Charlotte's center city shows growing promise, according to latest annual report
It’s become an annual tradition for movers and shakers in Charlotte: gathering to hear the annual State of the Center City Report. Charlotte Center City Partners released its latest report about uptown and South End on Wednesday night.
Here to talk more about it is Tony Mecia of the Charlotte Ledger Business Newsletter for our segment BizWorthy.
Marshall Terry: First, summarize it in a few words: What is the state of Charlotte’s center city?
Tony Mecia: Marshall, I would say that it's mixed. There are a lot of positive things going on in the center city. There is some momentum in many regards, but there are also some challenges that have emerged in the last few years that are still lingering — the sorts of things that we're seeing in downtowns across the United States.
Terry: So, there’s been a lot of attention on vacant office buildings. Nearly half of uptown employees are working hybrid schedules, the latest data shows. What did we learn in this new report about the office market, and what it might take to revive it uptown?
Mecia: Yeah, this is a report that looks at a lot of different measures of the health of uptown. One of the figures that struck me is that it said that 78% of workers are back on a regular basis in uptown and and South end, that number is increasing, so that's positive. They say 130,000 people work in uptown and South End, so it’s a pretty big part of our employment base. You know, there are empty office towers uptown, certainly, you and I have talked a lot about that, but there are empty office buildings, really, throughout Charlotte.
The Charlotte Ledger looked at that this week. There was a new report from CBRE that said that it's not just uptown. Uptown is actually more full than other places. You look at Ballantyne, NoDa, some of the other markets — So it's not just an uptown problem, but certainly there is a lot of office space concentrated in uptown.
Terry: Uptown has had a rough go of it with COVID and hybrid work and also worries about public safety. So, are uptown leaders and boosters like Center City Partners’ Michael Smith worried about the next few years?
Mecia: I talked with Michael Smith this week. They are very upbeat about the future of uptown. They look at the development pipeline, which is development projects that are either under construction or that have been announced and haven't broken ground yet. They say there's $4.2 billion of development activity that's just waiting to burst forward. I will say, talking to people in the real estate industry, there is some skepticism that some of these projects that have been announced are going to get off the ground anytime soon, really because of higher interest rates and several other factors.
But talking to Charlotte center city partners, they say it's not just a place to work, it's a place to live, that there's a lot going on in Uptown from the Pearl Medical District, that Atrium Health is developing outside of 277 to a planned innovation corridor on North Tryon Street to, of course, Spectrum Center, Bank of America Stadium. They point to the increase in the number of events over the last few years — concerts, sporting events, they still turn out a lot of people who come to Uptown, stay in hotels, go to bars, there’s conventions. So they're seeing a lot of positives in Uptown and they like how Charlotte is positioned relative to its peer cities.
Terry: Now what are we seeing with office construction around other parts of the city, and why doesn’t it “pencil,” to use real estate developer jargon there?
Mecia: Yeah, a lot of these deals don't “pencil,” or they don't make financial sense the way that they used to, because of these higher interest rates that we've seen in the last couple of years. New office construction has almost ground to a halt in the Charlotte region. You certainly have a couple of big projects that are underway that are supposed to finish this year. There's 110 East in South End, there's the 4th Tower of Legacy Union uptown, medical office buildings in Dilworth Midtown area. Besides those, we're not really seeing a lot of new office construction because there's still these questions about hybrid work and the persistence of that.
You see companies wanting to shrink the amount of real estate that they're using and as their leases come up, they're taking less real estate. So, it's making it harder for those deals to make sense at a time when construction is more expensive and the financing of that is more expensive.
Terry: Finally, a preservation effort is underway in Charlotte. But this one is to not save an old house or building, right?
Mecia: It's to save an animatronic band. Chuck E. Cheese has a location on Pineville-Matthews Road. WSOC reported there's a movement afoot in Charlotte to raise awareness that Chuck E. Cheeses nationwide are removing their bands. The people behind it say, look, this has been there since the 1980s. You know, some people might say that it's a little bit cringe, but they say they want to raise awareness about it and hope that Chuck E. Cheese will change its mind. But it seems like that's an uphill battle, Marshall.
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