Economists continue to sound the alarm about a possible recession amid President Trump’s trade war. So what would a recession mean for the Charlotte region? The Charlotte Ledger Business Newsletter spoke about that with one of the area's best-known economists. The Ledger’s Tony Mecia joins WFAE's Marshall Terry for more on that and other stories in our segment BizWorthy.
Marshall Terry: You talked with Mark Vitner, chief economist at Piedmont Crescent Capital. And he said there are reasons for concern, but also some cautious optimism. Let’s start with the bad. What did he say are the concerns?
Tony Mecia: Mark Vitner told me that it's sort of a mixed bag. That, on the one hand, there are some concerns about the economy. Charlotte is not immune from things going on in in the larger economy. But that if our country were to go into a recession, we would see in Charlotte some of the things we would see nationwide, which is people would start pulling back on their spending. Businesses would stop spending. They would stop hiring It would be sort of a cascading effect of a lot of those things happening all.
Terry: And the cautious optimism?
Mecia: Well, the cautious optimism sort of comes from the fact that Charlotte is still a growing city. People still want to move here. They still want to live here and it's sort of one of these — where would you rather be? You know, that if the nation is going to go into a recession or the economy is going to slow down, Charlotte is a pretty good place. Just generally, Charlotte is doing pretty well compared to most other big cities.
Terry: On now to the state of Charlotte's office market. Three leading real estate firms recently released reports looking at it, and you say they were mixed. How?
Mecia: So, yes, I looked at some recent reports from real estate firms JLL, Cushman and Wakefield, and Avison Young. The big negatives are things you and I have talked about over the last few years. Number one, we're not really building any more office towers. There's just one major project, the Commonwealth Project in Plaza Midwood. That's really the only big one in the region. So we're not going to see new offices coming online in the next couple of years.
And at the same time, the vacancy rates of existing offices is around 22% or 25%. A lot of that is concentrated in older office buildings. We have a very big supply of empty office buildings. The good news is again sort of — where else would you rather be? Charlotte is doing better than peer cities in terms of those vacancies, and there's a lot of optimism among office brokers that more companies are going to be moving here. They're confident they're going to be more leases signed soon.
One related piece of that, Marshall, is that I also looked at the tax value of uptown properties. Uptown has about a third of the office space in the entire Charlotte region, so this is a problem that has an outsize effect on uptown. But you know the value of total taxable property in uptown is still increasing because even though some of these offices are empty and they're declining in value, there are other properties that are being redeveloped and adding values. So far not seeing a big hit in terms of tax revenue or the overall tax base uptown.
Terry: And I guess a recession would have an effect on that, though.
Mecia: Well, yes. You know, when there's a recession, companies pull back on spending. They get a little more cautious. Maybe they hold off on moving into nice new office space. Obviously, there's some hot spots around town. You know, you think of South End, some of the other neighborhoods close to uptown. They might be a little more resistant than others, but overall I think a recession wouldn't be good for that sector of the economy.
Terry: Finally, Charlotte's largest carrier, American Airlines, says it will begin offering free Wi-Fi starting next January. I thought airlines were adding fees for everything, not offering things for free. What's behind this move?
Mecia: You're right, there has been this tradition of sort of charging for everything. This counters that a little bit. I think it's a recognition that competitively, they see other airlines that are doing this, that are making it free. And, it's maybe a way to kind of differentiate itself against other competitors. American says that when this comes online in January of 2026, about 90% of their planes will have free Wi-Fi. It's just sort of the reality of where we are. People want to be connected and not be blocked out of their phone in the air.
Support for BizWorthy comes from the law office of Robertson and Associates.
