Charlotte is once again a city of cranes, with development roaring back and apartments, office buildings and hotels popping up around town.
During the recession, development in Charlotte ground to a halt. But now, developers are building record numbers of apartments, drastically expanding the number of hotel rooms uptown and starting to build speculative office buildings again.
Here’s a look at what’s going on in three of the major building sectors:
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It’s tough to miss Charlotte’s apartment boom. Five-story, boxy, beige apartment buildings are going up in many neighborhoods in and around uptown, and many are set to open next in late 2015 or 2016. And in uptown itself, two high-rise apartment towers are under construction, one atop the Mint Museum and one on Third Street.
Most of these new apartments are high-end units, with rents at $2 or more per square foot. That means a 550-square-foot one-bedroom would set you back $1,100 a month. The luxury status of most of these complexes is one reason that the apartment influx hasn’t pushed down rents yet.
Apartment-tracking firm Real Data reported earlier this year that the vacancy rate is still just 6.7 percent, barely half of what it topped out at during the recession. And average rent grew 3.1 percent from a year ago, to $938 per month.
There are more apartments under construction in Charlotte right now than at any one time: 10,400 units are being built, according to Real Data, and another 10,000 are planned after that wave.
That’s led to some angst in the community about what effect the apartment construction boom is having on neighborhoods and whether it risks “sterilizing Charlotte.” Some of the planned apartments will displace local businesses, such as a project on Central Avenue by DPJ Residential that will demolish decades-old dive bar Tommy’s Pub.
One part of the market that hasn’t come back: Condos. Although there were more than 2,500 building permits issued for condos during a 12-month period in 2006-07, the height of the building boom, only several dozen were issued during the year ending in February.
There’s only one major condo project that’s a possibility right now in Charlotte: One Brevard Street, at the corner of Fourth and Brevard streets. Brevard Street Associates is exploring a 31-story condo tower on the site, which wouldn’t be finished for several years.
But experts say that some of the high-end apartment buildings under construction could convert to condos if the market turns – especially some of the high-rise apartment towers. That means some of those apartments springing out of the ground could be for-sale units in the next few years.
“The cranes are back,” Gov. Pat McCrory triumphantly proclaimed in December, at the groundbreaking for 300 South Tryon, uptown’s newest office building. The 25-story tower is underway on a former surface parking lot at Third and Tryon streets, with crews digging out the massive foundation and starting to build vertically. Babson Capital is the anchor tenant for what will be the first office tower completed in Charlotte since the recession.
Two other office towers are planned uptown: Crescent Communities is building a 27-story office tower called Tryon Place at Stonewall and Tryon Streets, while Portman Holdings is building a 19-story office tower called 615 South College atop a parking deck next to the Westin hotel. Both of these are speculative buildings, meaning they don’t have tenants signed before starting construction.
In SouthPark, Lincoln Harris is building a pair of 10-story offices called Capitol Towers, totaling almost 500,000 square feet. And in South End, just outside of uptown, Trinity Capital and Honey Partners are searching for an anchor tenant for their planned 14-story building at Morehead and Tryon streets.
The hotel sector is also poised for a major boom in Charlotte. Developers are planning to build about 1,900 new rooms in uptown and the surrounding neighborhoods, which would increase the supply by 42 percent.
The city’s hotel occupancy rate crept up gradually over the past several years, as the economy rebounded and supply remained the same because new hotels weren’t being built.
Hotels in Mecklenburg County were running at a 70.3 percent occupancy rate through March this year, according to the Charlotte Regional Visitors Authority. That’s up from 66.7 percent the same time a year ago, and well above the U.S. average of 61.1 percent. Combined with low interest rates that make borrowing attractive, that’s helping to fuel the surge of hotel plans.
But city boosters still haven’t landed one project Charlotte has been after for years: A 1,000-room convention center hotel. Supporters say such a hotel – which would likely require public subsidies – would make booking large conventions that attract thousands of attendees simpler and more attractive. Charlotte’s current largest hotel is the Westin, with 700 rooms. That hotel opened in 2003, with about $16 million worth of city support.
Ely is the Observer’s development and commercial real estate reporter.