Kevin Archer and his wife, Leslie, had looked at five or six condominium sites in downtown Charlotte when they rode the elevator to the top floor of a 13-story building one Sunday in January. The Archers were planning to move to the Queen City from Hickory after their two younger children, ages 13 and 15, finished high school, but they hadn’t seen anything they wanted to buy.
The 30-year-old former office building didn’t seem likely to suit them, either. 230 South Tryon was still in the early stages of conversion to condominiums, and Spectrum Properties had gutted the building, including the 13th floor. “It was just a concrete floor and windows,” says Archer, who owns 14 Bojangles’ restaurants in five counties around Charlotte.
But the developer didn’t have to renovate one thing — the view. The Charlotte skyline beckoned, and diagrams and renderings arranged around the empty space filled in the interior blanks of the penthouse. Twenty minutes after seeing the plans, Archer submitted a bid for the penthouse. He won’t specify the amount, only that it topped the asking price of more than $1.5 million.
“We were a little anxious,” he says. The private preview had drawn hundreds of bidders. The Archers sweated it out more than a week before the real-estate agent called to say the penthouse was theirs. About a year from now, the couple and their two teenagers will move into a glass-walled aerie, swapping their five-bedroom, 4,000-square-foot house in Hickory for the same square footage — but only three bedrooms — overlooking downtown Charlotte.
Developers are betting that what drew the Archers will lure others — the skyline, access to sports and the arts, the convenience and cachet of urban living. The city is awash in plans for residential high-rises. Seven — ranging from 13 to 53 stories and totaling more than 1,700 units — were announced from April 2004 through April 2005. Three, including 230 South Tryon, were nearly sold out before construction started. There’s talk of more in the works. If all seven are built, Charlotte will have transformed itself along with its skyline.
“The market’s hot as a pistol down here,” says Peter J. Verna, a structural engineer and construction consultant who has worked in real estate since he came to the city in 1948. His development group, 222 S. Caldwell Street Partnership, is building The Park, a 21-story high-rise atop an existing four-story parking deck at Third and Caldwell streets. Buyers snapped up 75 of the 107 units in two months last summer, even with prices starting at $250,000 and topping out near $1 million. Verna says The Park would have sold out then had he not halted preselling. He figured prices would rise, and they have — about $50,000 more per unit.
“This gentrification of the American city is occurring nationwide, from places like Charlotte and Durham to Dallas, Atlanta, Oakland,” says Chris Patriarca, a senior editor in the Charlotte office of Emporis, a German research company that tracks high-rises. “In Greensboro, there are rumors of the 16-floor 201 North Elm Street — vacant since the 1980s — being converted to residential. In downtown Winston-Salem, the 20-floor Nissan Building is currently under reconstruction into residential units. In Raleigh, the 10-floor Paramount is currently under construction in the Glenwood South area.”
The list goes on, he says — two seven-floor residential buildings in downtown Asheville, the seven-floor Plaza converted to residential units in Salisbury. At least two low-rise condominium projects in downtown Raleigh have been announced in recent months, and Progress Energy has opened part of a mixed-use development there.
In Charlotte, however, the real-estate accelerator is mashed to the floor. Developers, buyers and analysts say national trends are converging with years of public and private spending to create a demand for city living. Moreover, growth outside the city has turned some suburban commutes into two-hour-a-day rituals, adding luster to the idea of living downtown. So has the nightlife. “Downtown Charlotte 15 years ago was dead as a doornail,” says William J. McCoy, retired director of the Urban Institute at UNC Charlotte. “Today, if you go to downtown Charlotte — particularly from, say, midweek on through Saturday — it’s a very lively spot.”
Local architect and developer Jim Gross placed the first big bet on downtown living more than a decade ago. In 1994, he renovated a former Ivey’s department store into the six-story, 62-unit Ivey Townhomes. The next year, his Metropolitan Group tackled the four-story former Lance factory south of downtown, converting it to 85 condo- miniums. In 1999 came The Arlington, a glittering, rose-glass high-rise with 25 floors and 113 units, locally known as the Pepto-Bismol building and on the Web as thepinkbuilding.com.
It has not been clear sailing. Disputes with tenants and contractors have plagued some properties, and only about half of the Arlington’s units have sold. It lies just outside the interstate loop that girds downtown and delineates Charlotte’s core. But the Gross buildings, particularly The Arlington, broke an invisible fence around downtown. When he started his projects, he says, there was “a real mental barrier — a moat, psychologically” separating where people worked from where they lived. Today, the moat is gone. “I was the first,” he says with pride.
From a 17th-floor balcony at The Arlington, facing the skyline from the southwest, it’s easy to forget the moat and focus on the view the way the Archers did. Downtown’s tall buildings shimmer in the sun. Bank of America Stadium looks like a plump blue-and-gray cushion lying beside the pastel-hued banks and other commercial buildings. The horizon is the gauzy green line of the Piedmont landscape.
“Charlotte has an awesome downtown,” says John Long, a senior vice president of Atlanta-based Novare, which is developing Avenue — 36 stories with 386 residential units — at North Church and West Fifth streets. “The urban core of Charlotte is better than any Southeastern city.” The reason, he says, is simple: Bank of America and Wachovia, formerly First Union, invested heavily in the downtown as they grew up there. “Consequently, it’s fed on itself.”
“It’s hard for an outsider — for people from Wilson or Raleigh — it’s hard for them to know how much we wanted for this to happen,” McCoy says, “and how unresponsive the market was for all those years. And all of a sudden, bang! It just happened overnight.” Like Long, he believes private industry has been the driver. “I don’t know that what’s going on in uptown Charlotte is a strategy. I know it’s been desired by a lot of people for a long time. I don’t know that the public sector has done anything to spur that along.”
Where the public sector helped, McCoy and real-estate analyst Frank Warren say, is in building a transit system and a downtown basketball arena and supporting the arts. “Certainly all the public investment that’s gone on down here makes it a desirable place to live,” Warren, president of Warren & Associates in Charlotte, says. “It would not be the market that it is if the city hadn’t invested heavily in infrastructure and amenities downtown — the stadium, the arena, the streetscaping.”
Michael Smith is president of Charlotte Center City Partners, which promotes downtown. He sees the arena, scheduled to open this fall, as a tipping point. “You get a $265 million investment right in the center city, a couple of blocks off the center of downtown, and it’s an indication to developers, it’s an indication to the companies that would finance those developers, that Charlotte’s serious. It wants a strong urban core.”
Archer says that being able to walk to the arena and other amenities was a big part of why urban living appealed to his family. “The Blumenthal cultural-arts center, we go down there often. Now, we drive an hour to do it, one way.” Other attractions for the Archers are the Levine Museum of the New South and Bank of America Stadium, where they have a suite.
Local real-estate analyst Emma Littlejohn says nearly everything now in place in downtown supports the building boom. “You’ve got land. You’ve got strong industry. It’s a good-looking city. It’s clean. You’re going to have transit. Your biggest Achilles’ heel is schools, but people living in condos don’t care about schools.”
That’s a safe assumption. Buyers of Charlotte condos, developers say, generally are childless. They can be successful singles or empty nesters whose children have grown and flown. Archer wanted to be in the empty-nester category; his teenage son and daughter weren’t having it. “Once they got out of high school and went to college, we were going to go down and live in downtown Charlotte. When the kids saw what we were doing, they said, ‘Gosh, we want to go, too.’” The Archer children will attend private school when the family moves downtown.
With prices averaging close to $400 a square foot in most of the proposed buildings, a degree of prosperity is required. “We’ve got the 25- to 35-year-old employee of Bank of America, Wachovia or one of the companies that support the banks that work downtown — that’s your most typical tar-get market,” says John Gray, president of Spectrum Properties’ residential division. “We do have a large number of empty nesters, who have sold the place and live downtown. We have a large number of people who have homes at Lake Norman and live in the city during the week and then drive out to their place on Lake Norman on Friday afternoon.” Many of the “knowledge workers,” employed by the banks and the businesses that support them, come from urban areas and want that lifestyle. “They thrive on the energy.”
That energy and diversity could help keep Charlotte’s condo boom going for a while. How long? “You never know how long the market will go — that’s the $64,000 question,” Gray says. “But right now, I don’t see the market weakening. In fact, I see it strengthening.” So much so, in fact, that in mid-April Spectrum decided to convert Fifth & Poplar, a two-year-old, eight-story, 304-unit rental development to condominiums. Going condo with a rental building allows Spectrum to hedge its bets — it can put a ready-to-occupy unit into a hot market, skipping a construction delay (and the previews and renderings).
“You cannot believe the phone calls we’ve taken in the last three days about Fifth & Poplar,” Gray says. “I think the demand is high and probably increasing. The question is, how much supply do you need for that? Nobody knows.”
One calculation used to quantify how many condo units downtown Charlotte can tolerate goes like this: The six-county metropolitan statistical area that includes Charlotte has about 1.5 million people, with between 50,000 and 55,000 of them working downtown. As much as 2% of the total population might want to live in the center city. That would mean downtown eventually could have as many as 30,000 residents. Estimates of downtown’s present population range from 7,500 to 10,000. That leaves a lot of room for growth, even if all seven proposed projects are built and sold out.
David Furman, principal of local developer Boulevard Centro, believes that downtown can more than double the number of current residents. Given his company’s experience, it’s not surprising. Boulevard Centro, which has done eight smaller projects downtown, announced that it would construct Courtside, a 10-story building at Sixth and Caldwell. “We started working off a list that we had compiled, and everybody that came in bought a unit, so it was like, ‘OK, we need to up the ante.’ We made it 17 stories, and we brought it back out and still it sold like crazy.” It was fully booked for reservations, a kind of presale system, and when it was time to sign contracts, about 100 of the 107 units went under contract.
So Boulevard Centro launched the TradeMark project, a 28-story high-rise on Trade Street between Mint and Poplar. “TradeMark is probably about 60% sold,” Furman says. “It’s fantastic.” It’s also somewhat surprising, Patriarca says, because Charlotte has no history of high-rise living, unlike cities such as Dallas, Houston and Birmingham, Ala. “Even so, the size of some of the Charlotte projects ... in combination with the city’s lack of existing high-rise living is what makes the Charlotte boom so impressive.”
It’s also varied, ranging in height from buildings with more than 50 floors to one at 13 stories. Tallest is the 53-story EpiCentre project at Trade and College streets planned by The Ghazi Co., a local developer, and Flaherty & Collins Properties of Indianapolis. It also is the most ambitious proposal, pairing 260,000 square feet of retail and commercial space with 400 condominiums on the site of the old civic center, scheduled to be demolished in May. Ghazi says that his plans include stores, restaurants and a bowling alley. About 160,000 square feet of the commercial space has been leased. He has floated the idea, though no firm plan is in place, to add a residential hotel. EpiCentre is scheduled for completion in 2007.
At 50 stories and 411 units, The Vue is EpiCentre’s closest competitor in height. It is being developed by Churchill Development Group of Orlando, Fla., and Westminster Partners of Chicago and is a taller version of a 35-story high-rise being built in Orlando, also called The Vue. Completion is expected in mid-2008.
Avenue, the Novare development, is next at 36 stories and is expected to be completed in mid-2007. TradeMark, with 28 floors, and The Park, with 21 floors, will be lower on the skyline. The shortest high-rises proposed are the 17-story Courtside and the 13-story 230 South Tryon, where the Archers will live.
In late April, Wachovia unveiled a multiuse development that will include a 30-story office tower, a condominium complex, a park, a museum and a theater on two blocks bounded by Tryon, Church and Stonewall streets. Wachovia hasn’t said how tall the condo complex will be or how many units it will have.
For now, the biggest question is, will all the projects be built? Even some developers will admit that it’s unlikely, though they won’t guess which ones will not be built. “The question is, how deep is the market?” Gray says. Spectrum has considered launching another project, but “given that all of these projects have been announced — and I’m not sure they’re all going to get done — I don’t know why I’d be 14th in line with another project.”
Gross is optimistic but skeptical. “I hope they all get built. It’s good for Charlotte.” But he compares the development race to musical chairs. “The music stops, and there are only four or five chairs.”
A lot of factors play into the financial underpinnings of the real-estate market, and any one of them can throw on the brakes, Littlejohn says, though she has seen no signs of slowing. “At this point, the banks have been fairly open. I haven’t seen any retreat. Either the buyers will dry up, or the interest rate will go up, or construction costs could go up, or lenders will go away. One of those four main legs could dramatically change the landscape in short order.”
For now, though, Charlotte’s high-rise boom is at full-tilt boogie — with perhaps one universal, albeit unwritten, limitation on construction. “There’s also the Hugh McColl factor,” Littlejohn says, referring to the retired Bank of America chairman and CEO. “Who’s going to build a tower taller than Hugh’s?”
So far, nobody. At 60 stories, BofA headquarters is still the tallest high-rise on the Charlotte skyline.