Uptown construction dropoff: Tourism thrives while business struggles

By the numbers: In Uptown and South End, $4.2 billion of development is either under construction or expected to break ground by 2025.

Yes, but: Last year's total was $6.9 billion — nearly a $3 billion leap from the prior year's report.

What's happening: A shrinking demand for offices may be partly to blame for the decline in new construction. Last year, CCCP reported 7.2 million square feet of office space in the pipeline.

• Now around 2.2 million is either under construction or proposed.
• Of that, around 1.8 million is in South End and just 411,000 square feet are being built in Uptown.
• Development, in general, is stalling because of high interest rates and inflation.
• Also, while demand for new offices still exists, plenty of floors are vacant and available for prospective companies to move into.

Why it matters: Uptown is transitioning from a central business district to a "central activity district," CCCP executives tell Axios. A strong tourism and event sector is making up for the lost vibrancy left by the pandemic-era workplace changes.

• "We've been very interested in Uptown becoming a more complete place," says Michael Smith, the organization's president and CEO. "The softness that we're enduring around office is creating a vacuum."

Zoom out: The evolution could include converting business towers for other, more needed purposes, such as housing or hotels.

• It could also mean fine-tuning the logistics around popular events, like making street closures more efficient and preparing small businesses for a rush of customers.

Zoom in: Hotel occupancy has almost returned to pre-pandemic levels of about 70%. CCCP attributes the rebound to Charlotte's 320-plus days of sporting events in 2023, plus the increase in concerts at Bank of America Stadium and Spectrum Center.

• Smith is also watching the impact that business travel's recovery has on local hotels.
• Uptown, on an average day, clocks about 100,000 visitors. Luke Combs' concerts and the Duke's Mayo Classic brought more than 235,000 people to center city.
• The number of hotel rooms should grow from 6,800 to 8,600 by 2025, CCCP projects. To compare, last year CCCP tallied 2,010 rooms in the development pipeline.

The big picture: CCCP is optimistic any construction slowdown is the result of successful monetary policy at work. The national economy is improving, recent outlooks signal.

• "What we don't want to return to is what we saw in the Great Recession, where we went to complete stillness," Smith says. "There were no cranes in the sky. And we struggled to get back on the lists of institutional investors."
• Smith says their strategy is to continue intriguing investors through talent and the city's assets, such as the airport.

Other takeaways: More than 113 people are moving to the Charlotte region daily, the report states, primarily from New York, Boston, Atlanta and Miami. Housing developers are taking note of those migration trends, Smith says.

• CCCP projects 9,300 apartments are in the pipeline, up from last year's 7,700 estimate.

• Companies looking to relocate are interested in where people do their work, says James LaBar, CCCP's SVP of economic development. They worry they'll lose workers to other employers who offer work-from-home options. The number of workers in South End and Uptown offices is at 78% of pre-pandemic levels, per CCCP.

Several companies relocated to Charlotte last year, including Ameriprise Financial, TTX and Palmetto.

• "We have good economic development momentum during a tough time," LaBar says.

What we're watching: Public partners are attempting to spark development by creating "mega sites" with the private sector. One of those is The Pearl, the future 40-acre innovation district and campus of a four-year medical school. Construction is progressing and leasing activity is strong, Smith says.

• "I think they're gonna end up with a high-cotton problem, where they're trying to figure out how do we create more space quicker," Smith says.
• Iron District, a 55-acre mixed-use development at the Charlotte Pipe and Foundry property, is gearing up to launch a developer search.
• A vision is forming for a North Tryon tech hub, 50 acres around UNC Charlotte's campus in Uptown.

The other side: Some ambitious projects are behind schedule.

• A private-public partnership deal for Seventh and Tryon fell through because the developer and county failed to reach an agreement.
• A piece of property in Brooklyn Village was just put on the market, where an office was planned.
• The developer behind Centre South, a 16-acre Dilworth development, has kept quiet about its next moves.

The bottom line: Growth is vital to the city's health, Smith says. It expands opportunities for everyone and broadens the tax base, which helps maintain affordability in the long run, he explains.

• But growth must be inclusive and sustainable, adds LaBar.
• Smith stressed the need for more infrastructure investments, specifically in rapid transit.
• A construction slowdown could offer a moment to play catch up.