Presentation

Downtown Real Estate Market Analysis

Presented to:
The City of Concord, North Carolina
Presented by:
Economics Research Associates

April 8, 2008
Assignment
• Market analysis for downtown Concord
• Stakeholder interviews
– CDDC & City staff
– Downtown merchants, brokers, developers
• Assess real estate market potentials
– Retail, Residential, and Office
• Market implications for downtown
• Policy Implications for downtown revitalization
Stakeholder Interviews
• Impending closure of Phillip Morris
• Downtown Kannapolis – 350-acre NCRC
• Development of new competitive nodes:
– US 29 / US 601
– US 29 / Philip Morris
– Airport / West Concord
– Afton Village Area
• Consequences of rapid growth
– Infrastructure needs
– Distance between east & west Concord
– Regional water resources
Stakeholder Interviews
• The Concord Hotel is the redevelopment priority
• Key downtown Anchors include:
– City, County Offices, Courts, and Jail
– The Arts Center & Davis Theater
• The City controls several redevelopment sites
• Cabarrus Avenue improvement program
• Parking supply
• Barbara Scotia College
• Lack of modern downtown housing options
• Downtown is physically constrained
• Long-term vision for downtown
Demographic Findings
• Population – Annualized growth of 5.2%
– 70,000 residents by 2008
• Young families with children are the driver
– Contrary to national trend – smaller household size
• Per capita income growth
– Growth rates are well above inflation
– $32,111, compared to MSA ($36,761)
• Educational Attainment
– Undergrad / graduate attainment slightly behind
• Household segmentation
– Growth of younger affluent families
Retail Market Analysis
• Regional inventory of 75 million square feet
– 57 square feet per resident
• Concord – 5.3 million square feet of retail space
– 81 square feet per resident w/ Concord Mills
– 61 square feet per resident w/out Concord Mills
• Vacancy levels are modest
– Region (6.1%) / Concord (5.1%)
– Population and income growth will drive demand
• Mecklenburg County remains the retail engine
– Suburban growth is shifting the market
Retail Market Concentration
Downtown Retail Inventory

Sp orting Good s

Ele ctronics & Ap p lia nce s

Se rvice s

Shoe s

Je w e lry

Food & Be ve ra g e

He a lth & Pe rsona l Ca re

Ap p a re l & Acce ssorie s

Misce lla ne ous

Pe rsona l Se rvice s

Hom e Furnishing s

Arts & Ente rta inm e nt

Re sta ura nts & Ba rs

0% 5% 10% 15% 20% 25% 30%

Downtown Inventory

Street Level Office

Street Level Retail

Street Level Vacancy

Upper Floor Office

Upper Floor Retail

Upper Floor Vacancy

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000

Source Zip Codes for Downtown
30%

25%

20% % of Tota l Visitors

15%

10%

5%

0%
28025 28027 28212 28075 28031 28124 28081 28115 28035 28023
National Retail Sales Trends
Warehou se clubs and superstores 15.0%

Electronic shoppin g and m ail-order houses 12.3%

Bldg. m at., garden equip., supplies 6.8%

Health and personal care stores 6.8%

Electronics and appliance stores 6.7%

Furniture and hom e furnishings stores 6.0%

Miscellaneous store retailers 5.5%

Food services and drinking places 5.5%

Oth er nonstore retailers 5.4%

Clothin g and clothin g access. stores 4.4%

Sporting goods, hobby, book, and m usic stores 4.1%

Food and beverage stores 2.9%

All oth er general m erchandise stores 2.2%

Discoun t dept. stores 2.1%

Departm ent stores -0.1%

Source : U.S. Ce nsus Bure a u

Retail Implications
• Lease rate comparisons
– South Charlotte: $23/sq.ft.
– Downtown Concord: $5-$10/sq.ft
• Competition with suburban “greenfield” retail
• Vacancy is low – new development is likely
• Significance of key anchors:
– Downtown office market
– Restaurants and bars
– Arts and entertainment
• Goal - expand trade area for downtown
Office Market Assessment
Office Market Implications
• Concord share of office market
– 75% of Cabarrus County office inventory
– 1.4% of regional office inventory
– 68% of Concord inventory is in downtown
• Office rents in Concord have grown faster than the
region
• Policy Implications
– The NCRC project will reshape the market
– Downtown office demand is linked to site availability
– Opportunity for smaller professional service firms
Residential Market Assessment
Change in Home Values
Charlot te MSA

14% Nort h Carolina

United St ates

12%

10%

8%

6%

4%

2%

0%
1986

1988

1991

1996

2001
1987

1989
1990

1992
1993
1994
1995

1997
1998
1999
2000

2002
2003
2004
2005
2006
2007
Residential Market Assessment
Residential Market Assessment
Curre nt Ho m e Value s

South Concord

Central Concord

North Concord

Total

West Concord

Afton Village

$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000

Residential Market Assessment
Age of downtown housing stock
Avg . Year Ho mes Bu ilt (Cit y Cen ter)

Avg . Year Ho mes Bu ilt (Cit yw id e)

Con co rd

Durh am

Mo oresville

Rock Hill

1 9 30 19 40 1 95 0 1 9 60 19 7 0 1980
Residential Market Assessment
Urban Housing Opportunity

Greenville Cityw ide Households

Households w ith Urban Living Interest

Mooresville

Durham

Rock Hill

Concord

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Residential Market Implications
• Charlotte regional home values are resisting
national trends
• Afton Village provides an example of premiums
that can be achieved for walkable urban housing
• Downtown will soon gain a 102-unit senior
housing project
• Opportunity for a downtown housing market with
300 to 400 modern housing units
• Question – size of downtown
Project Recommendations
• Downtown Parking
• Urban Residential Development
– 102-Unit Senior Project
– 6-Unit adaptive reuse project on Union St.
• Priority Projects
– Hotel Concord / Helig Meyers
– Old Police Station
– Reuse of City Hall and Annex on Union Street
Project Recommendations
• Retail Clustering Strategies
– Apparel and accessories
– Furniture, home furnishings & accessories
• Downtown Demand Generators
– Arts and entertainment
– City / county government
– Urban residential development
• Policy Direction
– Role of the City of Concord
– Role of the CDDC
– Use of incentives for downtown revitalization
– Expansion of downtown boundaries
– Economic Development Considerations