This time last year, you would have been forgiven if you confused a Charlotte real estate forecast with a baseball game: It seemed like every developer and broker was trying to guess which “inning” the boom was in, and how close we were to the bottom of the ninth.
But at the annual CCIM real estate forecast panel Wednesday, no one was talking innings. Instead, buoyant optimism seemed to have replaced last year’s fretting about whether developers are building too many apartments or if there’s a glut of new office space that’s set to swamp the market. There was near-universal agreement that Charlotte’s real estate boom will continue for the foreseeable future.
All of which made the tone of the three panelists – real estate titans Johnny Harris and Smoky Bissell, along with former Observer publisher Rolfe Neill – a bit curious.
While they agreed Charlotte has a bright future and marveled at the city’s growth in recent decades, they also raised concerns about everything from the controversial House Bill 2 to the state of Charlotte’s education system, and from North Carolina’s ever-more-rancorous politics to Charlotte’s racial and socioeconomic divides.
▪ “I hope I’m wrong, but it could be Charlotte without the NFL, without the NBA, without the NCAA,” Harris, chief executive of Lincoln Harris, said of Charlotte in 20 years if HB2 isn’t repealed.
▪ Neill addressed Charlotte’s changing demographics to the roomful of mostly white people at Carmel Country Club, a subject that’s received more attention in the wake of sometimes-violent protests that followed the fatal Charlotte-Mecklenburg Police shooting of Keith Lamont Scott in September.
“How many black people do we really know?” he challenged the attendees, also pointing to the rising number of Hispanic residents in Mecklenburg County. “How many do we know?”
▪ Bissell, longtime head of real estate developer Bissell Cos., said a business associate of his was recently introduced to a group in New York as a resident of “The Great Hate State” because of HB2. He warned the group of real estate professionals against taking lightly long-term threats to the city and state’s reputation.
“You don’t eat if the Charlotte economy isn’t growing and people don’t buy or lease real estate,” said Bissell.
Harris summed up his thoughts about what will happen when the Charlotte real estate market inevitably slows down.
“Up until recently, I thought we would always have a softer landing than other markets,” said Harris. “I’m not sure that’s the case anymore.”
Despite the general air of warning, there are plenty of signs Charlotte’s commercial real estate market is set to stay in high gear. Bissell just completed the biggest real estate sale in the city’s history, selling his namesake company’s Ballantyne holdings to Northwood Investors for a record-setting $1.2 billion.
Rent is still climbing, even as thousands of new apartments hit the market, because the new units are being filled fast by Charlotte’s growing population. Last month, the average rent for an apartment in Charlotte hit $1,082, up 7 percent from a year ago. And developers will deliver 2.4 million square feet of new office space to the Charlotte market this year, the most since 2010.
One possible cause for the disconnect between prosperity and anxiety: A general sense that leadership in Charlotte and North Carolina is more fragmented and less pragmatic than in decades past.
“You had people like John Belk who had a store in every town,” said Harris, referring to the four-term Charlotte mayor and head of the eponymous department store chain. “And if somebody got out of line, John Belk would go and talk to them. And you didn’t want to be on the receiving end.”
He pointed to the strong banks and figures like Hugh McColl, former CEO of Bank of America, who advanced grand plans for the city with the backing of a relatively small group of powerful people.
“It’s harder. It’s not necessarily bad, it’s just harder,” Harris said of leading the city now. “You’ve got to communicate with a more diverse population.”
Harris also lamented that on the state level, Republicans and Democrats seem unable to find any common ground. Urban and rural areas have also become increasingly polarized and disconnected.
“I’m very concerned,” said Harris. “I don’t know what we’re going to do about it.”
Looking back on success
In addition to being two of the biggest names in Charlotte real estate, Bissell and Harris were longtime partners and brothers-in-law (Bissell’s late wife was Harris’ sister). They developed much of the SouthPark area together, before amicably parting ways and pursuing different developments.
Bissell stayed focused on Ballantyne – built on Harris family land – and developed a 4.5-million square foot office park, four hotels and a golf course. Harris’ firm is working on some of the biggest development projects in the city right now.
Lincoln Harris is developing a 30-story office tower on the former site of the Charlotte Observer building on Stonewall Street, finishing up a second Capitol Towers office building in SouthPark, and developing the 194-acre Rea Farms mixed-use project on the site of the former Charlotte Golf Links course. And with Crescent Communities, Lincoln Harris is developing the River District west of the airport, the biggest master-planned development in the city’s history.
Harris and Bissell looked back on what they thought made them successful. Bissell cited his love of reading and practice of “falling forward,” or always moving on to the next project – a style reflected in his building all of Ballantyne’s office buildings “on spec,” or without an anchor tenant lined up.
“I never had an original idea in my life,” said Bissell. “I read an awful lot...I’m constantly thinking about tomorrow.”
Harris, Bissell said, is a “master salesman” who surprised Bissell by claiming to enjoy cold-calling prospective clients. Harris agreed.
“I never was intimidated one iota,” said Harris. “(My parents) taught me to walk up to someone, put out my hand and introduce myself. That worked.”