election Could See a Historic Switch in House and Senate Majorities

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

With national and swing state polls indicating support between President Joe Biden and former President Donald Trump is fairly even, casual political observers could be forgiven for not realizing that House and Senate races are also tight; there could be a historic switch in the House and Senate majorities this November. 

In the Senate, where Democrats currently hold a two-seat majority at 51-49, Republicans are projected to pick up the West Virginia seat from retiring Democratic Senator Joe Manchin, which would make it a 50-50 Senate, with the next vice president casting the deciding vote. Adding to their challenges, two Democratic senators in states projected to go for Trump (Ohio and Montana) are likely to face serious challenges in their reelection efforts.

In Ohio, three-term Democratic Senator Sherrod Brown will face Republican businessman Bernie Moreno. Polls taken before the primary favored
Brown; however, Biden lost the state in 2020, and has trailed in state polling by more than 10 percentage points. 

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BIM and the Future of Real Estate Investment: Mitigating Risk and Improving ROI

Originally published on April 18, 2024, by Anna Liza Montenegro for NAIOP.

Real estate development is an ever evolving and, at times, volatile business. Advanced technology can help to mitigate that volatility and improve processes in the construction and real estate industry. Building information modeling, or BIM, is one of the most powerful tools developers can use to reduce risk and ensure the profitability of their investments. BIM not only allows for better planning and project design, but also facilitates collaboration, communication, efficiency and ongoing asset management.

Building Information Modeling (BIM) in Real Estate

What is BIM?

Building information modeling (BIM) is a type of 3D modeling software that can be used to facilitate collaboration on every aspect of a building project, from design to construction to ongoing maintenance. Unlike traditional 3D computer models, BIM images contain vast amounts of data. Each component of a BIM model contains information about costs, spatial relationships, materials and more. BIM can also simulate design changes and identify potential problems before they become reality. Through the power of cloud-based computing, BIM models can be accessed from virtually anywhere in real time, allowing for better collaboration and information sharing among project stakeholders.

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Sean McMullan is a NAIOP Research Foundation Visionary

Originally published on April 16, 2024, by NAIOP.

Charlotte member Sean McMullan has been selected as a NAIOP Research Foundation Visionary.

The Research Foundation established the Visionaries program in 2017 to connect outstanding rising industry professionals with Research Foundation Governors who are experienced, well-respected industry leaders. The 2024 cohort of Visionaries will be inducted at NAIOP’s National Forums Symposium, May 8-10, in Minneapolis.

Press Release

Meet 2024 Chair Brian Walker

Originally published on March 25, 2024, by Brian Walker for NAIOP.

NAIOP’s Market Share blog sat down with 2024 NAIOP Chair Brian Walker to ask him about his career path, NAIOP experience, and vision for the association this year.

You are the first NAIOP Developing Leader to be named chair. Tell us about that.

I can recall what it felt like to be a young CPA just starting my career. NAIOP and the Pittsburgh chapter were essential in connecting me with the knowledge, research, education and people I needed to launch my career. Our DLs comprise nearly 28% of our total membership, and they’re the future of our industry and association. I’m thrilled to have the opportunity to meet so many of our rising leaders this year and support their growth.

Your career has been largely in the western Pennsylvania market. How has the market changed?

Pittsburgh has transformed from its roots as “the Steel City” into a vibrant hub for healthcare, education, technology, robotics, and financial services.  Western Pennsylvania has been a strong annuity market for investment.  Our real estate has always been built and priced right, with growth slow and steady. The offset is that the market is not growing rapidly, and we see lateral movement from old buildings to new.

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Due Diligence: Mitigating Risk, Maximizing Certainty

Originally published on March 13, 2024, by Kathryn Atkins for NAIOP.

Although this year’s I.CON West conference is taking place in California, much of the due diligence session applies to the rest of the country. In all aspects of due diligence, the goal is the same: How do we get the project for our investors through the approval cycle with the least risk, time and expense?  

In a panel session, four experts discussed slightly different aspects of due diligence practices (political; biological and resource; California Environmental Quality Act, if applicable; and site selection). Still, the take-home consensus was how properly executed due diligence can give the developer leverage with the growing number of naysayers in cities, counties and states across the United States.  

How do commercial real estate leaders work through increasingly difficult objections to building and growth? Say it doesn’t cost money to mitigate the challenges to the project and each due diligence – it can still push the timeline and invite more “bounty hunters” (those seeking to derail the project and exact a gatekeeper fee for stepping aside). It’s not worth it to some folks, while others with a higher risk tolerance might be willing to forgo the due diligence. It’s a risk. 

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President Joe Biden’s Opening Shot in 2025 Tax Fight

Originally published on April 3, 2024, by Aquiles Suarez for NAIOP.

On March 11, President Joe Biden submitted his FY 2025 Proposed Budget to Congress. Like the budget he proposed last year around this time, it contains a number of tax policy changes that, if enacted, would have an outsized negative impact on the commercial real estate industry. But unlike last year’s proposal, this is an election-year proposal intended as the administration’s statement on the economic agenda Biden will pursue if re-elected this November.

That does not mean, however, that this budget proposal should be seen as simply a rhetorical document with little chance in a Republican-controlled House of Representatives. Unlike prior year budget proposals, this one is a setup for an unavoidable tax debate in 2025, when many of the tax provisions enacted during the Trump administration in the Tax Cuts and Jobs Act of 2017 will expire. As a result, many lower and middle-income Americans, not just businesses, will face tax increases if Congress fails to renew a number of provisions. Democrats and Republicans will be forced to negotiate and pass tax legislation because both sides of the political aisle will need it.

If reelected, Biden will of course claim that the voters agree with his economic vision, and he will have enormous negotiating leverage in the tax debate because of the scheduled tax increases that will go into effect.

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The Real Impact of Innovative Building Solutions

Originally published on April 4, 2024, by Bob Boyer for NAIOP.

In the ever-changing world of construction, creative solutions are key to moving projects forward. In an industry where tradition can take precedence over innovation, it’s important for general contractors to regularly challenge the norm; doing so can uncover modern insights that reshape the way we build the communities where we live and work.

EMBRACING NEW TECHNOLOGIES

Technology exists at the root of all innovative breakthroughs, especially in the construction world. Although sometimes daunting to adopt, these new tools are positioned to help increase project efficiencies, save time and uncover cost-saving opportunities. Examples of these impactful technologies include Building Information Modeling (BIM), 3D printing, virtual and augmented reality, artificial intelligence and blockchain technology. As a forward-thinking general contractor looking to enhance existing processes and enter a new generation of productivity, leaders should consider implementing these tools into their daily practices to remain relevant and up to speed.

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Welcome New Members

We are proud to introduce our new association members! The following is a list of individuals who have joined NAIOP Charlotte since January 1, 2024:

  • Chad Andersen, Terracon Consultants, Inc.
  • Annabella Borgese, Greystar Real Estate Partners
  • Allen Brown, Lightstone
  • Dustin Carter, MCI
  • Robert Combs, The Keith Corporation
  • Megan Fitzsimmons, Kimley-Horn
  • Michael Gossenreiter, Cox & Schepp Construction, Inc.
  • Molly Harris, Bennett & Pless
  • Lexi Hazen, CoxSchepp Construction LLC
  • Tom Headlee, Gaylor Electric
  • Sanders Howell, SUMMIT Engineering
  • Matt Hubert, Midwest Industrial Funds
  • Scott Huffman, Weisiger RESCO, LLC
  • Matt Hunter, Marsh Properties
  • Drew Hunter, MetCap Commercial
  • Julie Jackson, Gensler
  • Andrew Jen, UNC Charlotte
  • Jessica Kerr, Gilbane Building Company
  • Alaina Kiewit, St. John Properties
  • Taylor Kiker, Kimley-Horn
  • Jack Little, Dogwood Industrial Properties
  • Stewart Lucas, Holder Construction Company
  • Patrick Monroe, Wells + Associates
  • Anc Newman, Lockton
  • Nathalie Noisette, KoHomes
  • Paul Pennell, Urban Design Partners
  • Dorail Porter, Balfour Beatty
  • Jay Schaeffer, Flournoy Development Group
  • Matt Shepherd, Peach State Roofing
  • Linsley Truesdale, SunCap Property Group
  • Kwame Yeboah, Costello Real Estate & Investments

Charlotte City Council Committees Meet

All four standing committees of the Charlotte City Council met yesterday.  Here's a quick outline of what was covered with links to agendas and presentations.

Transportation, Planning, & Development

Planning Director Alyson Craig provided an update to the committee and referenced three text amendments that are currently working their way through the process:  

  • Conservation Residential Development Standards - This amendment would limit the future utility of Conservation Subdivisions.  If you are developing and building future subdivisions and hoping to maximize your density to provide an attainable or affordable product, you need to pay attention to this one.  A virtual information session has been scheduled for April 9th at 6:00 pm and you are strongly encouraged to participate.  The public hearing for this amendment is scheduled for April 15th with a vote to follow on May 20th.
  • Campus Zoning Districts - This amendment adds uses to several zoning districts and creates a new General Office District.
  • Clean Up Text Amendment #3 - This one addresses a number of the issues raised by REBIC members over the last year related to such items as "contiguous tree save area," the use of EX provisions, street maps/NCDOT conflicts, fencing materials, ADU flexibility, transparency requirements, buffers, and N-2 layout standards.
            Agenda - Planning Presentation, Mobility Presentation

Jobs & Economic Development

            Agenda - Hospitality Presentation

Budget, Governance, & Intergovernmental Relations

            Agenda - CLT Water Presentation

Housing, Safety, & Community

            Agenda - Safety Presentation

2024 Developing Leaders Mentorship Program Booking Open

2024 Developing Leaders Mentorship Program
Booking Now Open

The always popular DL Mentorship Program is back! This program is exclusively for Developing Leader members (ages 35 & under) and provides a special forum for personal and professional growth through one‐on‐one learning sessions with accomplished and experienced professionals in the CRE industry. Take advantage of this opportunity to benefit from the knowledge, guidance, and ideas willingly shared by the program mentors.

The specially designed Mentorship website allows each participating mentee to familiarize themselves with the program mentors and book 1‐hour sessions with them to discuss career topics important to the mentee. Meetings can take place between April through June.

NOTE: 2024 mentors are still being confirmed/added to the website & are in the process of updating their profiles.

Booking is first-come, first-served! The Mentorship Program provides a special forum exclusively for DLs to meet one-on-one with selected industry leaders. We have 20+ mentors for this year’s program, all with extensive CRE industry knowledge. Take advantage of this opportunity to make connections and benefit from their knowledge, guidance, and ideas.

Book Your Session

Congress Passes Spending Bill; Challenges Ahead for House Speaker

Originally published on March 26, 2024, by NAIOP.

Six months into the 2024 fiscal year, Congress passed a final $1.2 trillion funding agreement and President Joe Biden signed it into law. The package was approved by the House (286-134) and Senate (74-24) before going to the White House on Saturday. It will keep the federal government operating until Sept. 30, 2024.

On the eve of the spring Congressional recess, Rep. Ken Buck (R-CO) officially resigned from the House and Rep. Mike Gallagher (R-WI) announced that his resignation will be effective April 19. These developments will leave House Speaker Mike Johnson (R-LA) with a slim 217-213 majority, but that may not be the worst of his problems, as Rep. Marjorie Taylor Greene (R-GA) filed a motion to “vacate the chair” (remove the speaker) just before she left town. If the Democratic minority supports Greene’s motion, Johnson will have to secure unanimous opposition from the rest of the Republican Conference to save his leadership role.

Full Article

From Historic Mill to Vibrant Mixed-use Community

Originally published for the Spring 2024 Issue of NAIOP Development Magazine by Anthony Paletta.

The Judson Mill District honors Greenville, South Carolina’s rich textile manufacturing history as it weaves a new plan for the future.

Greenville, South Carolina, once styled itself the “Textile Capital of the World.” While it might be difficult to quantify that superlative, there’s no question this small city along the Reedy River in the foothills of the Blue Ridge Mountains had ample claim to being one of them.

The city and its surrounding landscape once contained 18 textile mills, only two of which remain operational today. Four of the mills burned down or were demolished, but the rest remain standing, and they have proved to be excellent fabric for reuse. At least nine have been converted to new functions, including residential, office, and mixed-use. The most recent conversion is Judson Mill, an 800,000-square-foot complex that has returned to life as a mixed-use project containing apartments, retail, offices, and more.

A Century of Industrial History

Adaptive reuse is often an undertaking for buildings that have long sat dusty, but this wasn’t the case at Judson Mill, which produced textiles from 1912 until 2015. Renovation of the mill began in 2019 as a project of Belmont Sayre Holdings of Chapel Hill, North Carolina, and Taft Family Ventures of Greenville, North Carolina. The project was designed by the Greenville, South Carolina, studio of McMillan Pazdan Smith Architecture.

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