You can see the Queen City’s post-recession comeback story taking shape at a business park under construction in southwest Charlotte.
EastGroup Properties, a Mississippi-based real estate investment trust, is finishing the first two of six planned buildings in a complex called Steele Creek Commerce Park.
The 43-acre business park’s recent past mirrors the shaky economic times Charlotte has struggled through, and its immediate future reflects the region’s increasingly sunny business outlook – especially the growing strength of its industrial sector.
EastGroup entered the Charlotte market in 2007, just before the bottom fell out of the local economy. The site where the park sits, at Steele Creek Road and Interstate 485, had previously sat vacant for almost a decade.
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“It was (planned for) retail, mixed use, maybe a hotel, but the owners decided they couldn’t pull it off,” said Matt Cochrane, a senior asset manager for EastGroup.
Fast forward to today, and two 70,000-square-foot buildings are up, with one fully leased to Kuehne + Nagel, a German freight shipper. The other has seen about half its space leased by Huber + Suhner, a Swiss electrical and optical connections manufacturer that last year announced the move of its North American headquarters to Charlotte.
Hellman Worldwide Logistics has leased 45,400 square feet of a third building, which will contain 108,000 square feet total.
Anne Johnson and Bryan Crutcher of CBRE, the brokers who have marketed and leased the park, say activity has been brisk.
“The timing was perfect, judging from the activity that we’ve had,” Johnson said. “I think between that and the fact that lease rates are continuing to go up, it’s really getting everybody kind of fired up.”
It doesn’t hurt that the site sits just south of the new $92 million intermodal shipping yard going in at Charlotte Douglas International Airport. Or that the airport is spending $35 million to buy a 370-acre neighborhood south of the intermodal yard for related business uses.
The 200-acre Norfolk Southern rail yard, nestled between two runways on a patch of cement sunk 40 feet below ground level, moves shipping containers from trains to trucks, and vice versa.
The intermodal yard, as well as the 370-acre tract, are expected to spur Charlotte’s growth as a manufacturing and shipping hub. As the global economy recovers and trade expands, the thinking goes, more companies need to ship more products. And if Charlotte boasts an efficient intermodal facility, it will attract more transportation, manufacturing and logistics firms – along with their increasingly scarce, good-paying blue-collar jobs.
Just across the interstate from the Steele Creek park, yet another sign of the rebounding Queen City economy – the new Charlotte Premium Outlets mall – is rapidly taking shape. Sarah Belk Gambrell, daughter of Belk department store founder W.H. Belk Sr., and Childress Klein Properties have a hotel and more retail in the works for land she owns near the mall.
Chris Thomas, a Childress Klein partner, said the development group has also won rezoning for a planned office and industrial park off nearby Arrowood Road, but that project remains in the early stages.
“It’s a nice story to see what’s going on down around that (Steele Creek Road) interchange,” he said. “We’ve all been patiently waiting for the economy to recover and it’s nice to see that being rewarded.”
Experts say the healthy demand for such projects isn’t limited to southwest Charlotte. The industrial real estate sector, which comprises manufacturing and production uses, is arguably the hottest part of Charlotte’s overall real estate market, said Andrew Jenkins of Karnes Research.
The sector’s vacancy rate is down to about 7 percent, he said, the lowest rate since Karnes started tracking the statistic in 1988. After years when little industrial development was going up, companies’ interest in new space locally is high.
“Clearly people are looking at this area as a long-term growth area,” Jenkins said.
More economists and business leaders than I can count have been offering rosy 2014 forecasts for Charlotte. Resurgent projects like the Steele Creek Commerce Park show why.
“We’ve now created 300 jobs, right in this area,” Cochrane said. “Once the intermodal opens up, it’s going to translate into even more leasing activity.”