We held its Annual Meeting at the Myers Park Country Club, where we elected the 2025 Board of Directors and awarded the 2024 Award of Excellence to Tim Sittema, the Managing Partner at Crosland Southeast.

Attendees delved into Charlotte's commercial real estate future, exploring pivotal public policy shifts, legislative changes, and evolving business practices. The panel of industry leaders examined critical topics including ESG initiatives, Basel III, environmental regulations, and local public policy, offering insights to help stakeholders stay ahead of emerging trends in the region.

Event Photos

Meeting Resource Information

Moderators

Sagar Rathie Crescent Communities			Tim Sittema Crosland Southeast

 

Panelists

Bobbi Jo Lazarus Elliott Davis		Peet Poillon NFP		Mary Katherine Stukes Moore & Van Allen

Problems with the Charlotte Area Transit System became obvious to many observers about two years ago when one of its light-rail trains experienced a derailment. It was later determined by the North Carolina Department of Transportation (NCDOT) to be the result of deferred maintenance.  Shortly after, Brent Cagle a seasoned expert on transportation matters, was brought in to lead the department on an interim basis.  

At that time, the City’s Transportation, Planning, and Development Committee also received a referral from the Council to engage in greater scrutiny of CATS and receive regular progress reports from Cagle. To establish even further transparency, the Federal Transit Authority (FTA) was asked to review to obtain additional guidance regarding corrective measures.  The draft report (see page 267 of the meeting packet) outlining its recommendations was provided during the most recent November 20th meeting of the Metropolitan Transit Commission (MTC) which is a body made up of local government representatives who oversee the System.  The findings included the following:

1. CATS deferred the required 600K overhaul of its rail fleet trucks which resulted in a derailment and in-service failure.
2. CATS rail fleet maintenance plan does not include the detailed requirements for existing equipment at certain defined intervals.
3. CATS has not met its miles between road calls goal of > 15,000 miles for the last three years.
4. Site visit observations found that CATS staff could not confirm the status and plans for the buses located in Lanes 15-17 at the South Tryon bus maintenance facility.
5. CATS could not provide FTA with a full assessment of all its system facilities and equipment.
6. Currently, each CATS department has a separate asset list with no central coordination.  
7. CATS does not report overall maintenance compliance to either senior management or the MTC.
8. CATS Safety Department conducts audits/reviews of the maintenance of CATS assets.  However, these efforts are not fully documented.

Following the update, Chairman Driggs expressed his feeling that the committee’s work was complete on the referral and that monthly updates from Cagle would no longer be necessary.  Although no formal vote was taken, most members of the committee appeared to share a similar view.

Charlotte’s Planning Director, Alyson Craig, provided a lengthy presentation yesterday to members of the Transportation, Planning, and Development Committee on proposed changes to the UDO.  She began her remarks with an update on “Clean Up Text Amendment #4”.  Some highlights included the following:

• Adds, deletes and modifies several general definitions.
• For N1 districts, clarifies where setbacks are measured from
• For residential development on corner lots, clarifies building orientation
• Updates procedural and applicability requirements for Neighborhood Character Overlay (NCO) and Residential Infill Overlay (RIO) districts
• Adjusts allowable building lengths for schools and places of worship
• Clarifies connection requirements for attached housing
• Allows duplexes, triplexes, and quads in additional zoning districts
• Another text amendment related to housing supply is likely to be filed after the first of the year.  Some of Craig’s reasons for pursuing such a measure appear sound.  Here were some of her thoughts:
• We are experiencing a housing crisis in Charlotte with demand outpacing supply.
• Gentle density can provide supply that is aligned to the Charlotte Future 2040 Plan, while providing for-sale housing opportunities.
• Initial Council referral dealt primarily with larger, greenfield development projects.
• A need exists moving us to focus on infill and small-scale development options (missing middle) to increase homeownership opportunities and inventory.

Some key elements to be included are:

• Appropriately scaled density: Explore ways to encourage stacked quads (2 over 2)
• Allow housing in more places: Develop more flexibility for housing through partnerships and conversions
• Affordable small-scale solutions: Revise ADU standards
• Make it easier to develop preferred housing types: Create preapproved pattern books for missing middle housing types
• Increase affordable housing tools and explore options to fast-track affordable projects

Time did not allow for the final presentation on the Community Area Planning Process which will be discussed in further detail at the next meeting.

Originally published on December 3, 2024, by Maria Gatea for NAIOP.

U.S. cities have experienced massive expansion across all real estate sectors over the past 44 years, according to recent StorageCafe research that looked at residential and commercial construction activity between 1980 and 2023.

Along with residential construction, industrial, office, retail and self-storage spaces have grown significantly, although the scale and pace of development differ among regions and asset types.

Industrial real estate boom, driven by e-commerce and manufacturing revival

Almost 29.3 billion square feet of industrial space have been delivered across the United States since 1980, representing about half of the country’s overall inventory.

Originally published on November 25, 2024 by Kathryn Hamilton, CAE for NAIOP.

Supply chain dynamics, increased demand for “just-in-case” products, and a shift in where goods are assembled are three key drivers in a movement toward growing the manufacturing sector closer to home. NAIOP hosted an executive summit this month in Scottsdale, Arizona, to explore challenges and opportunities, and to hear from the developers, end users and experts who are influencing the trend and shaping the future.

Here are takeaways from the event: 

Globalization Isn’t Affecting Every Country the Same

In the last 40 years, only 25 countries in the world saw trade double or more between 1980 and today; in contrast, 89 countries saw trade stay the same or decrease. In short: globalization is not a juggernaut that affects everyone equally. In North America, about 40% of trade happens between U.S., Mexico and Canada, down from a one-time high of 50% in the 1990s.

Originally published on November 18, 2024, by Alexandra Both for NAIOP.

What is the best place to live in the U.S.? The answer varies, but livability often means striking the right balance between cost of living, city amenities, and quality of life. RentCafe.com measured livability in 139 metro areas using 17 metrics divided into three categories: socioeconomics, quality of life, and location and community.

 

Read More

Originally published on November 14, 2024, by Kathryn Hamilton, CAE for NAIOP.

Shannon O’Neil grew up in a small town in Ohio, not anywhere near the border. She was enthralled by stories shared by her grandmother and a great-aunt who traveled the world, which inspired O’Neil’s desire to work internationally. Today, she is the vice president, deputy director of studies, and Nelson and David Rockefeller senior fellow for Latin America studies at the Council on Foreign Relations. She was the keynote speaker at NAIOP’s Nearshoring/Onshoring Summit held in Scottsdale, Arizona this week.

O’Neil began exploring the commercial ties that cross borders more than a decade ago, observing that supply chains weren’t being talked about enough given all that they can influence. Although known for having commercial and profit margin effects, supply chains weren’t yet assumed to have big geopolitical effects.

All that changed in 2020-2021 when supply chains worldwide were suddenly pinched by a global pandemic that impacted everything.

On December 4, 2024, NAIOP Charlotte hosted the Annual Meeting: Navigating the Horizon in 2025. The panel peeked into the future of Charlotte's commercial real estate landscape as we explored the public policy shifts, legislative changes, and evolving business practices poised to shape the industry. Below are resources, to dive deeper into the discussions.

• 2024 Midyear NFP P&C Client Claims Journal and Trend Report: https://www.nfp.com/media/l0spiupg/h1-trndclms-24.pdf 
• MVA article on PFAS designation: https://www.reuters.com/legal/legalindustry/implications-pfas-cercla-liability-commercial-real-estate-industry-2024-06-17/
• MVA article on wetlands: https://today.westlaw.com/Document/I0eb92c79379711ee8921fbef1a541940/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=cblt1.0&firstPage=true
• Information page re: Charlotte Water interbasin transfer request: https://www.charlottenc.gov/water/DevelopmentBusiness/Charlotte-Water-IBT
• Brownfields tax incentive information: https://www.deq.nc.gov/about/divisions/waste-management/brownfields-redevelopment-section/program-information/tax-incentives
• EPA’s PFAS Enforcement Discretion and Settlement Policy Under CERCLA: https://www.epa.gov/enforcement/pfas-enforcement-discretion-and-settlement-policy-under-cercla
• Tax Policy Post Election - Preparing for the Trump Administration's Tax Policy Plans: A Sector-by-Sector Guide
• Basel III Endgame  - Federal Reserve Dials Back Basel III Endgame Regulation – Market Share
• Adaptive Reuse Introduced Legislation - Bipartisan Property Conversion Incentive Legislation Introduced – Market Share

ESG Reporting Requirements

• SEC – Insights | Elliott Davis | Aligning with SEC Climate Regulations: A Strategic Approach
• California’s Impact on North Carolina Businesses - Insights | Elliott Davis | What SB 253 and SB 261 Mean for Your Company's Sustainability Goals

Originally published on November 11, 2024, by Doug West for NAIOP.

Driven by changes in the business environment and the demands of modern corporate tenants, prebuilt office spaces have transformed from underused “leftover” spaces into an integral part of commercial leasing strategies. These modern, ready-to-move-in spaces are designed to meet the evolving expectations of both building owners and corporate tenants, offering flexibility, aesthetic appeal and functional elements that reflect current office trends.

Benefits of Creating Prebuilt Office Spaces:

1. Move-in Ready Convenience: Prebuilt offices allow tenants to bypass lengthy design and construction processes, providing immediate access to functional, ready-to-use spaces.
2. Flexibility for Tenants: These spaces can serve as short-term “swing spaces” for existing tenants during renovations or expansions elsewhere in the building, or as flexible offices for new tenants with short-term needs.
3. Market Appeal: By offering design enhancements (e.g., color schemes, additional materials and finishes), prebuilt spaces can be customized to meet the needs of a wide range of tenants with varied preferences.
4. Cost and Time Efficiency: Prebuilt offices eliminate much of the upfront design work for incoming tenants, helping to control project costs and speed up occupancy, benefitting both landlords and business owners.
5. Consistent Leasing Strategy: Once established, a prebuilt office program can be easily replicated or modified, offering building owners a consistent leasing product that adapts to market demands.
6. Scale: Creating a range of suite sizes, from as many as five or as few as one tenant space per floor, provides the leasing team with more options to offer potential tenants. Multiple layouts can be combined if needed, as long as the layout was created for flexibility.

Read More

Originally published on October 30, 2024 by Joel Brenner for NAIOP.

It took more than 3,500 workers to build the Empire State Building in the early 1930s. Nearly 100 years later, commercial construction projects still require the work of hundreds to thousands of people to complete. Depending on their size, these projects can take anywhere from six months to 10 years to deliver. Managing that volume of workers across an extended period of time is a considerable undertaking. Success doesn’t just hinge on technical expertise; each and every member of the project team must be engaged, working together toward one common goal that unites them.

Building a Team Family

Whether it’s the CEO or one of their executives from the owner’s side, the program or construction manager, project leadership has to set the tone for teamwork from the beginning. Key to this is building the entire team as an extension of the client’s organization, rather than as outside consultants or service providers. Bringing them into the client’s vision, educating them on the brand, sharing communication and accounting platforms all help to create a more seamless workflow and culture of whole-team integration. When people feel like they’re part of something bigger, they’re not just checking boxes; they’re invested in the outcome – and they know that others are, too. This sense of ownership is critical to long-term project success.

The process requires a level of humility, and not every person or company you interview is going to be able to take that step. Even if they are the most technically qualified for the job, if they can’t rally around the one-organization mentality, they’re not going to do the best work for the project. You need ambassadors, not order-takers.

Read More

Originally published on November 5, 2024 by Shawn Moura, Ph.D. for NAIOP.

NAIOP Research Foundation Governors, Visionaries and Distinguished Fellows met in Las Vegas in October to discuss development challenges associated with water and power scarcity and possible research topics for future exploration. A panel, moderated by Marianna Hunnicutt, practice builder at Kimley-Horn, discussed how the development community in Las Vegas is working with utilities and municipal leaders to meet sustainability objectives and ensure access to water and power for future projects.

Michael Bernardo, enterprise conservation division manager at Southern Nevada Water Authority (SNWA), provided an overview of how Southern Nevada is planning for future development while facing a limited supply of water from the Colorado River, which supplies 90% of the community’s water. Southern Nevada receives 1.8% of the river’s flow annually as part of an agreement with neighboring states. SNWA augments this supply by treating any water that enters an indoor drain and returning it to the river. Every gallon returned to the river is one that SNWA can pump back out from Lake Meade. Water conservation efforts are focused on limiting uses that do not return water to the sanitary sewer. Evaporative cooling in the form of cooling towers and swamp coolers currently represents the second largest use of water after landscaping, which uses 50-60% of the available water supply.

Steve Neiger, principal/managing broker, CAST, and Rod Martin, senior vice president, Majestic Realty, explained how NAIOP Southern Nevada worked with SNWA to come up with a workable plan to limit evaporative cooling. The water authority explained to the development community that if no limits were placed on evaporative cooling, all new construction would have to come to a halt within several years. NAIOP Southern Nevada made it clear that a complete ban on all evaporative coolers would impose large costs on existing buildings and would force many to close if they could not be retrofitted with new roofs or expanded power capacity to support new HVAC systems. As a compromise, since the end of last year, evaporative cooling systems are now prohibited from being installed on new projects or added to existing buildings, but buildings with existing evaporative cooling systems can keep them.

Read More

Originally published on October 11, 2024 by Ginger Meurer for NAIOP.

The supply imbalance in the office market has been stark the last few years, but panelists at NAIOP’s CRE.Converge conference this week identified bright spots and emphasized the possibilities for creative investors.

Rich Gottlieb, president and COO, Keystone Development & Investment, moderated the panel that featured John Weidner, AIA, NCARB, LEED AP, principal, Global Media Practice Area Leader, Gensler; Adam Showalter, managing director at Stream Realty Partners; and Connor Greissing, founder and managing principal, Brick Row.

Showalter said he hoped to “talk about some green shoots in office and not just a bunch of crabgrass.”

Special thanks to the Developing Leaders who participated in a community service project earlier this month. Partnering with The Y to support Loaves & Fishes, volunteers helped distribute food to local communities in need. They packed large quantities of donated food into individual boxes and handed them out to cars in a drive-through line. It was a fantastic experience!

View Photos

Following the impacts of Hurricane Helene on the Southeastern United States, the Internal Revenue Service (IRS) has provided targeted tax relief for certain affected individuals and businesses in the region. The relief automatically extends various tax deadlines to May 1, 2025, for taxpayers who live or operate a business in impacted areas. 

• Learn more from Elliott Davis HERE
• Read the IRS announcement HERE.

Originally published on September 26, 2024, by Morris Davis, Ph.D. for NAIOP.

Citing progress on inflation and the balance of risks, last week the Federal Reserve announced rate cuts of 0.5%, to 4.75% to 5%. Can we expect additional cuts from the Federal Reserve and when, and how would these cuts impact commercial real estate markets?

How deep are the cuts? 

According to data from the Fed, on Sept. 20, Treasuries were trading as follows: 

• 1-month Treasury           4.87%
• 3-month Treasury           4.75%
• 6-month Treasury           4.43%
• 1-year Treasury                3.92%

After some math, we can use these yields to compute market participants’ beliefs on future Fed actions as follows:  25bp rate cut on Nov. 7, 50bp rate cut on Dec 18. and 75bp rate cut on March 19. In sum, markets are expecting the Fed to cut rates by 1.5% over the next 6 months, and if that occurs, the Fed funds rate will fall from 4.75% to 3.25%.

Read More

Originally published on October 24, 2024 by Ginger Meurer for NAIOP.

As developers reduce every possible expense in a tight market, what are overlooked ways to improve their competitive position? Tax attorney Ben Blair, a partner at Faegre Drinker Biddle & Reath LLP, said that while you may not be able to move the building to a better location or put an intensive capital investment into improvements, you can work to lower your tax bill.

During a CRE.Converge conference presentation on property tax mitigation, Blair shared tips for making your case for property tax mitigation.

Any assessment that is based on pre-pandemic data is ripe for challenge. Assessment data is inherently backward-looking while values for income-producing properties are (and should be) forward-looking. Many municipalities are assigning higher values for properties today than pre-pandemic, which Blair said is not reflective of the economic reality.

Originally published on October 1, 2024, by the IRS.

The Internal Revenue Service announced today tax relief for individuals and businesses in the entire state of North Carolina that were affected by Hurricane Helene which began on Sept. 25, 2024. These taxpayers now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments.

Following the disaster declaration issued by the Federal Emergency Management Agency (FEMA), individuals and households that reside or have a business in the entire state qualify for tax relief.

Affected taxpayers with returns and payments with due dates postponed until Feb. 3, 2025, due to Tropical Storm Debby in North Carolina (NC-2024-07) will also now have until May 1, 2025, to file and/or pay.

What’s happening here? Make sure you read to the end:

In an earlier edition of Two For Tuesday, we reported that the Charlotte Regional Transportation Planning Organization (CRTPO) Board had requested that the North Carolina Department of Transportation (NCDOT) prepare a comparative analysis to compare a traditional toll alongside and a Public Private Partnership (P3) delivery for additional lanes for the eleven-mile segment of I-77 running through the City of Charlotte and south to the border of South Carolina. Those results were presented by representatives of NCDOT at the August 21, 2024, Board Meeting (Agenda, Minutes - item 14, pages 5-8).   

During a recent Charlotte City Council business meeting, an update was provided by NCDOT containing highlights of its NCDOT: I-77 South Express Lanes Supplemental Report and the next steps were discussed.

Some of the details of the project along with recommendations include:

This fall, several communities within the region have referred bond measures to the voters for their consideration. Today we are highlighting two of those efforts.

***

The City of Charlotte is asking residents to approve three measures related to housing, neighborhoods, and transportation.

Housing - The housing bond will invest $100 million into new affordable housing for low and moderate-income residents. The breakdown looks like this: