Three years ago, downtown Charlotte’s condo market was cooking. At least seven developers had high-rise projects planned or under way (Skyline Drive, June 2005). But one of four things, local real-estate marketer Emma Littlejohn warned, could cool things off: shrinking demand, higher interest rates, increased construction costs or cautious lenders.
All four have been felt, but it’s the last factor that has hindered Queen City developers, just as it has their peers across the state and nation. Several projects are on hold for various reasons, usually financial, and a 22-story tower went into foreclosure and was auctioned at the Mecklenburg County courthouse. Three contractors forced The Park into bankruptcy to delay the sale and recover $1.8 million they claim they’re owed.
Carl Felson of developer Verna and Associates declined comment on what happened. In 2005, the project’s estimated completion date was late 2006, but it’s only 70% complete, according to court papers filed in August by the project’s lender, Madison, Wisc.-based BB Syndication Services. When the developer stopped making payments earlier this year, $28.1 million of the $30.7 million loan had not been repaid.
The Park is the worst symptom of a market under stress, Littlejohn says. “It’s just sad. It’s a marketable project. He has people that want to buy, and it’s a good location. It’s just unfortunate that it took him so long, and he didn’t get the project completed.”
Lenders beset by rising loan losses have changed their equity requirements, and financing costs have risen in the past few years, she says. “The numbers just don’t work. The cost of doing business is too much. There’s no profit left in these deals.” There might be more pain to come.
Wachovia, the nation’s fourth-largest bank and employer of many downtown residents, recently announced nearly 7,000 layoffs. “They’re cleaning house, and people are going to be losing jobs, which will affect demand. And it’s also psychological because its such a big part of the downtown office market and everything else.”
After news of its president’s hefty compensation ignited a public firestorm, the United Way of Central Carolinas board gave Gloria Pace King 30 days to resign or be fired, notwithstanding that the board — a who’s who of the Queen City’s business elite — had approved the pay package. Her ouster will cost the nonprofit plenty. Unless she gets another job, it will have to pay King her $275,000 annual salary for the two years left on her contract. And if she and her lawyer have their way, it will have to fork over retirement benefits estimated at about $500,000 a year for three years. Plus it’s paying retired bank executive Mac Everett $20,000 a month — “It’s a full- time job,” he told The Charlotte Observer — to pinch-hit while it searches for a permanent replacement. His gig is limited to four months. Everett gave the United Way a rebate of sorts by pledging $20,000 to this year’s fund drive. That won’t come close to replacing contributions the fiasco is expected to lose in this fall’s campaign.