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Market Update Rossi

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Market Update Rossi

  1. 1. Market Update: Charlotte Edition May 3, 2017
  2. 2. Are we growing?
  3. 3. Moving to North Carolina? • Interstate moves increasing, but haven’t eclipsed pre-Recession levels • NC has more than one decade of in-bound moves outpacing outbound • Historically, Washington DC, North Carolina, and Texas have had the highest shares of inbound moves
  4. 4. Charlotte MSA Growth • Approximately 57,300 new households; 6.7% increase • 55% growth in Mecklenburg; not just job center for region • York Co. surpassed Union Co. for second-fastest growth • Some suburban counties struggling for jobs and commercial tax base to pay for household growth and schools
  5. 5. Net Migration • More than 100 people move to Charlotte MSA every day • Five-year average of ~16,000 net new people per year into Mecklenburg • About 40% move to area for new job, a relocation or to seek employment • High share young professionals seeking work out of college 74,706 moving in 58,818 moving out
  6. 6. What jobs are we attracting?
  7. 7. North Carolina Job Growth
  8. 8. Charlotte MSA Job Growth 33,800 38,495 22 -58,277 -15,038 28,705 28,214 27,146 36,831 42,453 -80,000 -60,000 -40,000 -20,000 0 20,000 40,000 60,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 AnnualNetJobGrowth Annual Net Job Growth, Charlotte MSA, 2005-2015
  9. 9. Charlotte MSA Job Growth • Total MSA growth of 164,000 jobs, or 17.7% • Higher than 9.1% gain nationally • Mecklenburg County led with 102,700 net new jobs; growth equated to 62.9% of total regional increase • Lincoln and Rowan reported the slowest growth rates; more heavily impacted by Manufacturing losses
  10. 10. Strong Technology Growth • Historically, banks over ‘bots • Tech businesses expanded job count by 18% 2014-2016; fastest in US • Metro experienced 23% workers in STEM in last decade
  11. 11. What is (still) driving demand for apartments?
  12. 12. Apartment Demand Drivers • Household increases • Job growth • Improving wages and household formation • Proximity to… • Transportation options
  13. 13. Housing Affordability • Nationwide, the share of income spent on a mortgage is well below historic norms, while rents affordability has decreased • Charlotte is comparably more affordable that the national average • Consider impact on relocation decisions, especially for young professionals with school debt
  14. 14. Charlotte’s Rental Market 7.3% 11.8% 13.6% 9.0% 6.7% 6.2% 6.2% 6.1% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% -2,000 0 2,000 4,000 6,000 8,000 10,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 VacancyRate Units Net Change in Inventory Net Absorption Vacancy Rate Apartment Market Performance, Charlotte Region, 2006-2016 Vacancy 0.1% Rent Growth 4.0%
  15. 15. Charlotte’s Rental Pipeline • Pipeline remains strong • 11,974 units under construction • 13,938 units proposed • Downtown is one of the most active with more than 2,000 units underway • Other hotspots include the Southwest, East, and York County submarkets
  16. 16. Is our office space competitive?
  17. 17. National Trends in Office Space • Compact, walkable places near housing and public transit • Space/employee on a long-term decline • Open floor plans • Fewer offices • Less on-site paper storage • Telecommuting on the rise nationally
  18. 18. Charlotte’s Office Inventory • Downtown Charlotte is home to over one-third of the total inventory in Mecklenburg County with 17.3 million square feet • I-77/Southwest is second with 7.9 million square feet, less than half of Downtown • Location, location, location… many companies are seeking integrated and active locations to attract top talent 0.3% 1.4% 2.1% 2.2% 4.8% 7.0% 9.0% 10.2% 13.2% 15.6% 34.2% 0.0% 10.0% 20.0% 30.0% 40.0% Cotswold Park Road East CrownPoint/Matthews North Midtown SouthPark Northeast Ballantyne/South I-77/Southwest Downtown % of Market Submarket Office Inventory by Submarket, 2016
  19. 19. Charlotte’s Office Market Office Market Performance, Charlotte Region, 2013-2016 14.8% 14.3% 13.2% 9.8% 0% 2% 4% 6% 8% 10% 12% 14% 16% 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2013 2014 2015 2016 VacancyRate SquareFeet Completions Net Absorption Vacancy Rate Vacancy 3.4% Rent Growth 3.3%
  20. 20. Charlotte’s Office Pipeline • ~2.2 million square feet of office space under development • Includes speculative and build-to-suit projects for specific companies • Falling vacancy has spurred development, with a focus on CBD and surrounding areas
  21. 21. Closing Considerations
  22. 22. What are we seeing? • Growth in the most competitive states, cities, and submarkets is accelerating, and their market shares are increasing • Mixed-use urban experience is the clear winner, even in suburban locations; time is increasingly valuable commodity and digital age creates demand for “connection” and “experience” • Most desirable locations accessible by “thick” or “layered” network of transportation (air, highway, transit, train, bike, pedestrian) • Younger demographic is driving more employer location decisions in order for companies to attract the best talent • Real estate market is responding to preferences of Millennials for housing and retail, but don’t forget the aging Baby Boomers and their spending power
  23. 23. Is Charlotte Following Suit? • Growth is not evenly distributed across the region – like the Country market share is increasing in some areas while declining in others • 0 • Many of the densest developments are seeking proximity to transit; exception – SouthPark • SouthEnd is a different place from a decade ago • Development momentum already beginning along northeast corridor • What about the Streetcar? • How will SouthPark address traffic congestion moving forward? • Land uses are integrating, offering more options to ‘live, work, and play’ all in one place • The mixed-use model has been especially prevalent in some of the suburban developments – capitalize on outer-belt mobility • Think: Waverly, Rea Farms, Crescent Providence Farm, River District
  24. 24. Jessica Rossi, AICP Senior Planner & Economist Kimley-Horn jessica.rossi@kimley-horn.com 704.954.7484

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