January 19, 2015
In
Luncheon Summary
Frank Warren, CRE, is a Senior Economist with Kimley-Horn and Associates. With over 25 years of real estate market research, appraisal, and development experience, Frank brings a uniquely comprehensive perspective to consulting assignments. Developer and investor clients rely on his insight to determine demand for commercial and residential projects, and to recommend specific concepts to maximize marketability and value. Frank also works on a wide variety of comprehensive planning and economic development assignments for local governments.
Charlotte’s New Normal? How shifting location preferences and infrastructure investments are driving new development patterns. Frank began his presentation by discussing all the changes that have shaped the City of Charlotte since 1964 including four interstate highways, two airport terminals, three UNC-C campuses, three baseball stadiums, three basketball arenas, the return of rail transit, and the dissolution and rebirth of Center City. Recent job growth in the Charlotte MSA (metropolitan statistical area) was heavily focused in Mecklenburg County, further enhancing it as the employment center of the region. Although, suburban job growth, primarily focused in York and Lancaster counties, has been facilitated through affordable land, state incentives, and business-friendly tax rates.
Demographic shifts are impacting location choices that households and employers are making. Nationally, household formation has dropped dramatically from a peak of two million new households per year to a trough of 500,000 during and following the Recession. The region’s renter household growth has been strongly focused in Mecklenburg County, representing not only organic growth but also pent-up renter demand. Millennials, born between 1980 and 2000, will continue to shape real estate. They generally value experiences over possessions, drive less, are always connected, and are increasingly diverse. They also face challenges like student debt, jobs, and incomes.
These employment and demographic shifts have impacted the real estate market throughout the region. Apartment growth has been heavily concentrated in a few submarkets in Mecklenburg County, primarily urban or with access to retail or transit opportunities. Similarly, office and retail vacancy rates and rent growth trends are strongest in urban locations. Development of new office space will likely emerge along the south corridor light rail line in the next five years. Older product in Midtown, Cotswold, Park Road, and Southpark will start to redevelop.
Key Takeaways:
- Divided Economy . Growth is accelerating in states and metropolitan areas with educated workforces and at least 18-hour urban cores; the balance of the country is trying to remain relevant.
- Mixed-Use Success . Demographic patterns, lifestyle preferences, and a focus on sustainability will continue to make mixed-use developments attractive.
- Suburban Redux . With downtown urban areas thriving, suburbs are the next great opportunity.
