Why the Charlotte Market is a Prime Investing Opportunity
The numbers say it all about the high potential of the Charlotte market. The region is gaining more than 1,000 new residents a week, according to 2017 Census Bureau stats. By 2050, that growth will add another 1.8 million people to its current population, and spur the creation of nearly a million more jobs.
Charlotte’s steady, measured growth suggests it’s on a marathoner’s version of an easy run. It also suggests that this regional business hub is becoming one of the best places in the nation to invest in private equity real estate.
Substantial development activity flanks the Charlotte central business district and with Miami billionaire hedge fund manager David Tepper’s record $2.2 billion deal to buy the Carolina Panthers football team in June of 2018, more activity is anticipated. Four banks will anchor new office towers, and new apartments and a 1,000-room hotel are all underway immediately adjacent to the Panthers’ Bank of America Stadium.
Job Opportunities and Paycheck Strength
With Bank of America’s headquarters and a Wells Fargo hub, Charlotte is the nation’s third largest financial center and also a power player in professional and business services ranging from tech-driven marketing to procurement and logistics. Power is also a key Charlotte industry thanks to Duke Energy’s performance in electric utilities, natural gas and renewables, now the nation’s largest electric power holding company. Charlotte is also a supply chain hub for the Southeast, supported by CSX and Norfolk Southern rail lines. All told, the Charlotte Chamber of Commerce lays claim to 14 Fortune 1000 headquarters, as well as other multinational corporations.
While Charlotte has an overall 3% job growth rate, a number of business sectors are outpacing that figure and making the metropolitan area a population magnet. The biggest percentage gains in private-sector employment come from health services (including the Atrium Health hospital network), hospitality and construction, the U.S. Bureau of Labor Statistics reports.
Millennials have also taken note of Charlotte’s robust fundamentals, which allow them to maximize their salaries and quality of life, and are flocking there in droves. Last year, Charlotte took the top spot in Business Insider’s ranking of where Millennials are moving, and came in fifth in a list of the 25 best cities for people under 35 for its job opportunities and strength of paycheck. Job openings are 27 percent better than the national average in Charlotte, and the millennial paycheck goes far given the city’s affordable cost of living.
Not surprisingly, Charlotte ranked 11th last year among cities adding new residents. Population growth will keep rental occupancy high at about 95 percent, according to a CBRE forecast. And despite Charlotte’s reasonable cost of living, average rents have increased nearly 35 percent in five years. Yet rent as a percentage of household income is still substantially below the likes of much larger cities like Boston, Chicago, Seattle and Miami.
Scenic Surroundings and Urban Amenities
Charlotte boasts mild weather; gorgeous, tree-lined communities; many outdoor activities; well-ranked school systems; and over three dozen colleges and universities. Charlotte’s costs of living and housing are also 2% and 3% lower respectively than the national averages, with the median monthly rent at $902.
Another substantial asset — and attraction — is Charlotte’s superb public transportation system. The metropolitan area has improved its connectivity by linking its uptown financial center to the city’s university and business communities. The Lynx light rail line’s extension westward to Charlotte Douglas airport has the green light for planning, and it coincides with development rezoning of as much as 2.4 million square feet of industrial space near the Charlotte airport.
A northern extension of the Lynx light rail line debuted this year, linking Uptown to the University of North Carolina Charlotte campus. This extension will further bolster the substantial growth in the University City neighborhood, anchored by UNC Charlotte’s 30,000 students, by creating more transit-oriented, mixed-use development.
Origin recently completed a multi-million-dollar, interior and exterior renovation on One University Place. The makeover created move-in ready, millennial-focused, collaborative office spaces in the 1986 lakefront office building. The property is located within walking distance of the light rail station, creating further appeal for employers looking to attract the young talent living in Uptown Charlotte, a 15-minute ride away.
In the same area, the marketing technology firm Red Ventures is investing $5 million in building improvements and equipment at Origin’s Cambridge Corporate Center. The company plans to add more than 500 workers in this area in software development, information technology, business development and sales.
But to me, the top reason for the growth in Charlotte commercial real estate is the lifestyle it offers its residents. Charlotte has an eclectic arts presence in Noda and a lively South End entertainment scene. The Great Smoky Mountains and the beach towns of Charleston, South Carolina, are both a few hours away. Housing is affordable for millennials and downsizing baby boomers, the two large generations driving the real estate market, and the great network of schools and universities attracts a skilled workforce.
For my money, these factors make Charlotte one of the best places for multifamily and commercial private equity real estate investment in the country.