When local real estate developers look ahead, they see sunshine and big deals for 2016 – but beyond
When local real estate developers look ahead, they see sunshine and big deals for 2016 – but beyond that, shadows loom that could turn into storm clouds.
Signs of the ongoing real estate boom are all around us: new office towers popping up from uptown to Ballantyne, apartments sprouting by the thousands, new subdivisions carved out of vacant land. The 2008 real estate crash and recession seem very distant next to the tower cranes dotting Charlotte’s skyline.
“It’s been hard over the last three years to make very many mistakes,” said Jim Merrifield, a partner at real estate firm MPV Properties, speaking at a forecast hosted by commercial real estate news site Bisnow.
“Most everyone feels good about ’16. I think it’s going to be good for everyone,” said Brian Leary, president of Crescent Communities’ commercial and mixed-use division.
At two real estate forums I went to this week, almost all the attendees I spoke with agreed with Leary. Farther out, though, the unknowns start to multiply. There’s the presidential race, the nastiest in recent memory and fraught with the possibility of a labor market-disrupting border wall and deportation surge. Oil is still slumping and stocks are bouncing around like a pinball. And global economic signs are mixed at best and outright troubling at worst, with China’s growth slowing and other large countries like Brazil and Argentina struggling.
“There are certainly clouds on the horizon about international and national growth,” said Merrifield. “If the rest of the world has a flu, we’re sure to at least get a cold.”
Attendees at the Charlotte Region Commercial Board of Realtors Deal Maker Awards, held Tuesday at Myers Park Country Club, also said business is strong right now. Commercial real estate is selling for record prices, rents are rising and vacancy rates are down in all major sectors.
A survey during the program asked attendees when they think the Charlotte real estate market will peak. The most popular answer was 2017, indicating a slight majority of those in attendance think we have at least another year left before the market declines. The second-most popular answer was 2018 – even more optimistic – and the possibility that we’re already at the top of the market came in third.
Building permits for housing (single- and multifamily) issued in Mecklenburg County in 2014
Building permits for housing issued in 2006
Source: U.S. Census
What inning are we in?
At Thursday’s forecast, held at a nearly full Fillmore concert venue with hundreds of attendees, the specter of the last crash was a fresh memory, but not one most attendees think we’ll repeat anytime soon.
“It will be some time before we see another crash like we did in ’08,” said Chris Epstein, president of BECO South, which owns Innovation Park in the University City area. He said there’s no fevered over-building going on right now, and that tighter lending and underwriting standards have kept a lid on development.
The local homebuilding hasn’t reached its pre-recession highs, for example. In 2014, there were 3,896 single-family building permits issued in Mecklenburg County along with 5,365 multifamily building permits, almost all apartments. That’s 9,261 total, according to the U.S. Census.