Charlotte Report: Hot Times in the Queen City

By Bea Quirk

While construction in Charlotte was expanding at a healthy clip last year, the area's builders remained skeptical about whether it would last. In fact, last September, after Hurricane Katrina, they were downright jittery.

But by early this year, construction had jumped markedly, and contractors were optimistic, without reservations.

"Charlotte is hot, and the next few years are looking good," said UNC Charlotte business professor Tony Plath, who compiles the Construction Barometer Report for the Carolina Associated General Contractors. The Barometer ranking looks at future industry trends. The barometer is a composite index for the Carolinas' construction industry that analyzes economic indicators and opinions of more than 100 professionals in the field; results are broken down by state and geographic area.

"Every sector you can think of - they're all going," added Plath, who is predicting a growth rate of 5 to 6 percent for the year.

Pat Rodgers, president and CEO of Charlotte-based Rodgers Builders, describes herself as a "cautious optimist." But even she's sold.

"The market is as strong as I've ever seen it," she said. "I'm optimistic about the future - there's no reason why Charlotte as a region won't continue to be strong. It's a great community for people to live in."

Her company's projects include the $32 million U.S. National Whitewater Center and the $25 million Billy Graham Library, expected to be a major tourism attraction when it opens next year.

"Construction is booming in several areas," Charlotte Mayor Pat McCrory said. "Economic development is a result of a good quality of life. I hope we're doing a good job."

National groups say they are. In March, Site Selection Magazine ranked Charlotte ninth as a 'Top Metropolitan Area,' and in February, Charlotte was ranked sixth on the list of America's 50 Hottest Cities compiled by Expansion Management Magazine. Entrepreneur Magazine named Charlotte the number two U.S. city for entrepreneurs in October 2005.

Revved Up Downtown

One day during May, 47 new projects were added to the CAGC's Daily Project Alert, a feature on its Web site that lists projects going out for bid.

"That's a lot of activity," said Steve Gennett, CAGC's president and CEO. He added that all the contractors he speaks with are "as busy as they can be - both with current projects and with work in the pipeline."

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From a geographic standpoint, much of the activity is centered in the center city. For a number of years, there was always at least one new office tower going up, but that activity disappeared in recent years. Towers are again sprouting, but this time full of condominiums rather than offices.

"Young people aged 25-30 are attracted to Charlotte and moving here, and they like living in the center city," McCrory said. "Empty nesters do, too."

Eight condominium projects are in various stages of planning, design and construction. Tenants have already moved into Courtside, a 17-story, 107-unit tower developed by Boulevard Centro. The same developer has chosen Batson-Cook of Atlanta to build TradeMark, another of its center city condo projects. The $47.7 million, 28-story building will also feature retail and office space.

Also, later this year, tenants will move into 230 South Tryon Street, a renovation of a former 13-story office building developed by Spectrum Properties and constructed by Dunn Southeast.

Construction has recently begun on one of the center city's signature projects, the EpiCentre, which will include 100,000 sq. ft. of entertainment space with up to 20 restaurants slated to begin opening next year; a 53-story condo tower called 210 Trade; and a 175-room Aloft Hotel.

The $100 million project is located on the site of the old Charlotte Convention Center, which was imploded last year.

R.J. Griffin & Co. of Atlanta has started work on 210 Trade, which is being developed by Flaherty & Collins Properties of Indianapolis. Across the street from EpiCentre will be a $60 million, 150-room Ritz-Carlton Hotel. Construction began June 1, with plans for a 2008 opening.

Two other signature projects are in the works for the center city. Wachovia started sitework started earlier this year on its mixed-use project that will feature a 45-story office tower, residential units, retail, facilities for the Charlotte campus of Wake Forest University's business school and a cultural center featuring a 1,200-seat theater and two art museums.

A new facility for the city's Afro-American Cultural Center will be built across the street.

Two blocks away, the NASCAR Hall of Fame will be built. A team consisting of Turner Construction Co., F.N. Thompson and Walter B. Davis has been hired as the construction manager and is performing preconstruction services. This is the same group that is constructing the new Mecklenburg County Courthouse project.

The $140 million NASCAR facility was designed by Pei Cobb Freed & Partners of New York. Tertiary sitework, including some demolition, is currently under way, but a formal groundbreaking won't happen until the spring.

"These signature projects have an ongoing and continued impact and add vitality to the market," builder Rodgers said.

Just a few blocks down from the hall of fame, on the outskirts of the center city, initial work has started at The Metropolitan, a $200 million, 16-acre mixed-use development by Charlotte's Pappas Properties and Collett & Associates. There will be more than 200 condos and 605,000 sq. ft. of office and retail space that will encompass a vertically stacked center with a Target and Home Depot Design Center.

Elsewhere in Charlotte

Retail is making a comeback in other parts of the city as well. At the 1.4-million-sq.-ft. SouthPark Mall, a Neiman Marcus will open in September as the last phase of a $100 million makeover and expansion. The contractor was Winter Construction.

At another corner of the mall, mall owner Simon Property Group is being joined by the Hanover Co. and MetLife Real Estate Investments in building the Village at SouthPark, featuring parking, a two-story Crate & Barrel and another 48,000 sq. ft. of retail, and 150 residential units. Completion is slated for March.

Beside the mall and across the street, a retail-and-residential complex, Morrison Place, is heading for a 2007 completion. Grubb Properties is the developer of the 27-acre site, and Rodgers Builders is the contractor. Also adjacent to the mall, the finishing touches are being put on Piedmont Town Center with two office towers with 297,000 sq. ft., 179 condominiums and 70,000 sq. ft. of retail.

Shelco handled the construction for Lincoln Harris and Crescent Resources, all based in Charlotte.

None of the economic sectors are being left out of the construction boom. The industrial market, which was annually absorbing more than a million square feet of space in the late 1990s, hadn't seen any major new spec construction in more than five years. But work began this year on several new buildings.

One of the city's major industrial players, Childress Klein Co., has broken ground on three buildings - a 280,000-sq.-ft. warehouse at Ridge Creek being built by the Charlotte office of Conover, N.C.-based Matthews Construction Co., and two office-warehouse buildings totaling 200,000 sq. ft. at NorthPark, being built by Shelco. All are set to open late this fall.

Beacon Partners is focusing on smaller, flex-space projects, and ProLogis will soon be completing its 260,000-sq.-ft. warehouse at West Pointe Business Park. American Asset Corp. has two buildings with 272,000 sq. ft. and 30-ft. clear ceilings under construction in southwest Charlotte.

"High demand and low supply leads to construction, which means more jobs and an increased tax base," McCrory said.

In health care, the Carolina HealthCare System is in the midst of a major building program including the $85 million Levine Children's Hospital and a $75 million expansion of its flagship facility, Carolinas Medical Center.

Robins & Morton Group of Birmingham, Ala., is the contractor for both projects, set for completion in fall 2007.

Expansion/renovations are being planned at three of the medical center's other Charlotte-area hospitals, plus $116 million is being invested in new medical office buildings, including one now under construction in the SouthPark area and another just finished in the Ballantyne area.

Ballantyne has also been the site of most of the city's recent Class A office construction. The Bissell Cos. is currently adding three buildings totaling 401,000 sq. ft. to its 2 million-sq.-ft., 535-acre Ballantyne Corporate Park. The local office of Turner Construction Co. is the contractor for all three structures.

Charlotte city government is also busy. The Charlotte Area Transit System is on track to complete the $427 million, 10-mi. South Corridor light rail line for a late 2007 debut. It is the first in what is ultimately planned to include five lines.

In conjunction with the light rail, the city is now in the process of making $60 million of infrastructure improvements along the line. "What has been a blighted corridor is now growing and dynamic," McCrory said. "The private sector sees the value of the potential there."