Center City Growth Projections Final Report

CENTER CITY GROWTH PROJECTIONS

Economic & Planning Systems, Inc. The Economics of Land Use

Final Report June 2021

730 17th Street, Suite 630  Denver, CO 80202 303.623.3557  www.epsys.com

TABLE OF CONTENTS 1. Introduction and Summary of Findings 2. Center City Demographic and Economic Framework 3. Center City Real Estate Conditions 4. Growth Opportunities and Constraints 5. Vision Plan Recommendations Appendix

Economic & Planning Systems

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1. INTRODUCTION AND SUMMARY OF FINDINGS

1. INTRODUCTION AND SUMMARY OF FINDINGS Project Overview

Project Objectives

Charlotte Center City Partners, the City of Charlotte and Mecklenburg County are currently updating the Center City Vision Plan. To support this effort, they wanted an economic analysis completed to help understand the development and growth potential for the Study Area (as defined in the map on the following page) over the next 20 years.

Forecasts for population and employment growth are needed to assess the demand for new development (by asset type) and the area’s capacity to serve this growth. The forecasts will be used to develop targets for the types of development and change feasible over the plan horizon. This assessment will allow the MIG team to identify policy directives, interventions, and investments that can be made to better guide future growth.

Project Scope

This project includes four major tasks: - Evaluation of the Center City demographic and economic conditions.

- Assessment of the past growth and development trends in the Center City.

- Evaluation of growth issues and opportunities through an evaluation of land and infrastructure capacity and suitability to support new development.

• To assess and forecast the physical, economic, and cultural growth of Charlotte’s Center City for the next 20 years.

• To inform the 2040 Vision Plan and CLT Future 2040 comp plan recommendations.

Demand Analysis

Supply Analysis

 Historic Growth Trends  Regional Forecast  Capture of Regional Growth

 Land Capacity  Land Suitability  Infrastructure availability and capacity

Growth Forecast

- Development of recommendations (growth forecast) for the Center City Vision Plan.

Economic & Planning Systems

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1. INTRODUCTION AND SUMMARY OF FINDINGS Study Areas

Figure 1 Project Study Areas

This project utilized three geographies to evaluate existing conditions and forecast new growth potential for the Center City.  Center City (shown in the blue circle in Figure 1) - This area is the influence area for activity in Center City and is defined as a 2-mile radius from Trade and Tryon. This area is used to assess demographic and economic conditions, as well as evaluate the commercial real estate market.  Growth Area (shown in gray) – This area defines the portions of the Center City that are likely to capture most of the new development and growth. This area is used to identify potential land capacity for new development.  Central Business District (CBD) (shown in dark blue) – This area matches the boundaries of the Uptown and South End area defined by Charlotte Center City Partners for its planning and data tracking).

Economic & Planning Systems

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1. INTRODUCTION AND SUMMARY OF FINDINGS Summary of Findings

Charlotte is a major attractor of jobs and is a driver of the regional economy. The Center City is a primary destination for financial, professional, and administrative services. As a result, employment uses have dominated the growth in the Center City. There is, however, a growing presence of housing in the area.

Growth Targets for 2040 •

35,000 new housing units

•

1.6 or lower new job to new resident ratio for new growth

•

3,500 new permanently affordable housing units

•

 Continue to be a desirable place for people and businesses to locate

10.5 million new square feet of office / employment space to accommodate over 19,000 new workers

•

 Continue to provide a diverse mixture of employment opportunities for the Charlotte region

350 new retail, restaurant, bar, and service businesses

•

 Increase resiliency and vibrancy throughout the Center City by attracting a greater diversity of uses

20%+ of jobs provided by small businesses (less than 50 employees)

•

10%+ of jobs provided by businesses 5 years old or less

 Maintain affordability of living and doing business

•

8,000 new hotel rooms

 Attract a greater balance between employment and resident growth

•

2.0 million more annual visitor nights

The Center City is forecast to continue to attract significant growth and increase by 70,000 new residents and 109,000 new jobs by 2040. The 2040 Vision Plan should aspire to achieve the following objectives:

 Maintain the ability to accommodate employment growth

Economic & Planning Systems

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1. INTRODUCTION AND SUMMARY OF FINDINGS Vision Plan Recommendations  Diversify the Economic Base

 Become an international destination

– Workforce development for and upskilling of existing residents in target industries

– Expand the hotel room base and amenities supporting visitation

– Preservation/adaption of viable industrial/flex buildings and the businesses within them

– Increase the presence and number of repeatable tourism events

– Maintaining the affordability of workspaces and doing business in the Center City

– Expand the number of regular events and programs in partnerships with Center City arts, culture, and historic attractions/institutions

– Continuing to build the culture and support system for greater entrepreneurship and new business creation – Talent attraction to region and Center City – Job attraction of multiple wage levels  Grow the Resident Base – Encourage the growth of the housing stock and resident base in the Center City – Create and maintain housing opportunities that are affordable to the diverse workforce in the Center City

 Guide Growth – Support efforts to mitigate impacts of growth with focus on limiting displacement of residents within the growth areas in the Center City – Expand place management efforts that have been used in Uptown and South End to other areas in the Center City

– Invest in amenities and services supporting residents of the Center City with a focus on areas lacking these services currently Economic & Planning Systems

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1. INTRODUCTION AND SUMMARY OF FINDINGS Covid-19 and the Post Pandemic World The Covid-19 Pandemic has disrupted life for people throughout the world. The full impacts on the future health of the region and the Center City will be discovered once we have recovered fully from the pandemic and life returns to normal.

The pandemic has exposed unseen vulnerabilities in the economic health of the community and has also extenuated trends that were already present. The impact of the pandemic has been unequal in terms of the businesses most impacted and the workers/residents that have been impacted. Some of the notable impacts are listed below:  The service sectors have been the most impacted. About 70% of US GDP is directly tied to consumer spending, 20% of which is discretionary. Drops in discretionary spending have uneven impacts.  The contraction of brick-and-mortar retail and growth of e-commerce has been magnified and may have lasting impacts on spending patterns. Retail sales levels have returned to near pre-pandemic levels but how people spend money has changed.

Economic & Planning Systems

 The shift of retail/consumer patterns has spurred rapid growth and demand for logistics centers. The security and reliability of supply chains may need to be evaluated and may lead to shifts as to where goods are made.  The stress on vulnerable households has increased and the ability to obtain and maintain safe, secure, and affordable housing has becoming more challenging for lower income residents/workers.  The largest impacts have been on leisure and hospitality, retail trade, and selected services (childcare, personal services, certain transportation services). These highly impacted sectors are often a major part of the economic activity in city centers.

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1. INTRODUCTION AND SUMMARY OF FINDINGS Covid-19 and Charlotte’s Center City The Covid-19 Pandemic continues to impact the Center City in the following ways:  The pandemic has resulted in a significant reduction in employment base working in the Center, specifically in Uptown, on a typical weekday. This lack of activity is likely to continue throughout most of 2021.  There has been a significant reduction in visitors to the Center City for the typical major event (conventions, sport events, etc.). This reduction in visitors and events will likely also remain through 2022.  Financial struggles for business support businesses, retailers, restaurants or others reliant on workers and visitors to drive sales will continue until activity levels increase.

Tracking Changes and Improvements As the City of Charlotte rebounds from the pandemic, tracking the improvements and changes over time can help it adapt and support the business community. The following items should be tracked to help guide support efforts.  Retail and service business closings and/or re-openings  Visitation to the Center City  The number of events and conferences scheduled  Hotel occupancy  Vacancy of office buildings  Absorption/leasing rate of office space

The major takeaway from the pandemic has been the need to increase the diversity of use and activity in the Center City to make it more resilient. This includes increasing the diversity of businesses and uses, attracting more housing development, and creating more reasons for people to visit the Center City.

Economic & Planning Systems

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2. CENTER CITY DEMOGRAPHIC AND ECONOMIC CONDITIONS

2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK This evaluation of demographic and economic trends includes findings related to the Center City from the Growth Factors Report and Equitable Growth Framework analysis developed in the Charlotte Future 2040 Comprehensive Plan. Demographic and economic trends within the Study Areas are also summarized.

Table 1 Peer Cities MSA Employment Capture

Growth Factors Report

EPS and MIG developed a Growth Factors report to identify international, national, regional, and local trends that may influence growth in the City of Charlotte over the next 20 years. The report identifies trends under five major themes, which are the Regional City, Prosperous and Innovative City, Inclusive City, Livable and Connected City, and Healthy and Sustainable City.

Regional City

Charlotte is a major city within the metro area and is the primary economic driver of the regional economy. Charlotte has the highest capture rate of regional employment growth out of 8 peer cities analyzed. Charlotte captures a wide range of jobs and development types, whereas comparable cities have been losing production jobs.

Within Charlotte, the Center City is the premier employment center and is growing into a work, live, and play destination. However, despite its economic success the Charlotte Center Area has a lower resident base relative to its peer cities.

Economic & Planning Systems

Source: US Census LEHD, Economic & Planning Systems

Table 2 Peer Cities Center City Housing Capture

Source: ESRI

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Prosperous and Innovative City

Charlotte and its Center City area have been a major employment growth center over the past two decades; however, housing has not kept pace. Employment growth has outpaced housing growth in the City and MSA during the past decade creating pressures on housing prices and affordability. Mecklenburg County has attracted 145,000 jobs since 2010 including continued growth in service sectors (health care, financial services, and professional services), and has experienced a rebound in production sectors.

Despite the growing economy, the rate of new business creation has not experienced the same rate of growth indicating the need for more support for local business growth and creation.

Inclusive City

Charlotte has attracted a diverse resident base in terms of the age of residents, the race/ethnic background of residents, and educational backgrounds. In 2017, 17% of residents were foreign born and this group accounted for a 1/3 of population growth since 2010. However, the city’s rapid growth is leading to growing inequity as home prices are outpacing income growth in the city.

Housing prices and rents have increased by approximately 70% since 2000 while incomes increased by approximately 30% on average over this time. Affordability of housing and the cost of doing business has been a major draw for attracting companies, but the city may lose its appeal if affordability issues are not addressed.

Economic & Planning Systems

Table 3 Peer Cities Ratio of New Jobs to Households

Source: ESRI, US Census LEHD, Economic & Planning Systems

Figure 2 Mecklenburg County Employment Change, 2000 to 2017

Source: Quarterly Census of Employment and Wages, North Carolina Department of Commerce

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Livable and Connected City

Figure 3 Residential Unit Demolitions by Neighborhood Profile Area

Charlotte has a higher-than-average percentage of residents that live and work in the city (67% in 2015) compared to many of its peer cities.

The city’s growing transit and transportation network has provided greater options and support to commuters. Within Charlotte, the Center City is a major contributor to the region’s quality of life and connectivity. Growth pressures in the Center City have led to transformation of areas in and around Uptown in the past two decades, especially to the south of Uptown. This growth within the Center City is likely to continue, especially as new transit lines (Gold Line and Silver Line) are built - increasing connectivity to the Center City. This growth will cause continued change and growth pressures on neighborhoods within the Center City that has been occurring in the past decade illustrated by the amount of home demolitions in the neighborhoods south of Uptown.

Healthy and Sustainable City

Overall health of the community is reflective of the economic health of the community. Urbanization has impacts on environmental health and social health. As the Center City grows in residents and diversity of activity, continued investment in public and green spaces are needed to provide access to natural systems for residents and address impacts of denser development. The Center City is home to a wealth of community services and amenities, however some areas within the greater Center City still lack access to essential amenities such as grocery stores selling fresh foods and health care services.

Economic & Planning Systems

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Equitable Growth Framework

Figure 4 Areas Vulnerable to Displacement Score by 10-acre Grid

The Charlotte Future 2040 Comprehensive Plan is guided by its Equitable Growth Framework that was created to help direct plan goals and policies to address inequities in the community. EPS and MIG developed four measures of equitable growth to assess the equity of access to residents, including: 1) job opportunities; 2) housing opportunities; 3) essential goods and services, and 4) presence of environmental justice issues. Lastly, an overlay showing where residents vulnerable to displacement live was created to illustrate how investments to increase access in some areas may have unintended consequences that must be addressed. Each score in the Equitable Growth Framework was developed for 10-acre grid cells covering the entire city.

Vulnerability

A vulnerability score was developed to identify residents that are vulnerable to displacement. The metrics used were percent of residents below the poverty line, the area’s educational attainment rates, the presence of minority residents, and areas with a higher percent of older residents. The vulnerability score analysis identified that many areas to the north and west of Uptown are vulnerable. These are also the areas most likely to attract new development over the next 10 to 20 years.

Economic & Planning Systems

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Access to Amenities Score

Figure 5 Access to Essential Amenities and Services by 10-acre Grid

Access to essential amenities, goods and services measures the quality of access to specific services based on the number of households within proximity to these services. The services measured include:  Presence of childcare and early childhood education  Proximity to parks, open space and trails  Proximity to community facilities  Proximity to fresh food

 Proximity to health care and pharmacies  Proximity to financial services  Access to internet service

The analysis identified that many of the areas to the north and west of Uptown lack access to essential services. While Uptown has a wealth of conveniences, investment in amenities and greater access to goods and services is needed to improve the quality of life for residents to the north and west of the area.

These areas are likely where new development may occur, which may also generate the potential for displacement.

Economic & Planning Systems

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Access to Housing Opportunities Score

Figure 6 Access to Housing Opportunities by 10-acre Grid

The access to housing opportunities score is an index of measurements looking at:  housing unit type diversity  housing cost

 housing unit size

 presence of subsidized affordable housing  tenure split

 the recent level of (re)investment.

The Uptown area scored low in terms of housing opportunity largely due to the circumstances and conditions in the area. The area has the highest density and land costs and therefore lends itself to a housing mix that is primarily multifamily and/or expensive. Increasing opportunities for more affordable housing and a wider diversity of unit types and sizes within multifamily projects can help increase diversity.

The neighborhoods surrounding Uptown, however, were generally considered to have a high access to housing opportunity, with these areas providing a greater diversity of housing in support of the core of the CBD. Maintaining the diversity in the surrounding neighborhoods (both in terms of unit types and affordability) and increasing options throughout in new housing developments will improve the overall area’s access to housing opportunity score.

Economic & Planning Systems

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Access to Employment Opportunity Score

Figure 7 Access to Employment Opportunities by 10-acre Grid

The access to employment opportunity score measures the diversity of job types, presence of and density of jobs, and the mixture of wage levels using the following metrics:  Job density within/around each grid  Job density within a 20-minute commute shed  Mixture of jobs by wage level  Middle skill jobs (presence of jobs held by workers with some post-high school education but without a bachelor’s degree)  Knowledge based jobs (presence of jobs held by workers with at least a bachelor’s degree) The Center City is the largest employment center in the region and has the highest scores in terms of employment access. Maintaining the diversity and variety of jobs types should be the main focus of efforts to maintain employment opportunities. Continued efforts to provide more mobility options for workers to access jobs in the Center City can help increase the already large impact the Center City has on the region’s economic health.

Economic & Planning Systems .

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Demographic Trends

The City of Charlotte has grown in population at a relatively steady rate since 2000, adding between 14,000 to 15,000 new residents annually over this time. The rate of population growth in Center City, however, has increased since 2010 as the area has added 2,500 new residents annually, growing at an annual rate of 5.0%.

The Center City has a population of 67,000 residents within 33,270 households.

The capture of new households in the Center City has been increasing. The Center City accounts for 10% of citywide households but captured 24% of new households between 2010 and 2020. The household growth in the Center City has occurred in most portions of the Center City area, with Uptown capturing 8% of new households, the South End area capturing 7%, and the rest of the areas within the Center City geography capturing 9% of household growth.

Center City Population (2020) | 67,000 Center City Households (2020) | 33,270

Average Household Size

1.84 persons Median Age 33 years

Figure 8 Capture of New Households by Area, 2010 to 2020

9% 15% 76%

Economic & Planning Systems

8%

Rest of Charlotte Rest of Center City Uptown

7%

South End

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Table 4 Charlotte and Center City Population and Household Change, 2000 to 2020 Description

2000

2010

2020

Total

2000-2020 Ann. #

Ann. %

Total

2010-2020 Ann. #

Ann. %

Uptown Population Households HH Size Median Age

4,689 5,382 1.51

11,188 5,382 1.49 29.0

18,301 9,900 1.50 30.8

13,612 4,518 -0.01 ---

681 226 0.0 ---

7.0% 3.1% 0.0% ---

7,113 4,518 0.01 1.80

711 452 0.00 0.18

5.0% 6.3% 0.1% 0.6%

South End Population Households HH Size Median Age

1,011 603 1.64

2,134 1,486 1.43 30.0

9,237 5,645 1.63 32.1

8,226 5,042 -0.01 ---

411 252 0.0 ---

11.7% 11.8% 0.0% ---

7,103 4,159 0.20 2.10

710 416 0.02 0.21

15.8% 14.3% 1.3% 0.7%

Center City Population Households HH Size Median Age

38,352 15,444 2.25

41,872 19,217 1.90 31.3

67,056 33,268 1.84 33.1

28,704 17,824 -0.41 ---

1,435 891 0.0 ---

2.8% 3.9% -1.0% ---

25,184 14,051 -0.06 1.80

2,518 1,405 -0.01 0.18

4.8% 5.6% -0.3% 0.6%

Charlotte Population Households HH Size Median Age

575,101 228,266 2.47

736,271 291,725 2.48 33.8

877,279 349,611 2.47 34.8

302,178 121,345 0.00 ---

15,109 6,067 0.0 ---

2.1% 2.2% 0.0% ---

141,008 57,886 -0.01 1.00

14,101 5,789 0.00 0.10

1.8% 1.8% 0.0% 0.3%

Source: ESRI; Economic & Planning Systems

Economic & Planning Systems

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Employment Trends

The Center City area has a total employment base of over 177,000 jobs, which accounts for 28% of jobs in the City of Charlotte. The Center City area grew in employment by nearly 47,000 jobs between 2010 and 2018. Despite the robust rate of job growth, the Center City captured a smaller share (24%) of the citywide job growth compared to its share of the total base. The Center City’s largest industries include Health Care, Professional and Technical Services, Finance and Insurance, and Management of Companies.

Table 5 Charlotte and Center City Employment Change, 2000 to 2018

Description

Area

Total Jobs (LEHD)

Center City % of City City of Charlotte

Total Jobs (LEHD)

2010

2018

Total

130,308 30% 435,727

177,205 28% 634,148

46,897 24% 198,421

2010-2018 Ann. #

Ann. %

5,862

3.9%

24,803

4.8%

Source: Economic & PlanninSource: LEHD; Economic & Planning Systems

Employment growth in the Center City has been primarily in the Management of Companies, Administrative & Support Services (e.g., back-office support jobs), Professional and Technical Services, and Finance industries. The Center City attracts an outsize share of employment in certain industries. The area accounted for 71% of the employment growth in Management of Companies within the city and also captured a substantial portion of overall job growth in Administrative & Support Services (40%) and Professional Services (33%).

Economic & Planning Systems

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK The Center City is a major attractor of employment, especially employment within jobs that typically locate in an office setting. Employment growth far surpasses housing growth in this area. Even with an increase in housing development in the Center City, the rate of new jobs captured annually in the Center City was still 4 times higher than the annual rate of new households attracted to the area.

Figure 9 Center City % of Employment by Industry, 2020 Health Care and Social Assistance 13.2%

Finance and Insurance

11.2%

Management of Companies and Enterprises

9.6%

Administration & Support, Waste Management and…

8.5%

Public Administration

8.3%

Accommodation and Food Services

7.3%

Information

4.3%

Educational Services

3.5%

Retail Trade

2.3%

Arts, Entertainment, and Recreation

2.2%

Construction

2.0%

Other Services (excluding Public Administration)

1.9%

Real Estate and Rental and Leasing

1.7%

Wholesale Trade

1.6%

Manufacturing Transportation and Warehousing 0.0%

Economic & Planning Systems

20.3%

Professional, Scientific, and Technical Services

1.4% 0.7% 5.0%

10.0%

15.0%

20.0%

25.0%

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Workforce

The City of Charlotte has a diverse workforce due to its wide variety of employment opportunities. The City and region have higher concentrations of workers with occupations in Computer/Mathematical, Business and Financial Operations, and certain types of production related occupations (e.g., jobs in textiles, machine operations, pipelayers). The region’s strength in the financial services industry has attracted and built a strong workforce with financial and technology skills.

The Center City has a greater share of workers that have college education or some post-high school education than the city as a whole. However, the educational attainment rates of the workers in the City Center are still diverse in terms of level of education. This reflects the mixture of jobs in the Center City.

Table 7 Charlotte Metro Area High Location Quotient Occupations, 2020 Occupation

Occupation Code

Employment

Location Quotient

Computer and Mathematical Computer Systems Analysts Information Security Analysts

150000 151211 151212

50,470 11,310 3,070

1.3 2.3 2.9

Business and Financial Operations Financial Examiners Credit Analysts

130000 132041 132061

84,660 3,370 1,720

1.2 6.2 2.8

Source: BLS; Economic & Planning Systems

Figure 10 Charlotte and Center City Worker Education Attainment, 2018 Bachelor's degree or advanced degree

24.4%

Some college or Associate degree

24.2% 24.5%

30.3%

19.9% 17.8%

High school or equivalent, no college 9.4% 7.9%

Less than high school

22.0% 19.5%

Unknown/Unavailable

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Economic & Planning Systems

City of Charlotte

Center City

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Innovation and Entrepreneurship

The Center City is home to some of the larger companies located in the region including the headquarters of international companies. These anchor businesses help attract additional companies and a diverse workforce. As a result of these companies in the Center City, the area had a higher average size of private businesses (15 workers per firm) than the city as whole. These employers are primarily located in the Uptown area. The surrounding areas in the Center City have more new and small businesses than the citywide average. These areas near the CBD serve as attractive locations for new business formation with lower rental rates and more flexible workspaces but proximity afforded by the Center City.

The economic development partners in the region have made a concerted effort to support the creation and growth of new businesses in Charlotte. The Center City area now has over 20 innovation “cultivators” (e.g., coworking spaces, and business incubators and accelerators).

Economic & Planning Systems

Table 6 Charlotte Employment by Firm Age and Size, 2017 Description

Uptown 2017

%

Southend 2017 %

Rest of Area 2017 %

Center City 2017 %

Charlotte 2017

%

Firm Age 0-1 Years 2-3 Years 4-5 Years 6-10 Years 11+ Years Total

1,105 1,588 1,808 3,741 68,389 76,631

1% 2% 2% 5% 89%

543 803 552 1,143 8,947 11,988

5% 7% 5% 10% 75%

939 1,805 1,640 2,152 33,725 40,261

2% 4% 4% 5% 84%

2,587 4,196 4,000 7,036 111,061 128,880

2% 3% 3% 5% 86%

15,190 18,737 16,849 37,695 458,261 546,732

3% 3% 3% 7% 84%

Jobs by Firm 0-19 Employees 20-49 Employees 50-249 Employees 250-499 Employees 500+ Employees Total

3,633 2,859 6,179 2,852 61,108 76,631

5% 4% 8% 4% 80%

2,090 1,737 1,981 693 5,487 11,988

17% 14% 17% 6% 46%

6,369 4,425 4,709 1,993 22,765 40,261

16% 11% 12% 5% 57%

12,092 9,021 12,869 5,538 89,360 128,880

9% 7% 10% 4% 69%

62,047 39,031 65,313 27,592 352,749 546,732

11% 7% 12% 5% 65%

Source: Economic & Planning Systems

The City’s target industries—finance and technology (FinTech) and advanced manufacturing—present opportunities to spur new business creation and innovation from the needs of these industries and the workforce employed within them.

The Center City Partners have also made investment and efforts in growing the arts and entertainment industries to attract visitors and growth in these industries. The Music Everywhere Charlotte effort is an example of actions taken to grow creative industries in the city.

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2. DEMOGRAPHIC AND ECONOMIC FRAMEWORK Impacting Trends

Vision Plan Considerations

 Charlotte is a major attractor of jobs and is a driver of the regional economy. The City’s capture of metro area employment growth (62%) is stronger than its peers. The Center City is a primary destination for financial, professional, and administrative services.

 Charlotte and the Center City are major employment destinations and support the vibrancy and economic activity throughout the region. Ongoing efforts should continue to maintain and grow the economic base in the Center City.

 Employment has dominated the growth in the Center City but there is a growing presence of housing. Despite the increased capture of housing growth, the amount of citywide housing in the Center City is lower than peer cities.

The housing growth in the past 10 years has been an impactful addition to the Center City and has been occurring throughout all areas of the Center City.  Within the City of Charlotte and the Center City, employment growth has been outpacing housing growth by a 4 to 1 ratio. This imbalance has not substantially impacted the quality of life in the city as the majority of workers also live in the city. However, this imbalance can further increase housing prices, and as a result of these trends adversely impact housing affordability and access to employment.

Economic & Planning Systems

 The predominance of employment uses, specifically office jobs, makes the Center City‒especially Uptown‒reliant on the activity these uses generate. The impacts of the Covid-19 Pandemic have illustrated that a greater diversity of activity can make the Center City more resilient.  Continuing the rate of housing growth experienced in the last decade is needed to add vibrancy and resiliency. Efforts to make areas in Uptown along Stonewall Street and within South End an attractive place to live have been successful and should be replicated elsewhere in the Center City. Increasing the presence of amenities and services that residents of the Center City want will help aid in the rate of housing growth. By promoting the attraction of these services/amenities to the area, the community can ultimately benefit from a greater diversity of housing product types and residents.

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3. CENTER CITY REAL ESTATE CONDITIONS

3. CITY CENTER REAL ESTATE CONDITIONS This section provides an overview of the real estate market conditions within the Center City area for multifamily housing, office, retail, and hospitality uses. The inventory of development space within the Center City and the development pipeline is provided using data from CoStar and the Charlotte Center City Partners.

This section also includes a summary of the market readiness analysis EPS completed for the Charlotte Future 2040 Comprehensive Plan. The market readiness analysis evaluated the existing market drivers and recent market momentum throughout the city to identify where new development is likely to occur in the future. This analysis was coupled with an evaluation of development suitability by use to inform future mapping of place types.

This section provides an understanding of the magnitude of real estate development that has occurred in the recent past to assess future demand for development over the next 10 to 20 years.

Economic & Planning Systems

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3. CITY CENTER REAL ESTATE CONDITIONS Multifamily Development

The growth in multifamily housing units in Charlotte since 2010 has been primarily in rental apartment units. The Center City area has over 21,600 apartment units (as tracked by CoStar), which represents 10% of the Charlotte Metro Area total. Since 2010 the apartment inventory in the Center City grew by 14,000 new units, which more than doubled the inventory that existed in 2010. The apartment development in the Center City since 2010 represented 25% of all apartment units built in the Metro Area over this time.

Table 6 Center City Apartment Unit Inventory, 2010 to 2020

Area

Uptown South End Center City Mecklenburg County Charlotte Metro Area

2020 Inventory Units

% Total

Total Units

7,496 7,955 21,615 147,467 207,438

3.6% 3.8% 10.4% 71.1% 100%

4,648 5,465 14,020 40,522 56,896

2010-2020 Ann. # Ann. % Units 465 547 1,402 4,052 5,690

10.2% 12.3% 11.0% 3.3% 3.3%

% Capture

8.2% 9.6% 24.6% 71.2% 100%

Source: Costar; Economic & Planning Systems

New apartment development in the Center City was distributed throughout the area, however South End captured the greatest share of new units (5,465 units or 39% of the Center City new units since 2010). The Uptown area captured a slightly lower amount (4,648 units or 33%).

Economic & Planning Systems

Center City Growth Projections Final Report | 26

3. CITY CENTER REAL ESTATE CONDITIONS The expansion of the apartment development market is expected to continue, based on the development pipeline. Of 14,020 new units since 2010, over 2,000 units have been built since 2019 and there are over 2,000 more units currently under construction. In addition to these units under construction, projects in the planning stages total nearly 6,000 units. Note that these statistics were generated prior to understanding of any potential slow down or impacts on planned projects of the Covid-19 Pandemic, and thus pipeline numbers may change moving forward.

Figure 10 Center City Apartment Unit Pipeline (as of July 2020)

Source: Charlotte Center City Partners; Economic & Planning Systems

Economic & Planning Systems

Center City Growth Projections Final Report | 27

3. CITY CENTER REAL ESTATE CONDITIONS Office

The Center City is the premier location in the Charlotte-Concord-Gastonia Metro Area office market. The Center City has nearly 33 million square feet of office space and accounts for 36% of total office space in Mecklenburg County and 27% of space in the metro area. The Center City has captured 23% of new office development in the metro area since 2010.

Uptown is the primary office location within the Center City with an inventory of 23.7 million square feet (72% of the Center City total). The areas in the Center City outside of Uptown have begun to capture a larger share of the Center City office market in the past decade. South End increased by 872,500 square feet of office space since 2010, capturing 11% of the Center City’s growth of 2,729,698 square feet over this time.

Economic & Planning Systems

Table 7 Center City Office Space Inventory, 2010 to 2020

Area

2020 Inventory Sq. Ft

Uptown South End Center City Mecklenburg County Charlotte Metro Area

23,669,289 3,435,175 32,914,566 90,521,851 120,371,307

% Total

19.7% 2.9% 27.3% 75.2% 100.0%

Total Sq. Ft

2010-2020 Ann. # Ann. % Sq. Ft

1,554,832 155,483 872,479 87,248 2,729,698 272,970 7,638,258 763,826 11,854,747 1,185,475

0.7% 3.0% 0.9% 0.9% 1.0%

% Capture

13.1% 7.4% 23.0% 64.4% 100%

Source: Costar; Economic & Planning Systems

Center City Growth Projections Final Report | 28

3. CITY CENTER REAL ESTATE CONDITIONS Uptown is poised to remain the premier office location in the region over the next 10 to 20 years. However, locations outside of Uptown that have strong access to transportation and rail transit will also be competitive for capturing office growth. The old industrial building stock in the Center City is likely to become a competitive option for new office users. These more flexible and less expensive locations will appeal to businesses with non-traditional space needs, smaller space needs, and/or flexibility in office configuration. As well, these spaces will command lower rental rates but still provide the Center City location and proximity to amenities that employers desire.

Figure 11 Center City Office Space Inventory by Area, 2010 to 2020

Uptown

Sq. Feet

South End

Rest of Center City

35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Source: Costar; Economic & Planning Systems

Economic & Planning Systems

Center City Growth Projections Final Report | 29

3. CITY CENTER REAL ESTATE CONDITIONS Retail

The retail inventory in the Center City totals over 5.6 million square feet. The amount of retail space in the Center City increased slightly since 2010, with the area’s inventory growing by 345,800 square feet. The Center City captured 808,000 square feet of new retail development built since 2010, but the impact of this new space was offset by the loss of approximately 460,000 square feet of existing space; much of which was likely part of larger redevelopment projects.

The South End retail inventory decreased slightly (17,559 square feet) between 2010 and 2020 despite the construction of 275,000 square feet of new space. While a similar pattern occurred in Uptown (lower inventory growth than new space built), there was still a net increase in the overall inventory of space in the area.

Economic & Planning Systems

Table 8 Center City Retail Space Inventory, 2010 to 2020

Description

2010-2020 Ann. #

Ann. %

75,722 -$8.81 -5.5%

7,572 -$0.88

0.5% -2.6%

1,389,405 $31.52 6.9%

-17,559 $13.23 -1.5%

-1,756 $1.32

-0.1% 5.6%

5,653,033 $29.96 5.9%

345,834 $12.41 -2.7%

34,583 $1.24

0.6% 5.5%

2010

2020

Total

Uptown Inventory Rent/sf Vacancy Rate

1,399,295 $37.88 10.8%

1,475,017 $29.07 5.3%

South End Inventory Rent/sf Vacancy Rate

1,406,964 $18.29 8.4%

Center City Inventory Rent/sf Vacancy Rate

5,307,199 $17.55 8.6%

Source: CoStar; Economic & Planning Systems

Center City Growth Projections Final Report | 30

3. CITY CENTER REAL ESTATE CONDITIONS This pattern of continued retail demand and new retail space development despite a relatively flat total inventory of space is likely to continue over the next decade. Existing, lower density commercial areas are often prime locations for redevelopment into more dense and often mixeduse buildings. As well, retail trends will likely lead to existing spaces becoming outmoded.

Figure 12 Center City Retail Space Development Pipeline

Source: Charlotte Center City Partners; Economic & Planning Systems

Economic & Planning Systems

Center City Growth Projections Final Report | 31

3. CITY CENTER REAL ESTATE CONDITIONS Hotel

The Charlotte Center City area has a relatively small hotel room inventory. The Center City area has an inventory of just over 7,500 rooms. The inventory grew by approximately 3,100 rooms since 2010 spurred by continued growth in room rates and a steady occupancy rate of nearly 70% for most of the past decade. Almost all of the hotel rooms are within the Uptown area, with very little inventory in the areas outside of Uptown.

The development pipeline is substantial due to the strong performance of hotels in the area (prior to the Covid-19 Pandemic). There are nearly 1,900 rooms in projects currently under construction and another 700 rooms are in the planning stages. These under construction and planned projects total more rooms than were built in the past decade, which may be an indication of pent-up demand in the market.

Economic & Planning Systems

Figure 13 Center City Hotel Occupancy and ADR, 2001 to 2020 Occupancy %

OCCUPANCY %

ADR $

ADR

80%

$200

70%

$180 $160

60%

$140

50%

$120

40%

$100

30%

$80 $60

20%

$40

10% 0%

$20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$0

Source: Charlotte Center City Partners; Economic & Planning Systems

Center City Growth Projections Final Report | 32

3. CITY CENTER REAL ESTATE CONDITIONS The hospitality sector has been one of the hardest hit during the Covid-19 Pandemic. It is likely that the hotel pipeline will be impacted (at a minimum delayed in construction) until travel levels return to normal in the US. Prior to the pandemic, center city areas were seeing growth of non-traditional short-term rental units (e.g., Airbnb) especially in cities with high tourism visitation. This sector is likely more present in the areas surrounding Uptown, in and around Center City neighborhoods, and the pandemic impacts on this type of use are unknown at this point.

Figure 14 Center City Hotel Development Pipeline

Source: Charlotte Center City Partners; Economic & Planning Systems

Economic & Planning Systems

Center City Growth Projections Final Report | 33

3. CITY CENTER REAL ESTATE CONDITIONS Market Readiness

Figure 15 Market Readiness-Momentum Score

The market readiness analysis EPS completed for the Charlotte Future 2040 Comprehensive Plan developed index scores to measure market opportunity and market momentum across the city.

The Market Opportunity score identifies locations where market demand for new development is most likely to be, based on the presence of attributes that will likely attract development. These metrics include acres of development sites, density of employment uses in the area, and proximity to amenities such as parks and trails. The Center City area scored high for development opportunity.

The Market Momentum score, shown on the right, identifies locations where market pressure for new development is increasing. The metrics that measure market momentum include recent housing growth, recent employment growth, and increases in commercial and apartment rental rates. The Market Momentum score analysis identified that many of the commercial corridors leading out of Uptown and areas surrounding Uptown are experiencing market pressures for new development. The Vision Plan has identified many of these same areas as Focus Areas where new development is likely to occur.

Economic & Planning Systems

Center City Growth Projections Final Report | 34

3. CITY CENTER REAL ESTATE CONDITIONS Impacting Trends

Vision Plan Considerations

 There has been substantial growth in the amount of housing units in the Center City over the past decade. Much of this growth has been from new apartment units. The development pipeline indicates a continued growth and potentially at a greater rate than in previous years. A range of unit sizes and types should be encouraged to provide options to potential residents.

 Growing the housing stock in the Center City should be a primary objective of the Vision Plan to help support the growing employment base and provide vibrancy and activity to areas that have primarily day-time employment use. The Center City neighborhoods and transit station areas will have the highest demand for new units. Efforts in the higher-density areas like Uptown are needed to provide an attractive, neighborhood-like setting to attract additional housing.

 The Center City continued its robust growth of office space over the past decade. The Uptown area continues to be the primary office destination, but its inventory is primarily large, institutional users in spaces that command higher than average rents, especially in newer buildings. Attracting additional speculative office buildings in and around Uptown can help build opportunities for smaller and non-traditional office users. Covid-19 will likely have major lasting impacts on space requirements for businesses. Adaptability to emerging trends is needed to provide near term opportunities for attraction of users.  The hotel inventory in the Center City appears to be small compared to its peer cities, but development trends indicate robust growth in recent years. Expansion of the hotel base, especially outside of the Center City, can help create vibrancy and support retail demand throughout the area.

Economic & Planning Systems

 Continued office growth should be focused in the Uptown area and also along planned transit lines outside of Uptown.

The plan should identify ways to support speculative development of a varied set of employment spaces to maintain the diversity of employment uses.  The Center City area is growing into an attractive destination for visitors that are not coming to Charlotte for business or conventions/large events. The expansion of the hotel room base and amenities supporting visitation can help increase economic diversity and vibrancy in the Center City.

Center City Growth Projections Final Report | 35

4. GROWTH OPPORTUNITIES AND CONSTRAINTS

4. GROWTH OPPORTUNITIES AND CONSTRAINTS This Growth Opportunities and Constraints section consists of four parts described below.

Figure 16 City Center Area

 Growth Forecasts – Baseline forecasts for new jobs and housing within the Center City over the next 20 years are presented.  Development and Land Demand Estimates - Demand forecasts for new residential, office, retail, and hotel development over the next 20 years are summarized. The estimated demand for new development is converted to land demand as well.  Development Capacity Estimates – An estimate of development capacity is provided based on an evaluation of parcels in Center City that is used to identify parcels that are likely to (re)develop based on their current utilization.  Comparison of Supply and Demand – Lastly, a comparison of demand to supply (capacity) is summarized to determine the Center City’s physical ability to capture the forecast growth for the area.

Economic & Planning Systems

Center City Growth Projections Final Report | 37

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Growth Forecast

EPS utilized growth forecasts for the Center City area created

by City Explained, developed for the Charlotte Future 2040 Comprehensive Plan and for the Charlotte Region Transportation Planning Organization (CRTPO). These forecasts were developed using the Community Viz forecasting model for the Metrolina Regional Travel Demand Model (see appendix).

Households

The growth forecasts were taken from Traffic Analysis Zones (TAZs) and 10-acre planning level grid areas that align with the Center City Study Area. The forecasts are baseline estimates of future growth used by EPS to gauge the Center City’s capacity to capture growth and develop target growth/change metrics for the Vision Plan.

Employment

 Community Viz Model Forecast estimates growth of 30,890 new housing units by 2040 – Rate of 1,544 units per year • Recent trend (‘10 to ‘20) = 1,400 per year

 Community Viz Model Forecast estimates growth of 110,500 new jobs by 2040 – Rate of 5,525 jobs per year • Recent trend (‘10 to ‘17) = 5,600 per year

 Estimated capture of 20% of citywide housing growth – Recent capture has been 24% of housing unit growth

 Estimated capture of 57% of citywide job growth – Recent capture has been 22% of job growth

Economic & Planning Systems

Center City Growth Projections Final Report | 38

GROWTH OPPORTUNITIES AND CONSTRAINTS Housing Demand

EPS estimated housing demand for the Center City based on an evaluation of past trends. This demand analysis is compared to the forecasts developed by City Explained and used to provide an estimate for the types of units likely in demand.

The City of Charlotte is forecast to grow by approximately 145,000 new housing units between 2020 and 2040, which is an annual rate of 7,250 units per year. The Baseline Forecast estimates 30,000 new housing units in the Center City by 2040, which is a capture rate of 20.7% of citywide growth. Based on the capture rate for the Center City in the past 10 years (24%), the Center City is estimated to capture 35,000 new housing units by 2040.

Given recent trends, 80% of these units are estimated to be multifamily units, which would account for over 40% of all new multifamily units in the city. This estimated new housing growth will lead to an increase in population in the Center City of approximately 70,000 people (using a 2 persons per unit factor).

The forecast of 35,000 new housing units over 20 years, 1,750 units per year, is an aspirational growth target for housing in the Center City. This amount of new housing would represent an increase over the annual rate of housing growth that occurred in the past decade and is 13% higher than the growth forecast within the current regional transportation model.

Economic & Planning Systems

Table 9 Charlotte and Center City Housing Demand, 2020 to 2040 Housing Types

Factor

2020-2030 2030-2040

Change 2020-2040 Total # Ann. #

Charlotte New Housing Demand New Housing Units

72,500

72,500

145,000

7,250

Baseline Forecast Center City Area New Housing Units

15,000

15,000

30,000

1,500

750 2,250 12,000 15,000

750 2,250 12,000 15,000

1,500 4,500 24,000 30,000

75 225 1,200 1,500

17,500

17,500

35,000

1,750

875 2,625 14,000 17,500

875 2,625 14,000 17,500

1,750 5,250 28,000 35,000

88 263 1,400 1,750

By Type Single Family Attached Multifamily Total Growth Target Center City Area New Housing Units

By Type Single Family Attached Multifamily Total

Capture Rate

20.7% % of units

5% 15% 80%

Capture Rate

24.1% % of units

Source: Economic & Planning Systems

5% 15% 80%

Center City Growth Projections Final Report | 39

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Office Demand

EPS estimated office demand for the Center City based on capture rates of forecast office growth in the Metro Area and Mecklenburg County. These estimates are used to estimate demand for new office space and the number of new office workers likely, and to compare against the forecast in the transportation model.

EPS estimates the Charlotte Metro Area will add 372,235 jobs between 2020 and 2040. EPS developed this forecast based on historic trends and forecasts by industry made by the North Carolina Department of Commerce and US Bureau of Labor Statistics. EPS estimates approximately 36% of jobs will be located in office spaces, which will translate to a demand for 137,026 office jobs and 37.7 million new square feet of office space.

EPS estimates that Mecklenburg County will capture 70% of the office space demand over the next 20 years. The Center City has captured between 22% and 23% of metro area office development since 2000. The Baseline Forecast assumes the continuation of this capture rate, which equates to demand for 7.3 million square feet of office space by 2040.

The Growth Target forecast estimates 28% capture of office growth in the MSA. This equates to demand for new office space over 20 years of 10.5 million or 525,000 annually. This office space will create space for approximately 19,000 new office workers over the 20-year period.

Economic & Planning Systems

Table 10 Center City Office Demand, 2020 to 2040

Description

2000-2010

2010-2020

2020-2030

2030-2040

Charlotte Metro Area Office Space Demand

25,191,747

11,854,747

17,458,423

20,223,827

Mecklenburg County Capture Rate of MSA

Office Space Demand

72%

18,207,501

64%

7,638,258

70%

12,220,896

70%

14,156,679

Center City Capture Baseline Forecast Capture Rate of MSA

Office Space Demand Annual Demand

21.9%

5,519,413 551,941

23.0%

2,729,698 272,970

23%

4,015,400 401,540

23%

3,256,000 325,600

Growth Target Capture Rate of MSA

Office Space Demand Annual Demand

21.9%

5,519,413 551,941

23.0%

2,729,698 272,970

28%

4,888,358 488,836

28%

5,662,672 566,267

Source: Economic & Planning Systems

It is important to note that this estimated demand may be accommodated by existing vacant or outmoded office buildings and/or other converted building space (e.g., industrial flex spaces).

Center City Growth Projections Final Report | 40

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Retail Demand

EPS estimated demand for retail spending based on the estimated growth in employment and housing in the Center City. EPS developed a sales flow model to understand what portion of sales currently occurring the Center City come from residents, workers, and visitors to the area. This sales flow model was then used to estimate future demand.

EPS utilized data from the US Census of Retail Trade and ESRI Business Analyst to estimate average annual expenditure potential by retail category. This estimated spending by households and workers was compared to actual sales estimates by store category provided by ESRI. Based on the EPS sales flow model, residents of the Center City account for 54% of retail sales, workers account for 22%, and visitors (i.e., anyone who doesn’t live or work in the Center City) account for 19%.

EPS estimates that future households, jobs, and visitors will generate an additional $1.8 billion in annual retail sales by 2040.

This amount of spending translates to an estimated Growth Target demand for 4.9 million square feet of new retail space (assuming 35,000 households in the Center City). Less housing growth will equate to less retail demand, the Baseline Forecast generates a demand for 4.3 million square feet. As shown in the market data, new demand may not translate directly to retail development.

Economic & Planning Systems

Figure 17 Center City Estimated Retail Spending by Consumer Type

Residents

19%

Workers

22%

54% Visitors

Based on the ratio of newly developed space to actual increases in inventory, the inventory in the Center City is estimated to grow by 2.0 million square feet by 2040.

A better target than retail space built in the Center City may be the number of new businesses. Currently there are approximately 942 retail/service businesses in the Center City. The demand estimates indicate a 37 percent increase in retail space by 2040 (accounting of losses in inventory based on recent trends). Applying this percentage increase to businesses indicates demand for 347 new retail businesses over the next 20 years.

Center City Growth Projections Final Report | 41

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Table 11 Center City Retail Demand, 2020 to 2040

Description

Total Expenditure Potential

Resident Expenditure Employee Expenditure Potential Potential ($000s)

($000s)

Visitor Spending

Total Exp. Potential

($000s)

($000s)

Sales per Sq. Ft.

Estimated Demand Sq. Ft.

$3,806,366

$558,876

---

$4,365,242

Convenience Goods Grocery Stores Specialty Food Stores Beer, Wine, & Liquor Stores Health and Personal Care Total Convenience Goods

$257,805 $9,903 $10,504 $108,590 $386,802

$76,280 $0 $0 $29,261 $105,541

$64,127 $1,901 $2,016 $26,460 $94,504

$398,212 $11,804 $12,520 $164,311 $586,847

$500 $500 $400 $600

796,400 23,600 31,300 273,900 1,125,200

Shopper's Goods General Merchandise Department Stores Excluding Leased Depts.

Other General Merchandise Stores Subtotal - General Merchandise

$195,838 $87,780 $283,618

$31,123 $37,233 $68,356

$43,565 $23,996 $67,560

$270,525 $149,009 $419,534

$500 $500

541,100 298,000 839,100

Other Shopper's Goods Clothing & Accessories Furniture & Home Furnishings Electronics & Appliances Sporting Goods, Hobby, Book, & Music Stores Miscellaneous Retail Subtotal - Other Shopper's Goods

$70,808 $78,433 $48,904 $44,821 $63,208 $306,174

$27,113 $0 $23,199 $29,023 $54,035 $133,370

$18,796 $15,055 $13,840 $14,174 $22,505 $84,369

$116,717 $93,488 $85,943 $88,017 $139,748 $523,914

$350 $250 $500 $350 $250

333,500 374,000 171,900 251,500 559,000 1,689,900

Total Shopper's Goods

$589,792

$201,726

$151,930

$943,448

Eating and Drinking

$182,105

$125,494

$59,043

$366,641

$500

Building Material & Garden

$118,665

$0

$22,777

$141,443

$300

$1,277,364 63%

$432,761 21%

$328,254 16%

$2,038,379

Total Retail Goods % of Estimated Sales

2,529,000 733,300 471,500 4,859,000

Source: Economic & Planning Systems

Economic & Planning Systems

Center City Growth Projections Final Report | 42

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Hotel Demand

Charlotte has a lower-than-average number of hotel rooms in its Center City compared to many of its peers. According to CoStar data, Charlotte has 28 hotels with over 7,500 total rooms in the Center City. Based on this data, it appears that Charlotte is underserved in terms of hotel rooms.

The estimate for hotel demand is based on the historic development trends in the Center City and consideration of development pipeline and comparison to peer cities. The Center City has attracted just over 240 new hotel rooms per year in the past 20 years. Development in the past decade and the development pipeline illustrate a significant increase in demand (approximately 313 rooms per year). Peer cities, such as Austin, Denver, Nashville, and Seattle, grew their room inventory by over 400 units per year in the past decade, as shown in Table 13.

Based on historic trends, the Baseline Forecast for hotel development is 5,000 new rooms by 2040 (250 rooms per year). EPS estimates that over the 20-year vision plan time frame, the Center City should aspire to capture 400 rooms per year or 8,000 new hotel rooms by 2040. This increase represents nearly double the current inventory in the Center City and would put Charlotte in line with its peer cities.

Economic & Planning Systems

Table 12 Peer Cities’ Center City (2-mile radius) Hotel Inventory

City Atlanta Seattle Nashville Denver Austin Minneapolis Charlotte Phoenix Raleigh

Hotels

Rooms

New Rooms Since 2010

61 91 89 73 70 48 28 33 16

15,956 14,249 14,162 12,626 12,472 8,100 7,274 4,367 2,094

1,385 4,142 8,790 4,299 6,138 1,806 3,139 899 562

Source: CoStar; Economic & Planning Systems

Table 13 Center City Hotel Demand, 2020 to 2040 Time Period

Hotel Rooms

New Development Ann Avg. Building Space

Ann. Avg

2000 to 2010 2010 to 2020 Development Pipeline (Est. 5 years) 20-Year Historic Average

1,682 3,139 1,555 4,821

168 314 311 241

1,172,837 1,799,867 1,348,020 2,972,704

117,284 179,987 269,604 148,635

Estimated 20 Year Demand Baseline Forecast Growth Target

5,000 8,000

250 400

4,000,000 6,400,000

200,000 320,000

Source: Economic & Planning Systems

Center City Growth Projections Final Report | 43

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Demand Summary by Area

The forecast development is broken out by areas within the Center City in Table 14. The forecasts assume that development in Uptown and South End will need all the estimated capacity for growth available. Note that the capacity estimates do not include publicly owned land that may be underutilized. The use of underutilized sites, both privately and publicly owned, will be necessary to accommodate the potential growth in the Uptown and to achieve the goals within this study.

Table 14 Growth Targets by Area, 2020 to 2040 Total

By Area

Units

Uptown

South End

Remainder of Center City

1,750 5,250 28,000 35,000

35 105 10,360 10,500 30%

175 263 6,440 6,878 20%

1,540 4,830 11,200 17,570 50%

Square Feet

Uptown

South End

Remainder of Center City

10,550,000 4,860,000 6,400,000 21,810,000

5,908,000 1,458,000 3,840,000 11,206,000 51%

2,637,500 972,000 960,000 4,569,500 21%

2,004,500 2,430,000 1,600,000 6,034,500 28%

Total Demand

1,259

222

197

810

Total Supply Low FAR Low Value Low FAR and Low Value

1,454 257 539 657

220 95 91 34

195 54 117 24

1,039 109 331 599

Residential Demand Single Family Attached Multifamily Total % of Total

Non-Residential Demand

Office Retail/Commercial Hospitality Total % of Total

Source: Economic & Planning Systems

Economic & Planning Systems

Center City Growth Projections Final Report | 44

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Figure 18 Center City Opportunity Parcels

(re)Development Parcels

EPS completed an analysis to identify parcels likely to develop over the next 20 years based on the current utilization of the land. These parcels represent the opportunity areas for capturing new growth in the Center City. In total, EPS identified 1,454 acres of potential development land in the Center City. The criteria used to identify parcels includes:  Parcel Size – Parcels over 1/3 acre in size were included in the analysis  Low Floor Area Ratio (FAR) – Parcels that have a building that is less than 20% of the size of the parcel it sits on.  Low Value – Parcels with a total assessed value of under $100 per square foot.

Table 15 Opportunity Parcels by Type

Description

Square Feet

Acres

11,213,794 23,461,637 28,640,096 63,315,527

257 539 657 1,454

Low FAR Low Value Low FAR and Low Value Opportunity Parcels Total Source: Economic & Planning Systems Economic & Planning Systems

Center City Growth Projections Final Report | 45

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Opportunity Areas

Figure 19 Center City Opportunity Areas

The potential opportunity parcels identified are shown together in Figure 19 in red. These parcels are overlaid with tax-exempt parcels (e.g., publicly owned parcels) to show areas with potential for sizable redevelopment. Some tax-exempt parcels may be candidates for redevelopment or may have opportunities for the addition of new uses/buildings.

The map of opportunity parcels includes an overlay of the identified Growth Areas being planned within the Vision 2040 Plan. The following findings were identified based on this analysis:  Much of the land identified as an opportunity parcel is located outside of the Uptown area. The parcels identified are generally along the major commercial corridors running out of Uptown and are in many cases along existing or planned transit lines.  The Uptown area has less land identified as opportunity parcels but generally has much higher land values than the surrounding areas and has many large publicly owned or taxexempt parcels. These parcels may present development opportunity sites in some cases.

Economic & Planning Systems

Center City Growth Projections Final Report | 46

4. GROWTH OPPORTUNITIES AND CONSTRAINTS Demand versus Capacity

EPS estimated demand for development based on the forecasts using average density factors for residential and non-residential uses. For the Growth Targets, the estimated 35,000 new housing units will generate demand for 758 acres of development over the 20-year plan horizon. For non-residential uses, the estimated demand for over 21.8 million square feet of development will generate demand for 501 acres of land.

Combined, the estimated total demand for land over the 20-year plan horizon is 1,259 acres.

EPS estimated the total capacity (supply) for new development in the Center City on sites likely to develop is 1,454 acres. This supply, compared to demand, indicates that the Center City has capacity to support estimated development demand if built at the assumed densities.

Charlotte Center City Partners and its partner agencies have a successful history of targeting specific areas of the Center City for redevelopment. The efforts along Stonewall Street illustrate the collective efforts needed to generate catalytic development in targeted areas. This same type of effort is needed within the focus areas identified in the Vision Plan. These efforts can help direct the private market to areas best suited for higher density development and to work in concert with other efforts to mitigate impacts of development pressures on areas not planned for major changes in land use or development density.

Economic & Planning Systems

Table 16 Land Demand vs Capacity Baseline Units Per Acre Units

Residential Demand

Single Family Attached Multifamily Total

1,500 4,500 24,000 30,000

Estimated Population

60,000

Non-Residential Demand

Square Feet

Office Retail/Commercial Hospitality Total New Employment New Jobs to Residents Ratio

7,270,000 4,337,000 4,000,000 15,607,000

10 25 75

Growth Target Acres

Units

150 180 320 650

1,750 5,250 28,000 35,000

Units Per Acre 10 25 75

Acres 175 210 373 758

70,000

FAR

Acres

Square Feet

1.0

167 100 92 358

10,550,000 4,860,000 6,400,000 21,810,000

1.0 1.0

78,000 1.3

FAR

1.0 1.0 1.0

Acres

242 112 147 501

109,000 1.6

Total Demand

1,008

1,259

Total Supply Low FAR Low Value Low FAR and Low Value

1,454 257 539 657

1,454 257 539 657

Source: Economic & Planning Systems

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5. VISION PLAN RECOMMENDATIONS

5. VISION PLAN RECOMMENDATIONS Recommended Focus Areas within the Vision Plan  Diversifying the Economic Base - Charlotte’s ability to attract employment growth has been a strength. Additional focus is needed on creating and attracting a greater variety of jobs types. Strategies to do this need to focus beyond attraction of office jobs and traditional office buildings.

Efforts to focus on include: – Workforce development for and upskilling of existing residents in target industries – Preservation/adaption of viable industrial/flex buildings and the businesses within them – Maintaining the affordability of workspaces and doing business in the Center City – Continuing to build the culture and support system for greater entrepreneurship and new business creation – Talent attraction to region and Center City

 Growing the Resident Base - Increasing the housing stock and number of residents in the Center City can help create vibrancy and resiliency for Center City businesses. Attracting new housing development throughout the Center City is needed, with focus on ensuring opportunity for affordable options and a diversity of product types. A major challenge for the Center City will be to make sure a sizable number of new units are attainable or affordable for workers in the Center City. Efforts to focus on include: – Encourage the growth of the housing stock and resident base in the Center City – Create and maintain housing opportunities that are affordable to the diverse workforce in the Center City – Invest in amenities and services supporting residents of the Center City with a focus on areas lacking these services currently

– Job attraction of multiple wage levels

Economic & Planning Systems

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5. VISION PLAN RECOMMENDATIONS Recommended Focus Areas within the Vision Plan  Major destination – The Center City is already a major visitor destination for large events and attractions (e.g., sporting events, conventions, NASCAR Hall of Fame visitors).

However, the visitation to the Center City can be bolstered by more frequent and diverse attractions and events.

Charlotte International Airport provides great access to national and international destinations, but Charlotte needs to leverage this asset to grow as a "travel-to destination" for more travels.

– Grow promotions and efforts to help make the Center City an international destination – Expand the hotel room base and amenities supporting visitation – Increase the presence and number of repeatable tourism events – Expand the number of regular events and programs in partnerships with Center City arts, culture, and historic attractions/institutions

 Guiding Growth - Providing visioning and strategic interventions to guide higher density development and employment uses to Uptown and Focus Areas with access to transit/mobility options is needed to achieve the same level of success the Center City has had over previous decades.

There is sufficient capacity for growth to meet demand based on this analysis. The areas outside of Uptown will continue to increase in attractiveness with the addition of transit and amenities, which may impact affordability and viability of existing uses. Visioning and strategic efforts are needed to guide development.

– Focus capital improvements efforts to support the enhancement of the area for live, work, and play, and to increase connectivity to the Center City – Support efforts to mitigate impacts of growth with focus on limiting displacement of residents within the growth areas in the Center City, especially areas identified as vulnerable to displacement (i.e., areas north and west of Uptown) – Expand place management efforts that have been used in Uptown and South End to other areas in the Center City

Economic & Planning Systems

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5. VISION PLAN RECOMMENDATIONS Vision Plan Aspirations

Growth Targets

 Continue to be a desirable place for people and businesses to locate

 Housing Targets – 35,000 new housing units

 Continue to provide a diverse mixture of employment opportunities for the Charlotte region

– 1.6 or lower new jobs to new resident ratio for growth over the next 20 years

 Maintain the ability to accommodate employment growth

– 3,500 new permanently affordable housing units

 Increase resiliency and vibrancy throughout the Center City by attracting a greater diversity of uses  Maintain affordability of living and doing business  Attract a greater balance between employment and resident growth The Center City is poised to continue to be an attractive place for new workers and residents. The Center City is forecast to grow by 70,000 new residents and 109,000 new jobs by 2040.

However, as the Center City grows, the diversity of growth that occurs should become the focus of the community’s efforts to guide the future of the Center City.

Economic & Planning Systems

 Employment Targets – 10.5 million new square feet of office/employment space to accommodate over 19,000 new workers – 350 new retail, restaurant, bar, and service businesses – 20%+ of jobs provided by small businesses (less than 50 employers) and 10%+ of jobs provided by businesses 5 years old or less  Visitation Targets – 8,000 new hotel rooms – 2.0 million more annual visitor nights

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5. VISION PLAN RECOMMENDATIONS Benefits of Desired Growth The Center City Vision Plan will guide future development and change over the next 20 years. The goal is to maximize the benefits that can be generated from the growth forecasts to improve the quality of life for the region’s residents, businesses, and workers.

The Center City is the region’s major economic center and generates a significant amount of economic activity.

Continuing to grow the Center City will continue to produce job and economic benefits for all residents. The recommendations in this study are to continue to broaden and strengthen the economic base in the Center City by helping to create more job opportunities, new businesses, improve the workforce and business environment, and diversify the economic activity in the area. These efforts will make the Center City more resilient.

In addition to the social impacts on the city’s residents and workers, the desired growth plan will produce fiscal benefits that can be leveraged to support investments in the Center City and fund programs/improvements to mitigate negative impacts of new development as well. The fiscal benefits the plan is estimated to generate were estimated using the fiscal impact model built by EPS for the Charlotte Future 2040 Comprehensive Plan and from the analysis completed for this study.

Economic & Planning Systems

 Property Value per Acre - The Center City accounts for approximately 18% of the property value in the city while only accounting for 3% of the land area. Properties in the Center City produce an average property value per acre of $4.7 million, which is 6 times the citywide average. The proposed new development in the Center City is estimated to generate $13 million in value per acre on average.

Investments supporting growth in the Center City have the highest return on investment of anywhere in the city.  Ongoing Fiscal Impacts – The desired growth pattern in the Center City is estimated to generate a net positive fiscal impact of $7 million annually on the City of Charlotte’s General Fund based on EPS’s fiscal model.  Annual Capital Tax Revenue – The forecast new development in the Center City is estimated to generate $11.8 million annually in property tax revenue for capital improvements funded through the City’s Debt Service Fund and Capital Projects Fund.  Visitor Spending – The target growth in hotel rooms is estimated to generate capacity for an additional 2.0 million visitor nights. This increase in visitation will generate an estimated $1.4 billion in addition visitor spending in the region annually (daily average of $720 per visitor).

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APPENDIX

APPENDIX Regional Growth Forecasts The baseline growth forecasts for new jobs and households in the Center City used in this study are from forecasts within the most recent Metrolina Regional Travel Demand Model. The forecasts for jobs and households are generated using the CommunityViz planning model.

The region’s 4 metropolitan planning organizations, 2 rural planning organizations, and municipal planning staffs develop information on land use designations, proposed projects, parcel data, and other data to inform the model on where and what type of development can occur.

The model then allocates county-wide forecasts for jobs and households over the planning horizon to specific parcels. The allocated jobs and households are summed at the traffic analysis zone (TAZ) geography and are used within the regional transportation model to inform transportation planning. For the City of Charlotte, the most recent information within the model is based on recent planning efforts and informed by the comprehensive plan process.

The allocation of growth to parcels in the model is based on the suitability of a parcel to accommodate development (e.g., is it vacant, does it have utility services, etc.) and the land use designation that is provided for the parcel (e.g., single family residential, commercial, mixed-use, etc.).

Economic & Planning Systems

EPS used the forecasts for new jobs and households for the TAZs within the Center City geography as the baseline forecast for this study. EPS then used its own analysis of parcels and estimates of demand for development to augment the estimated amount of growth (jobs and households) and the types of development needed to accommodate the growth over the plan horizon.

Term Glossary -

CommunityViz: Is a software program that works as an extension to ArcGIS software to perform analysis supporting land use planning, geo-spatial analysis, transportation planning, and resource management. CommunityViz is used to develop sub-county level growth forecasts for the Metrolina Regional Travel Demand Model.

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Metrolina Regional Travel Demand Model (MRM): is a planning tool developed in coordination of several entities to support transportation planning within the greater Charlotte region.

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Traffic Analysis Zone: Defined sub-geographies that group together land uses within similar traffic demand attributes used to model travel patterns in the region.

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APPENDIX Benefits of Growth Data The fiscal benefits of growth were generated using the development demand estimates for the Center City and inputs from the Fiscal Impact Model EPS developed for the City to support the Charlotte Future 2040 Comprehensive Plan Process.

The table to the right provides the calculations used to estimated the current and estimated value per acre of property in the Center City area.

The Fiscal Impact Model was used to estimate the annual ongoing fiscal impact of the forecast growth in the Center City and to estimate the property tax revenue generated for debt service and capital projects from new development.

Appendix Table 1 Existing and Forecast Property Values, 2020 and 2040 Description

Market Value per unit/sf

Estimated Growth (units/sf and Market Value) RESIDENTIAL Single Family Detached $500,000 Single Family Attached $350,000 Multifamily $250,000 COMMERCIAL Retail Office Hotel

$250 /sq.ft. $275 /sq.ft. $300 /sq.ft.

Number of Units/SF Estimated Change (2020-2040)

1,750 5,250 28,000

$875,000,000 $1,837,500,000 $7,000,000,000

4,860,000 10,550,000 6,400,000

$1,215,000,000 $2,901,250,000 $1,920,000,000

TOTAL

$15,748,750,000

Estimate Demand (Land) Land Square Feet Acres

52,184,880 1,198 Value

Acres (Developed)

Value per Acre

Current Center City Area % of City City of Charlotte

$27,908,932,138 18% $152,693,023,214

5,914 3% 199,116

$4,719,317

Future Center City Area

$15,748,750,000

1,198

$13,145,868

$766,855

Source: Mecklenburg County Assessor; City of Charlotte; Economic & Planning Systems

Economic & Planning Systems

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APPENDIX Baseline vs Growth Targets The study includes two estimates for future growth to guide planning efforts.

The Baseline forecast was estimated through the continuation of existing trends (e.g. rate of development, economic growth, and population growth). This forecast assumes no major regulatory changes, programmatic efforts, or investments are made to produce a different land use pattern or mixture of development in the Center City.

The Growth Targets forecast is an estimate of future potential for the Center City if efforts are made to achieve these aspirational growth forecasts. Regulatory changes, programmatic efforts, and public and private investments are needed to make this forecast a reality. The Growth Targets provide the guidance for planning efforts to make these amount of development a reality. The Vision Plan is based on the aspiration to achieve these targets and to show the impacts of how the forecasts may change if efforts are made to support the update Vision Plan.

Economic & Planning Systems

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