City may offer developers tax grants to revive Uptown through office conversions
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Charlotte city leaders are considering granting developers tax rebates in return for converting empty offices to reinvigorate a sleepy Uptown.
- Such financial assistance could help offset the costly and cumbersome process of turning a building designed for cubicles into housing or other purposes.
Why it matters: This city's ghost tower conundrum has created an opportunity to transform underused offices into much-needed housing, public open spaces and retail, which Uptown lacks.
- City leaders hope to transition center city from a business hub to a "central activity district" — a term officials are using as they focus on a flourishing tourism industry to compensate for a lack of daily workers in Uptown's recovery.
Driving the news: City council members on Monday were receptive to the idea of offering tax incentives to property owners for conversions. That may include the old Duke Energy headquarters, or the "Brooklyn & Church" project.
- City staff has not yet determined what the terms could be — including the duration of the tax reimbursements, or at what percentage developers may receive them.
- "Before I totally baked the cake, I wanted to hear from you guys," the city's economic development director Tracy Dodson told council, "because this is a different type of reasoning or rationale for investment."
- Mecklenburg County has engaged in similar conversations about using tax increment financing to drive development.
Context: Duke Energy moved out of the Brooklyn & Church building for a new tower. Asana Partners and MRP Realty bought the '70s-era property at a "discounted" price, Dodson said, of $35 million.
- They plan to convert the 14 stories into 440 housing units and about 60,000 square feet of retail. About 215,000 square feet will be demolished.
- The design makes the property more friendly to pedestrians and creates new open space and public parking.
By the numbers: Uptown's vacancy rate is 20%, according to Cushman and Wakefield's latest report.
- Five Uptown buildings are more than half empty, Dodson said. Of 940 office floors, 187 are available. Leasing is slowing down.
- The market isn't expected to recover until 2040, Dodson told council.
- "If we do nothing, do we have a ... pocket within our Uptown that doesn't have the vibrancy?" she said.
Zoom out: Office vacancies are citywide. The airport submarket's vacancy rate is 17%, and the University area's is nearly 33%. The South End and Midtown submarket is at 14%.
The intrigue: Cities across the U.S. are trying to address pandemic-driven office vacancies.
- The last comparable moment in history was when the government stepped in to help lower Manhattan recover after 9/11, as Charlotte Center City Partners' James LaBar noted.
- Chicago is the leader right now in how a city can use tax incentives to revitalize its financial district, he added.
Reality check: Other factors are deterring people from visiting Uptown and traveling there to work. They range from safety issues to undependable transit and pricey parking.