As Charlotte’s employment surpasses the pre-recession peak of 2007 and the metro swells to almost 2.4 million residents — growing three times faster than the national average — Charlotte is on every retailer’s radar and poised for continued retail growth. Retailers seeking customers with disposable income benefit from Charlotte’s strong affordability index, relative to similarly sized cities, and have enjoyed a positive trend in household incomes, which increased 8 percent between 2010 and 2015. This income growth is bolstered by the 35- to 54-year-old “big-spender” segment, which makes up approximately 30 percent of Charlotte’s population, and is expected to continue to grow in spite of shrinking nationally.
Retail developers and investors are also big fans of these fundamentals, which have yielded positive retail absorption over the past 12 months, impressive rent growth of 4.3 percent year-over-year, and vacancy of 5.5 percent, well below the historical average.
Bobby Speir, Crosland Southeast
Similar periods of growth in Charlotte’s history have delivered traditional grocery-anchored neighborhood centers, garden-style apartments and mid-rise office buildings, primarily surface-parked to accommodate the vehicle-centric nature of Charlotte. That trend is changing as Charlotte adapts to the cultural shift and increased density that now prioritizes proximity, access and convenience over McMansions and white-picket-fenced suburbia. The result of this shift is the focus on transit-oriented developments and infill multi-use projects that create dynamic live-work-play environments.
Charlotte’s clearest picture of this shift is in South End, one of the nation’s hottest multifamily submarkets, where increasing residential density is driving retail redevelopment. Behind this growth was the construction of the Lynx Blue Line light rail, which transports passengers along this corridor from I-485 to 7th Street in Uptown with 15 stops along the way. Most notable of the recently announced projects in South End is the 60-acre redevelopment led by Marsh Properties and Aston Properties that is located at the Lynx New Bern Station and anchored by a 53,000-square-foot Harris Teeter. This redevelopment follows the recent announcement by Edens to redevelop Atherton Mill, bringing diverse, national high-caliber retailers and restaurants to the submarket.
Transit-oriented redevelopment has followed the light-rail to the edge of Uptown with Crescent Communities recently breaking ground on a $500 million mixed-use project at the Stonewall Station on the Lynx Blue Line, which is anchored by a 47,000-square-foot Whole Foods Market. Not only does this project activate a formerly vacant parcel at the entrance to Uptown, but it also brings the Central Business District its first full-scale grocery option.
Additionally, SouthPark will experience unprecedented redevelopment in the coming years with the recent announcements of three significant mixed-use projects on key corners of the submarket. Childress Klein’s redevelopment of the 8.6-acre Sharon United Methodist Church property, which will add 170,000 square feet of retail and commercial space, gained unanimous City Council approval in March. Across the street, Synco and Schlosser’s $400 million redevelopment of The Colony apartments will incorporate a grocery-anchored retail component accompanied by up to 1,100 residential units, 250,000 square feet of office and a boutique hotel. Finally, a recently announced AAC mixed-use redevelopment of 5.25 acres at the corner of Fairview and Park South drive will include 75,000 square feet of retail space.
Waverly and Rea Farms are reshaping Southeast Charlotte’s landscape at the interchange of I-485 and Providence Road with nearly 300 acres of suburban infill mixed-use development. Both projects benefit from one of the most favorable demographic submarkets in the metro area. Waverly, a $200 million joint venture between Crosland Southeast and Childress Klein, will feature 225,000 square feet of retail, which is substantially pre-leased to tenants including the metro’s third Whole Foods Market.
Rea Farms, a 188-acre redevelopment featuring 250,000 square feet of retail on the former Charlotte Golf Links, is being developed by Lincoln Harris, in partnership with the Rea family.
As Charlotte maintains the trajectory of growth it has experienced in recent years, infill and transit-oriented developments will play a vital role in delivering retail and dining options suited to today’s busy lifestyles.
— By Bobby Speir, Vice President of Acquisitions, Crosland Southeast. This article originally appeared in he June 2016 issue of Southeast Real Estate Business.