Charlotte's center city settles into a new normal: Hybrid work, hipper offices, trying to be 'commute-worthy'
Next month marks three years since the start of the pandemic in Charlotte, and a new report shows how uptown developers, employers and workers are settling into the not-so-new-anymore normal.
The number of daily trips to uptown and South End by workers is back up to about 70% of where it was in 2019. That’s according to Charlotte Center City Partners, which published its annual state of the center city report Wednesday. Although offices aren’t empty like they were early in the pandemic, the group estimates that roughly half of workers in center city now have a hybrid work arrangement, in the office only part of the time. That's down from a 60%-40% estimated split before the pandemic between full-time in-office work and work with some flexibility, the economic development group said.
And that’s probably not going to change, said Center City Partners CEO Michael Smith.
"I'm convinced by the data and by the people that I speak with that the importance of the office is not going to return to what it was. It will be something new and more innovative that responds to the shared experience we've had," said Smith.
As companies get used to life in a hybrid world, there’s a game of musical office towers playing out uptown. Duke Energy is moving to its new tower, while Wells Fargo is moving into Duke’s old tower at 550 South Tryon Street and leaving One Wells Fargo, its so-called "jukebox building." Another former Duke office building, 526 South Church Street, was sold and is being converted to apartments and shops.
Companies are investing in renovations for older buildings. According to a memo sent to employees, Wells Fargo will remodel 21 floors of 550 South Tryon and 14 floors of Three Wells Fargo Center, adding amenities and new, collaboration-focused workspaces.
Here are some highlights from the report. You can read the whole report online at Charlotte Center City Partners.
Near-record office development
There are still lots of questions about what the role of the office will be going forward, and exactly how often office workers will actually come in. Despite that uncertainty, the 2020s are shaping up to be the second-busiest decade ever for office construction in uptown and South End. There is about 7.2 million square feet of new office space underway, including 1.9 million square feet under construction and 5.3 million more square feet that have been announced.
For comparison, there were 7.7 million square feet of office space built in the 2010s, 5.3 million square feet in the 2000s and 4.5 million square feet in the 1990s. Smith said that will help the center city attract more businesses.
"We're thrilled to have the amount of new product being designed, developed and delivered to our market. It's inventory and it is the first step towards being able to attract new employment and new investment to our community by major employers," said Smith. He acknowledged the uncertainty around offices, but said many new of the new towers are already leased — for example, by companies like Duke, Truist and Ally.
"We're at a softer point right now. It reminds me a lot of where we were going into the Great Recession, where, you know, we delivered, you know, 4 million square feet of new office, right into the teeth of the market," said Smith. "And a lot of that was not occupied. What's different about this one is a lot of the new stuff that's being delivered is highly occupied."
But he said companies will have to use their office space differently going forward.
"They're trying to use space in an even more creative way to make it attractive and, you know, commute-worthy," said Smith.
There are also differences in how often people are returning to work in uptown and South End, compared with the start of the pandemic. South End is actually seeing 107% of its pre-pandemic work trips — because of how many new offices have opened there — while uptown is at only 66%.
One major shift in uptown is the shift away from being a purely 9-to-5, work-centric place. Although the 100,000 or more workers still outnumber residents, some 21,400 people now live uptown. That's up from an estimated 18,300 residents in 2021.
South End's population is estimated at 12,600. Between uptown and South End, an estimated 7,700 more apartments are under construction or planned.
There are 6,500 hotel rooms in center city, and another 670 rooms are under construction in uptown across a new Moxy Hotel, Homewood Suites and Intercontinental Hotel. A further 760 new rooms have been announced uptown, and 580 more are coming to South End.
One reason for the hotel growth: Smith pointed to the growing number of events at Bank of America Stadium. There were 39 events at the stadium in 2022, three times the number in 2017.
"The recovery of the center city has been led by hospitality and tourism," said Smith.
One of the biggest knocks on uptown — at least since large-scale department stores decamped to the suburbs decades ago — has long been the lack of retail options besides food and drink. Smith said he's hopeful that's changing, as there are 608,000 square feet of new retail space coming to uptown and South End. Of that space, 62,000 square feet are under construction and another 546,000 square feet have been announced.
Combined with the 863,000 square feet of retail space built in uptown from 2010 to 2019, that means uptown and South End are adding almost one SouthPark mall's worth of retail space (though it's obviously spread out over a larger area). Smith said that new inventory will attract stores.
"One of our struggles for having a better retail environment has been the lack of inventory. And that's less of a case today," said Smith. "We have a lot more we can do with the retail space that we have."
But, he said, the retail sector's growth and recovery is still tied to office habits — which, again, remain a question mark.
"It's tied heavily to return to office and people returning to those habits of entertaining and of being in the office four or five days a week," said Smith. "And we're still recovering there."
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