Jan 23, 2023 - Business

Construction spending is up in Charlotte, but will building slow down?

Photo: Katie Peralta Soloff/Axios

Construction spending is on the rise in Mecklenburg County, and the number of building permits issued dipped last year.

What’s happening: Mecklenburg County issued 108,830 building permits last year, worth a collective $8.6 billion, according to county data obtained by Axios. That fell slightly from the year prior, when they issued just over 113,000 permits, valued at about $7.2 billion.

That’s because of inflation in the construction industry, says Ebenezer Gujjarlapudi, director of the Mecklenburg County Land Use and Environmental Services Agency.  

Why it matters: Inflation is affecting everything, from eggs to the price of building homes. Higher construction costs get passed onto buyers, exacerbating an already dire housing affordability crisis.

  • CBRE predicted a 14% year-over-year increase in construction expenses in 2022, driven by rising costs for labor and materials.

Data: Mecklenburg County Code Enforcement; Chart: Rahul Mukherjee/Axios

Of note: The permit numbers reflect everything from kitchen renovations to an office tower Uptown. And just one major project like a high-rise building could have hundreds of permits.

Between the lines: The number of residential permits filed fell by 5%, while commercial permits stayed nearly the same.

  • That’s the opposite of what happened during the pandemic, when work-from-home slowed commercial development, especially of office space. But during that time, residential permits spiked, as people embarked on home improvement projects, Gujjarlapudi says.

Now, he expects that commercial activity could be returning as employees come back to the office.

The bottom line: While the decrease in the overall number of permits could be a “slight indicator” of a slowdown, Gujjarlapudi says it’s too early to see the full impacts of a recession. It will take a while for future decisions builders make to be reflected in the data.

  • “What we have on tap currently in our system are those that have applied for a permit saying that this is what we intend to build,” he says. “But only time is going to tell us how many are going to come into the pipeline.”
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