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After years of empty floors, ghostly parking decks and tumbleweed-esque sidewalks, the city of Charlotte’s economic development staff are prepping City Council members to give some kind of public assistance for uptown office tower owners.
Last Monday, economic development director Tracy Dodson invited former Ballantyne real estate executive Ned Curran to talk about how work-from-home has crippled the office market.
Curran ticked off office vacancy rates across the city: Ballantyne — 31%. University — 39%. SouthPark and uptown — 21%.
Those numbers aren’t simply as bad as the 2008 Great Recession: They’re actually much worse.
“We are in unprecedented times,” said Curran, who is the former CEO of the company that built the Ballantyne Corporate Park.
He told council members that in five uptown buildings, half of the floors are empty. And over the next 18 months, 1.7 million additional square-feet leases will expire — many of which will not be renewed, Curran said.
“We know it’s not going to get better,” he said. “They will not renew at the same rate, if they renew at all.”
Curran told council members that “what has to happen here is a lot of these buildings just need to go away.”
By “go away,” he means be demolished. He floated the idea of whether the city would want to “participate” financially in tearing down old skyscrapers.
But do hard times in the commercial real estate industry require public assistance? Or will the sector rebound just as it did after the Great Recession, albeit more slowly?
Inside Politics has questions.
How can you still move forward with transit?
Charlotte is still pushing a $13.5 billion transit plan. Most of the money would be spent on two rail lines bringing workers to uptown.
Does it make sense to spend billions on trains to an area with empty office towers that may need to be imploded?
After all, Charlotte Area Transit System ridership is still only 62% of pre-pandemic levels. Dodson and Curran are suggesting more workers won’t return anytime soon.
Inside Politics asked Curran about that.
He said that Charlotte is still one of the fastest-growing cities in the nation. Work-from-home has upended uptown, but he said there’s still a need for transit and uptown is “still our largest office market. That’s not going to change.”
So if uptown is resilient enough to justify billions of dollars in transit investment, perhaps it’s resilient enough to not need city assistance in filling empty office towers?
What about other parts of the city?
Uptown is Charlotte’s heart — the place where people come together, whether it’s for the Fourth of July or Carolina Panthers games. Curran’s also right that its office market is by far the city’s biggest, many times larger than other submarkets like University City. It makes sense that uptown gets some special attention.
But Dodson and Curran’s presentation showed other parts of Charlotte are faring much worse when it comes to occupancy. And that raises more questions.
The vacancy rate for the University area is nearly twice that of uptown. Will there be special tax breaks for companies that relocate there? Why isn’t the city focusing on fixing that problem?
Would the city subsidize a company that moves from one part of Charlotte to uptown? Would that really accomplish anything?
And if the city is considering propping up failing commercial properties, the owner of Northlake Mall might like a word.
Dodson explained the focus on uptown by saying the city needed to “protect its investments” such as Bank of America Stadium and Spectrum Center, which have received public money. City Council members Dante Anderson and Majorie Molina seemed swayed by this argument.
But here's the implicit flip side of that argument: Since we haven’t invested as much in University City, there’s no pressing need to help it out today (set aside the Blue Line extension when you think about that one).
Where was Center City Partners?
The uptown and South End booster organization receives nearly $7 million in public funding from the city, through a special property tax. Its mission is to promote the center city.
But its executives did not speak during last Monday’s presentation.
Perhaps that’s because it’s been too upbeat, whistling past the uptown graveyard.
In its own reports and in interviews, Center City Partners has said uptown is a “vibrant” and “dynamic” place, with decades-long growth that has created a formidable “dynasty.”
Which assessment is true? Curran’s downtown dystopia or Center City Partners’ “nothing to see here?” And should the public expect more transparency from Center City Partners about the state of uptown?
Center City Partners didn’t respond to an email query before publication. (Editor's note: After the Inside Politics newsletter was sent to subscribers on Jan. 12, Charlotte Center City Partners sent a written response. This post has been updated to include the full statement below.)
Focus on public safety first?
In addition to empty office towers, uptown has been plagued by a sense of lawlessness.
Fourth Ward residents have complained about people drinking, peeing and defecating in public. WSOC-TV has reported that 10 people were shot in and around Romare Bearden Park in 2023. High-profile events like the Fourth of July fireworks and New Year’s Eve have ended up with chaos, shootings and mass arrests of unsupervised juveniles, some with guns.
A City Council committee last week voted in favor of reinstating criminal penalties for “quality of life” infractions like public defecation. City Council member Tariq Bokhari is trying to create a task force to study the problem of uptown violence.
Public safety is a core municipal function.
Is the best way to “protect our investments” in uptown through more police, rather than money to fill 10 floors of the Charlotte Plaza tower?
Isn’t the private sector already doing this?
The Charlotte Observer wrote in November 2022 about property owners spending a combined $42 million to renovate old uptown towers.
If real estate moguls are already acting, why do taxpayers need to foot the bill?
What about turning offices into housing?
During his presentation, Curran dismissed the idea as impractical. He said it would be too expensive to retrofit office towers, adding new plumbing, HVAC systems and walls.
But creating new housing will likely be a popular idea among elected officials.
If there is a proposal to spend millions of dollars on an office conversion, council members need to ask whether it's the most cost-effective way to build new housing.
Are things really that bad?
Consider this quote from Mecklenburg County’s economic development director Roger Johnson in the Charlotte Business Journal:
"Historically, if you look at cities like Detroit and San Francisco, their issues with office (vacancies) resulted in higher crime rates, disinvestment, greater homelessness and no particular resolution for solving things. Though some of those cities have recovered, if we do nothing, we could find ourselves in a similar spiral."
Detroit? San Francisco?
Over the last half century, Detroit has lost nearly two-thirds of its population due to the collapse of the American auto industry. In the same period, Charlotte’s population has grown by 360%.
Perhaps Detroit is not a good comparison city.
San Francisco, like Charlotte, is an economically prosperous city. It has been impacted by work-from-home more than other large U.S. cities, and it’s now wrestling with a massive crime and homelessness problem.
But is the biggest reason for the city’s public safety problem empty office towers? Or is it a lack of affordable housing? Or is it a historically lax attitude the city has had towards quality of life issues? Or is it a combination of many things?
Charlotte Center City Partners statement
Downtowns throughout the world have been stress-tested with pandemic lockdowns, protests, altered workplace rhythms, and higher funding costs. These disruptions are shaping and informing the next chapter for Charlotte Center City. These challenges are catalyzing needed adaptations from our Central Business District (CBD) into a more balanced and complete Central Activity District.
This reality has been shaping our strategy and tactics since 2020. Uptown Charlotte faces threats to its vibrancy due to these significant changes in office use fundamentals. We have a community scale challenge that will require a community scale response.
We are working with public and private partners on specific initiatives related to public safety, restored and enhanced public infrastructure, activations/programming with compelling experiences, enhancing perception, leading community engagement and driving economic vitality.
My staff and I continue to provide research and subject matter expertise to City Council, Mayor Lyles and City staff on issues relating to vibrancy, economic development and public safety in Uptown and South End. We are connecting all of our work to a core objective: revitalize our CBD into a CAD, and elevate Uptown’s appeal to business, residents and guests.
This is a rare and defining moment in our city’s history. While we understand the scale of the issues Uptown Charlotte faces, it is clear that we are well positioned compared to our peers and have opportunities with enhanced public and private partnerships as well as excellent civic, business, and philanthropic leadership, to avert crisis and be well positioned as we emerge from this tough cycle and prepare for the next.
Michael J. Smith
CEO
Charlotte Center City Partners
