Jan 8, 2023 - Development

Commercial real estate trends to watch in Charlotte

Uptown Skyline purple hue

Photo: Andy Weber/Axios

Cranes and construction crews pack Charlotte. Ongoing projects jam up traffic. It feels like there’s a new apartment complex going up everywhere you turn.

Yes, but:  2023 could be a “slugfest,” says Barry Fabyan, senior managing director at JLL in Charlotte.

  • As the U.S. embarks upon uncertain and potentially worse economic conditions, “there’s a little bit of belt tightening,” Fabyan says. “We’re starting to hear whispers of layoffs. That impacts real estate.”

Our city, however, may be overall better positioned to weather the storm. “Charlotte is a city that’s going to fare a lot better than others,” Fabyan told me.

Zoom out: Heading into 2023, I thought this would be a good time to reflect on some of the biggest storylines/themes in commercial real estate I’m watching in coming months.

The main one: How remote work will affect the health and future of Charlotte’s office buildings.

  • “Employers want their people back to work. They feel the office is the best place to spark innovation and productivity,” Fabyan said.
  • Employers often downsize their space — but they invest in making it top-notch, with amenities like cafes and wellness centers, to make employees happy.
  • Companies also are flocking to popular areas like South End, where new construction costs have reached $50/square foot, per JLL data. Five or so years ago, they were in the upper $30s.

Plus, these days, you won’t find developers building spec office space — or space without tenants lined up yet — as often as recent years. It’s hard to get financing to do so in this environment.

“There is not enough demand to satisfy the supply,” of office space around town, Fabyan said.

Other storylines I’m watching:

How Charlotte’s economy will fare — and how that’ll affect our city’s direction.

  • Plenty of experts say Charlotte is poised for further growth, despite the national financial climate.
  • Charlotte is expected to see a GDP growth rate of 0.8% in 2023, the 12th strongest of any U.S. metro in the U.S., according to a report from the Kenan Institute of Private Enterprise at UNC Chapel Hill’s Kenan-Flagler Business School.
  • Still, high interest rates, labor and construction costs could weigh on future projects.

The fate of some of the city’s high-profile developments on hold.

  • One notable project on hold is 10 Tryon, the 15-story mixed-use development that’s been planned on North Tryon for years. It was to include a Publix. The entire project is on hold “given the current market conditions,” Shawn Tibbetts, COO of developer Armada Hoffler, told Axios.
  • Another big paused project is the InterContinental Hotel in Uptown, planned for the restored Carolina Theatre property on North Tryon. The restored theatre is supposed to re-open in 2023.

What will happen to malls and other big aging retail properties?

  • The pandemic crushed foot traffic at area malls, as we reported in 2021.
  • As big-box retailers like Macy’s continue to close stores nationwide, traffic at malls and other large retail centers will diminish.
  • The pandemic further accelerated customers’ use of online shopping.

The bottom line: You’ll still see lots of cranes in Charlotte next year, despite what happens with the economy nationally. Demand for certain buildings — like industrial warehouses, high-end, modern offices and apartments — will remain strong.


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