Invest: Charlotte 2020

Charlotte 2020 An in-depth review of the key issues facing the Charlotte region’s economy, featuring the exclusive insights of prominent industry and political leaders.

Contents:

5 Economy:

27 Gaston County:

6 Economy in numbers:

28 Looking up: Having done many things right to diversify its economy, Gaston County is poised for growth on a number of fronts

8 Resilience: Charlotte is among those regions well-placed to weather the destructive impact of the COVID-19 pandemic

9 Interview: Vi Lyles, Mayor, City of Charlotte

29 Interview: Kim Eagle, County Manager, Gaston County

14 Interview: Marcus Jones, City Manager, City of Charlotte

30 Interview: Chris Peek, President & CEO,CaroMont Health

15 Interview: Janet LaBar, President & CEO, Charlotte Regional Business Alliance

31 Interview: Patricia Skinner, Former President, Gaston College

16 Roundtable: Growth accommodation; Dena Diorio, County Manager, Mecklenburg County; Beth Jones, County Manager, Iredell County; Mark Watson, County Manager, Union County

18 Interview: David Vehaun, City Manager, City of Rock Hill

21 Interview: Michael Smith, President & CEO, Charlotte Center City Partners

22 Market voices: Charlotte EDCs

24 Roundtable: The accounting landscape; Richard Battle, Shareholder, Elliot Davis; Adam Boatsman, Managing Partner, BGW CPA, PLLC; Donna Chamberlain, Tax Office Managing Principal, BDO USA, LLP - Charlotte; Mark Kral, Managing Partner, RSM US LLP

2 | Invest: Charlotte 2020 | CONTENTS

33 Market voices: County Leaders

39 Legal:

40 Firm ground: Charlotte’s legal sector survived the Great Recession and most believe it will emerge just as strong from current uncertainties

41 Interview: Tom Mitchell, Managing Partner, Moore & Van Allen

43 Interview: Steve Meckler, Charlotte Managing Partner, Shumaker, Loop & Kendrick LLP

44 Interview: Christopher Lam, Partner, Bradley Arant Boult Cummings LLP

49 Real Estate : 50 Real Estate in numbers:

52 Magnet: Whether a millennial or a baby boomer, Charlotte has something for everyone

53 Interview: Johno Harris, President, Lincoln Harris

55 Market voices: Residential real estate

57 Interview: Chase Monroe, Carolinas Market Director, Jones Lang LaSalle

58 Roundtable: Commercial real estate; Darryl Dewberry, Chairman & CEO, The Spectrum Companies; Brett Gray, Managing Principal, Cushman & Wakefield; Karen Mankowski, Associate Director, Newmark Knight & Frank; Lawrence Shaw, Managing Partner, Colliers International

62 Roundtable: Mixed-use communities; Clay Grubb, CEO, Grubb Properties; Daniel Levine, President, Levine Properties; Todd Mansfield, CEO, Crescent Communities

66 Interview: Ned Curran, CEO Emeritus, Northwood Office

67 Interview: David Ravin, President & CEO, Northwood Ravin

69 Market voices: Affordable housing

71 Construction &

86 Interview: Liz Babson, Director, Charlotte Department of Transportation

90 Interview: Brent Cagle, Aviation Director, Charlotte Douglas International Airport

Infrastructure :

72 Forging ahead: Despite COVID-19, projects in this ‘essential’ sector continue to rise out of the ground

73 Interview: Curt Rigney, Senior Vice President, Batson Cook Construction 74 Interview: Zach Pannier, Business Unit Leader, DPR Construction

75 Interview: Keith Poettker, President, Poettker Southeast

79 Sustainability: Charlotte’s utilities recognized the power of sustainability and are making moves toward renewable energy sources

80 Interview: Rich Cerretti, Charlotte Market Leader, JE Dunn

83 Transportation & Aviation:

84 Urban mobility: The Queen City is getting ready to provide the transportation of the future, today 85 Interview: Taiwo Jaiyeoba, Director of Planning, Design & Development/Assistant City Manager, City of Charlotte

93 Banking & Finance:

94 Top-notch: Charlotte’s financial services industry is enjoying faster growth than the national rate

95 Interview: Heath Campbell, Metrolina Regional President Charlotte, Truist

97 Market voices: Fintech 98 Roundtable: Community advantage; Jim Engel, CEO & President, Aquesta Bank; Phillip Jurney, President, TowneBank; Jeffrey Mylton, Charlotte Market President, HomeTrust Bank; Douglas Smith, Charlotte Market Executive, First Bank – Charlotte 100 Interview: Lee Fite, Regional President – Mid-Atlantic, Fifth Third Bank 102 Interview: Charles Bowman, Charlotte Market President, Bank of America 107 Interview: Kendall Alley, Region Bank President, Wells Fargo

109 Health: 110 Uncertainty:The region’s healthcare system was on a solid growth path when COVID-19 turned everything upside down

125 Interview: Philip Dubois, Former Chancellor – University of North Carolina – Charlotte 128 Interview: Rhett Brown, President, Wingate University 129 Interview: Daniel Lugo, President, Queens University of Charlotte 131 Interview: Kandi Deitemeyer, President, Central Piedmont Community College

145 Tourism, Arts & Culture: 136 Down, not out: Despite the heavy blow from COVID-19, tourism and the arts in Charlotte are set up for a bright future

111 Interview: Eugene Woods, President & CEO, Atrium Health

137 Interview: Tom Murray, CEO, Charlotte Regional Visitors Authority

113 Interview: Bruce Cohen, CEO, OrthoCarolina

138 Interview: James Meena, Artistic Director, Opera Carolina

114 Interview: Saad Ehtisham, President, Novant Health Greater Charlotte & Novant Health Presbyterian Medical Center

140 Market voices: Sports

116 Interview: Stacy Nicholson, President, Levine Children’s Hospital

123 Education: 124 Course adjustment: COVID-19 is reshaping the educational landscape but the underpinning foundation in Charlotte remains strong

142 Interview: Jeep Bryant, President, Arts & Science Council 145 Interview: Douglas Singleton, Executive Director, Charlotte Ballet 150 Roundtable: Hospitality in the region; Mohammad Jenatian, President, Greater Charlotte Hospitality & Tourism Alliance; Anuj Mittal, Co-Founder & CEO, MJM Group; Randy Rushakoff, Area General Manager, Hilton Charlotte Center City

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EDITORIAL NOTE

Charlotte 2020

From the publisher:

ISBN 978-0-9988966-1-8 President & CEO: Abby Melone Chief Financial Officer: Albert Lindenberg

Dear readers,

Regional Director: Jack Miller

By now, it is apparent that the COVID-19 pandemic that has raced around the globe from the beginning of January 2020, rupturing world markets, will have a lingering impact on our lives and businesses. At the time of printing Invest: Charlotte, countries around the world, including the United States, were at various stages of emerging from measures to contain and mitigate the pandemic, beginning with social distancing efforts and other social curbs, and in some cases culminating in the imposition of national states of emergency.

In the United States, which became a focal point for the pandemic in March 2020, measures include a $2.2 trillion economic rescue package agreed by Congress in late March to help businesses big and small, as well as individuals, to cope with the dramatic economic fallout as the virus spread.

Many of the interviews in Invest: Charlotte were conducted prior to the pandemic’s outbreak, but we have endeavored to reflect recent events throughout our editorial. Those interviewees who were able to comment on the potential long-term impact agree that the U.S. economy remains resilient, and most are optimistic that any downturn will be relatively short-lived. The economy’s underlying strength, many business leaders believe, will drive greater growth over the long term.

Capital Analytics shares this optimism. Especially at this difficult time, Capital Analytics remains steadfast in our purpose: to deliver in-depth business intelligence through its print and digital platforms. Now more than ever, information is not only necessary, it is vital.

Senior Editor: Mario Di Simine Art Director: Nuno Caldeira Executive Director: Chris Chapman Regional Editor: Max Crampton-Thomas Content Manager: Felipe Rivas Writers: S ean O’Toole; Sara Warden Editors: Tomas Sarmiento, Esteban Pages Editorial Assistant: Claudia Martinez

Invest: Charlotte is published once a year by Capital Analytics Associates, LLC. For all editorial and advertising questions, please e-mail: contact@capitalaa.com To order a copy of Invest: Charlotte 2020, please e-mail: contact@capitalaa.com All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, without the express written consent of the publisher, Capital Analytics Associates, LLC. Whilst every effort has been made to ensure the accuracy of the information contained in this book, the authors and publisher accept no responsibility for any errors it may contain, or for any loss, financial or otherwise, sustained by any person using this publication.

Capital Analytics Associates, LLC accepts no responsibility for the return of unsolicited manuscripts and/or photographs, and assumes no liability for products and services advertised herein. Capital Analytics Associates, LLC reserves the right to edit, rewrite, or refuse material.

Sincerely, Abby Melone

Photo Credits: Contents: Pg. 2 – M ecklenburg County, City of Mount Holly Pg. 3 – City of Huntersville Economy: Pg. 5 – City of Charlotte; City of Charlotte Pg. 6 – JE Dunn Construction Pg. 8 – City of Charlotte Pg. 10 – City of Charlotte Pg. 12 – City of Concord Pg. 16 – Lincoln Harris Pg. 20 – City of Mount Holly Gaston County: Pg. 27, 28 – Tom Hauer – Gaston County Pg. 34, 36 – Gaston County Legal: Pg. 39 – Lincoln Harris; City of Charlotte Pg. 40 – Lincoln Harris

4 | Invest: Charlotte 2020 | CONTENTS

Pg. 42 – City of Charlotte Pg. 46 – Poyner Spruill LLP Real Estate : Pg. 49 – Suncap Property; Northwood Ravin Pg. 50 – JE Dunn Construction Pg. 52 – Northwood Ravin Pg. 56 – Lincoln Harris Pg. 62 – Mecklenburg County Pg.64 – Northwood Ravin Pg.66 – JLL Construction & Infrastructure : Pg. 71 – Blythe Development; Siemens Energy Pg. 72 – JE Dunn Construction Pg. 74 – TRI Pointe Homes Carolinas Pg. 77 – Batson Cook Construction Pg. 79 – Charlotte Area Transit System2 Pg. 80 – Siemens Energy Pg. 82 – E4 Carolinas

Transportation & Aviation: Pg. 83 – Charlotte Department of Transportation; American Airlines Pg. 84 – Charlotte Area Transit System Pg. 86 – Charlotte Department of Transportation Pg. 89 – American Airlines Pg. 92 – Charlotte Area Transit System Banking & Finance: Pg. 93 – Regions Bank; Wray Ward Pg. 94 – Elliot Davis Pg. 100 – Spectrum Companies Pg. 103 – AvidXChange Pg. 104 – Spectrum Companies Pg. 106 – First Bank Health: Pg. 109 – CaroMont Health; Atrium Health Foundation

Pg. 110 – CaroMont Health Pg. 112 – JE Dunn Construction Pg. 115 – Atrium Health Foundation Pg. 116, 118 – CaroMont Health Pg. 120 – Northeastern University Education: Pg. 123 – Queens University of Charlotte; Davidson College Pg. 124 – Catawba College Pg. 126 – Pfeiffer University Tourism, Arts & Culture: Pg. 135 – CharlotteBallet; Arts and Science Council Pg. 136 – Discovery Place Pg. 138 – Arts and Science Council Pg. 144 – Laura Wolff-Charlotte Knights Pg. 146 – Charlotte Symphony

Economy: Before COVID-19 took hold of the world, Charlotte was enjoying the fruits of a decade of growth. Coming out of the 2008-09 financial crisis, the region successfully built an economic pillar based on diversification while maintaining its traditional strength in banking and financial services. These efforts are expected to help the Queen City weather the latest storm.

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Economy in numbers: Over-the-year changes in wages and salaries

Employer costs per hour worked for wages and selected employee benefits by geographic division

12-month percent changes in ECI United States

South Atlantic 3.5

Private industry, December 2019

South Atlantic (1)

Total compensation

$31.10

$34.72

22.33

24.36

8.77

10.37

Paid leave

2.18

2.53

Vacation

1.12

1.30

Supplemental pay

1.03

1.19.

Insurance

2.21

2.76

Retirement and savings

0.98

1.22

Legally required benefits

2.36

2.66

3.0

Wages and salaries

2.5

Total benefits

2.0 1.5 1.0 0.5

United States

(1) The states that compose the South Atlantic census division are: DE, DC,

0.0 Mar-17

Mar-18

Mar-19

Mar-20

FL, GA, MD, NC, SC, VA, and WV.

Source: U.S. BLS, Employment Cost Index

Source: U.S. BLS, Employer Costs for Employee Compensation

Employer costs per hour worked for wages and selected employee benefits by geographic division Charlotte Area

United States

Charlotte area employment (number in thousands)

Mar. 2020

3.5 Total non farm 3.0

2.0

1.0 0.5 0.0

1.3

70.2

3.1

4.6

Manufacturing

111.2

0.2

0.2

Trade, transportation and utilities

247.2

0.9

0.4

24.6

0.1

0.4

Financial services

106.5

5.8

5.8

Professional and business services

209.9

0.5

0.2 0.5

Education and health services

129.1

0.7

Leisure and hospitality

142.0

2.5

1.8

41.8

-0.1

-0.2

159.1

2.6

1.7

Other services Mar-17

Mar-18

Mar-19

Mar-20

Percent

16.3

Information

1.5

Number

1,241.6

Mining, logging and construction

2.5

Change from Jan. 2019 to Mar. 2020

Government

Source: U.S. BLS, Current Employment Statistics

Source: U.S. BLS, Current Employment Statistics

Total Gross Domestic Product for Charlotte-Concord-Gastonia, NC-SC (MSA): 170,000 160,000 150,000 Millions of Dollars

140,000 130,000 120,000 110,000 100,000 90,000 80,000 70,000 2002

2004

2006

2008

2010

2012

2014

2016

2018

Source: U.S. Bureau of Economic Analysis

6 | Invest: Charlotte 2020 | ECONOMY

Over-the-year change in the prices paid by urban consumers for selected categories

Over-the-year changes in the selling prices received by producers for selected industries nationwide

12-month percent change in CPI-U, March 2020

12-month percent changes in PPI

3.5

General Freight Trucking Hospitals Depository credit intermediation

20.0

1.5

1.1

1.5

1.9

1.5

15.0 Energy

-0.5

All Items

10.0

Food

-2.5

5.0

-4.5

0.0 -5.7

-6.5 South Region -7.7

U.S. city average

-8.5

-5.0 -10.0 Mar-17

Mar-18

Source: U.S. BLS, Consumer Price Index

Average annual spending and percent distribution for selected categories

Average hourly wages for selected occupations Occupation

60%

40%

$9,905

$11,185

$4,846

$4,968

$6,660

$7,296

$7,351

$7,923

ersonal insurance P & pensions

$9,789

$9,761

Food

Charlotte

All occupations All other items Healthcare

Transportation

Mar-20

Source: U.S. BLS, Producer Price Index

100 %

80%

Mar-19

United States

$25.07

$25.72

Financial managers

79.88

70.93

Computer systems analysts

47.17

46.23

Credit analysts

41.49

40.83

Registered nurses

31.71

37.24

Heavy and tractor-trailer truck drivers

21.92

22.52

Retail salespersons

13.71

14.12

Housing

20%

0%

$18,116

$20,091

South region

United States Source: U.S. BLS, Current Expenditure Survey

Source: U.S. BLS. Occupational Employment Statistics, May 2019

Resident Population in Charlotte-Concord-Gastonia, NC-SC (MSA): 2,800 2,600

Thousands of Persons

2,400 2,200 2,000 1,800 1,600 1,400 1,200 2002

2004

2006

2008

2010

2012

2014

2016

2018

Source: U.S. Census Bureau

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Resilience: Charlotte is among those regions well-placed to weather the destructive impact of the COVID-19 pandemic Charlotte was already a well-established financial hub but its diversification in recent years has helped it become one of the nation’s best economies, a fact that could help it weather the fallout from the COVID-19 pandemic that raged across the world, starting in early 2020.

A prime, central location along the Atlantic Coast, a rapidly expanding population that is increasingly educated and a slew of local initiatives designed to spur further economic development add to the Queen City’s advantages. Unemployment prior to COVID-19 was low, with several important industries adding jobs year-overyear, with foreign direct investment and the number of foreign-owned businesses in the region on the upswing.

The greatest immediate concern is the global COVID-19 pandemic. With many businesses closed and workers home until further notice, there is no doubt that the pandemic will have increasingly serious impacts on the local, as well as national and global, economy, with a recession looming. To tackle any downturn, municipalities across the region will have to be creative, given state limitations on raising taxes, Steve Willis, county administrator for Lancaster County, told Invest:.

“Even before everything that has hit in the last couple of weeks, in South Carolina we are limited in how much we 8 | Invest: Charlotte 2020 | ECONOMY

can raise our taxes. State law limits it to the consumer price index plus the estimated population growth. It admittedly causes problems when you have people unable to pay for new or enhanced services. There is no methodology provided in state law. In the northern part of our panhandle that is showcasing so much growth, we are trying to transition from volunteer fire departments to combination departments, which include a portion of career staff. It is prohibitively expensive and state law does not allow the instruments to provide the resources for it. We are handcuffed to meet some of those growth needs. The capital needs to have a bit more leeway with impact fees or development agreements, to name a few measures available.”

Like many large metro areas, Charlotte is also grappling with a housing affordability crisis caused by a disconnect between wages and housing costs, but fortunately, local organizations and public sector initiatives are hard at work to combat the housing gap. One example is Cabarrus County. “The county’s housing stock is solid, building at all different levels. The challenge of defining what is affordable, from subsidized housing for one group to workforce housing for another, is making sure that, based on the average salaries, we can provide enough ( )

ECONOMY INTERVIEW

Working together Charlotte’s focus on public-private partnerships among the city’s favorable characteristics

Vi Lyles Mayor – City of Charlotte What role does Charlotte’s culture play in attracting companies to move their headquarters to the city?

The city is welcoming, diverse and encourages equality of opportunity. If we stick to those values, I am sure we will continue to attract both individuals and companies. There is also a strong tradition of publicprivate partnerships in the city. We all work together as “Charlotte’s team” and we all pull in the same direction on all our initiatives, including economic mobility and headquarter corporation recruitment.

What is your vision for the Charlotte 2040 plan?

The plan is focused around community-building.

Charlotte is almost 300 square miles and is home to more than 850,000 people. We have lots of suburban opportunities and a dynamic city center. We want to interlink those areas, and so transportation will be a key driver for our 2040 plan. We need to connect people between home and work on a daily basis, but we also need to move goods and services. We already have an almost 20-mile north-south light rail line, and we plan to build an east-west route. We will also invest in bus rapid transit, both to reduce the city’s carbon footprint and ease congestion. In short, the 2040 plan lays out how our businesses can be successful, how households can thrive, and how our transport infrastructure will look.

matched by the private sector. As a result, we now have $100 million available for affordable housing. But that is still not enough. Our goal is to have an inventory of single-family ownership housing under $250,000 available for sale soon.

How do you plan to tackle the issue of affordable housing?

Affordable housing is an issue for urban communities across the country. We have been investing in affordable housing bonds, via a trust fund, for around 20 years.

We don’t believe that people should need to earn above a specific threshold to be able to live in Charlotte, because if that were the case the city would not be as diverse as it is today. We proposed a $50-million bond, more than double the usual size, that has been

What are your primary goals for your second mayoral term?

Everything that we do is centered around building a liveable city. We have to provide people with wellpaid jobs, safe housing and a safe community. Our biggest infrastructure investments will be focused on mobility, including roads, buses and trains. We want to make it easy, safe and enjoyable to move around the city. We also want to continue our work with the Charlotte Regional Business Alliance. www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

( ) housing stock for these different economic strata, especially those we are looking to attract here. We are developing housing facilities rather quickly but there is still a need for more,” said Mike Downs, county manager for Cabarrus County.

Location and history Charlotte has long been an important economic hub in the Southeast, and its location and history contribute significantly to this fact. The city of Charlotte, known as the Queen City, is the seat of Mecklenburg County in south-central North Carolina, located just east of the Catawba River. More broadly, the Charlotte-ConcordGastonia Metropolitan Statistical Area refers to an area spanning seven counties in North Carolina and three in South Carolina. According to the U.S. Census Bureau, the region’s estimated 2019 population stood at 2,636,883. The city of Charlotte itself is the 16th-largest city and 22nd-largest metro area in the United States.

The metropolitan area is located in what is known as the Piedmont region of North Carolina, which is characterized by rolling hills and is only 85 miles to the southeast of the Appalachian Mountains and 180 miles northwest of the Atlantic Ocean. Gold was discovered in Charlotte in 1799, and it remained the center of American gold production until the California Gold Rush of 1849.

Its modern industries include wholesale distribution of goods throughout the southeastern United States, thanks to its strategic location between Atlanta and New York City and the presence of Charlotte Douglas International Airport, a major international hub airport; a diverse

Charlotte’s light rail has been a game changer for the city, spurring transit oriented development along its corridors and helping connect residents to key points within the city.

Lloyd Payne City Manager – City of Concord The Grounds property is arguably among our best industrial pieces of property. It extends over almost 2,100 raw acres of land. The state is convinced it is one of the best sites to become a potential automotive manufacturing mega-site. We have all hands on deck to focus on any kind of infrastructure needs on that property to develop it into a diversified, international business park, parallel to our affordable housing efforts, the deployment of a greenway system to connect our neighborhoods, schools and commercial nodes. Overall, we want to make sure Concord answers to the quality of life needs of its residents and potential newcomers. We are working to make sure the redevelopment of our parks is providing attractive opportunities to our constituents around their needs and their community projections.

10 | Invest: Charlotte 2020 | ECONOMY

ECONOMY OVERVIEW

Now, we are competing with large corporations like Bank of America, Lowe’s and State Farm for talent.

Industries across sectors want young, creative, innovative talent. Millennials want to work for a company that is doing well, but also doing good in the community.

The leaders in Charlotte are talking a lot about talent and opportunities for all. Diversity of talent and making sure schools are training the students for the jobs of the future are hugely important. The great thing is that in Charlotte, we came together for the greater good and are laser-focused on this topic right now.”

John Aneralla, mayor of Huntersville, agrees the question of talent is on everybody’s mind, and describes the town’s efforts in this regard. “We have made a commendable effort to connect both the local business and education communities. We have the Merancas Campus of the Central Piedmont Community College (CPCC) and UNC Charlotte is close by. We are also integrating our high schools in this effort. The ultimate goal is to connect high-school seniors with jobs, particularly relating to light manufacturing.

Huntersville is home to top-tier, high-tech companies, such as a 3D printing of metals manufacturer. We want to bring the Career & Technical Education (CTE) teachers and kids to the businesses to give them handson experience and for the schools to integrate the skills inherent to such businesses into their curriculum. We are working closely with the Lake Norman Economic Development Chamber (EDC) on this initiative.”

manufacturing sector consisting of textiles, machinery, metal, and food products; and one of the most robust banking sectors in the country. Charlotte is also home to several institutions of higher education: Queens University of Charlotte (originally chartered as Queens College in 1857), a branch of the University of North Carolina (chartered 1946), Johnson C. Smith University (chartered 1867), King’s College (chartered 1901), and Central Piedmont Community College (chartered 1963).

These institutions also serve as significant sources of talent for the region, which is a must to continue attracting businesses to the area. “We are incredibly fortunate that Charlotte is a magnet for talent. Young, creative people are coming to the region in droves,” Jennifer Appleby, president and chief creative officer of Wray Ward, told Invest:. “The tough part for smallto medium-sized businesses is that there is so much competition across different sectors. Before, we used to compete for talent with similar agencies and firms.

Economic performance North Carolina has one of the highest performing economies in the United States, and Charlotte is one of the jewels in the state’s economic crown. In fact, a 2019 study by WalletHub named North Carolina the 10thbest economy out of all states in the country thanks to commendable performance in the metrics of economic activity, economy health, and innovation potential.

Another sign of positive economic health is the fact that North Carolina’s economy has experienced positive growth for 10 consecutive years following the 2008-09 Great Recession, albeit of the slow and steady variety.

Charlotte in particular has contributed stellar GDP growth to North Carolina’s economy. At the beginning of 2019, the Charlotte-Concord-Gastonia Metro Area had a GDP of just under $170 billion, a $7-billion increase over the year before and a $32-billion gain since 2014. This growth is due in large part to the influence of robust foreign direct investment, and approximately 1,000 foreign-owned companies calling Charlotte home and employing 50,000 people locally. These companies have selected Charlotte, and other foreign direct investment www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

Prior to COVID-19, economic activity was creating opportunities for growth in numerous counties and municipalities within the region.

continues to pour in, because the area is home to the world-class educational institutions producing top-tier talent, has access to excellent job training programs, and boasts the Charlotte Douglas International Airport, home to American Airlines’ second-largest hub and which makes travel into and out of the city a breeze.

Leading national companies are also finding Charlotte attractive. Honeywell was among the big corporations breaking ground on a new HQ in Charlotte in 2019. “The Honeywell story is important,” said Peter Zeiler, director of the Economic Development Office of Mecklenburg County. “Boeing, GE and Honeywell were the only three truly competitive Fortune 100 headquarter relocations in the last 20 years, and Charlotte was able to secure one of those, Honeywell. This is in addition to the 6,500 to 7,000 jobs a year we are attracting just through our business investment program, which does not even scratch the surface of what is happening organically and not incentivized. The ability to attract a Fortune 100 headquarters speaks volumes about the quality 12 | Invest: Charlotte 2020 | ECONOMY

of our workforce, the quality of life and the economic atmosphere in Mecklenburg County.”

Of course, the economy of Charlotte is directly impacted by events unfolding in the larger national and global economies. For example, there is general concern among experts that America’s economy is in for a slowdown in the near future, a concern that now seems inevitable given the COVID-19 pandemic. While the extent of any recession in 2020 is not yet clear, at the very least the growth of the U.S. economy is slowing down, having slipped from 3.1% positive growth at the beginning of 2019 to 2.1% by the end of the year.

Brexit is also sure to send ripples through Charlotte’s economy. The United Kingdom officially left the European Union on Jan. 31, 2020, leading to a dip in the value of the pound, and a reduction of trade with the island nation that has likely not yet bottomed out.

This may manifest in Charlotte in the form of reduced traffic through Charlotte Douglas International.

Finally, the ongoing COVID-19 pandemic and slew of

ECONOMY OVERVIEW

Airport let go 815 people employed by the airport’s food vendors. An uptown steakhouse in Charlotte laid off 57. The city’s Uptown Hilton let go of 162. If things continue in this manner for too long, it will take some time for the city’s economy to recover.

quarantine and shelter-in-place orders being issued by governments around the world will absolutely impact the global economy in the short term, as well as for the foreseeable future. With so many businesses closed or offering reduced services, so many people out of work, governments, including that of the United States, spending massive amounts of money on bailouts, stimulus plans and other protective measures, and all of this projected to possibly last through the end of the year, the economic impact could be catastrophic. At the time of this writing, the situation was still developing, but the U.S. stock market was already showing signs of considerable shock and suffered massive losses despite extraordinary efforts by the Federal Reserve to stem the tide. The picture was similar among the financial markets in Europe and Asia. In North Carolina, the impact has been severe, with 219,286 people out of work due to the virus and filing for unemployment as of early April. Tourism and hospitality have been particularly hard hit. Charlotte Douglas International

Employment Charlotte has enjoyed a healthy job market for several years running, and pre-COVID-19 estimates had that set to continue throughout 2020. This makes sense, as Charlotte has been one of the fastest-growing cities in the country in recent years, adding 888,000 people in the last 10 years and No. 5 on Forbes’ list of the best cities for jobs. As of January 2020, Charlotte was home to a labor force of 1,379,000 people, 1,328,200 of whom were employed. With only 50,800 residents unemployed as of January, that makes for an unemployment rate of 3.7%, up slightly from December 2019’s 3.1%.

Despite this small spike in month-over-month unemployment, the number of local people employed across all nonfarm industries was up in February 2020 compared to the same time the previous year. The individual industries experiencing the fastest rate of job growth over the past year are: Financial Activities (105,300 total jobs, + 4.8%); Leisure and Hospitality (143,300 total jobs, +4.5%); and Mining, Logging, and Construction (69,100 total jobs, +4.2%). Education and Health Services experienced slower job growth but remains a major sector in Charlotte (129,200 total jobs, 0.5%), and the same can be said for Manufacturing (112,000 total jobs, 0.9%). IT, on the other hand, underwent a contraction in total jobs over the past year (24,500 total jobs, -0.8%). COVID-19, of course, will skew the figures going forward.

Despite the fact that many in Charlotte are employed, not all jobs are necessarily created equal. Housing affordability is a common theme around the country,

A person would have to work 95 hours per week to afford a onebedroom apartment on minimum wage www.capitalanalyticsassociates.com

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Marcus Jones City Manager City of Charlotte

What factors are driving Charlotte’s headquarters relocation culture?

We have a low cost of living and a favorable tax structure. That gets us into the conversation regarding relocations, but when the decision-makers visit Charlotte, they encounter a strong sense of community and residents who will roll up their sleeves to tackle difficult issues and get work done. When people come to Charlotte, they have the chance to build a community and engage with the diversity of the city, the sense of belonging, and the opportunities available to our residents.The people coming into Charlotte have the opportunity to make the difference they want to make.

What is the plan to address affordable housing and mobility in 2020?

The bond approved by voters in 2018 included $50 million for a housing trust fund. It was an amazing moment because the business and philanthropic community came together and matched that amount. They also got other resources and approved lending programs that when added together total well over $200 million. We also realized that though people need affordable places to live in, they also need to get to work and have pathways to a good paying job. As we move forward, we are building neighborhoods so that no matter where you live you will have these opportunities. Right now, we really are focusing on the concept of mobility, accessibility and connectivity so we can create an environment in which people thrive. We have great momentum around affordable housing. Now, we want that same momentum in terms of building great neighborhoods and a lot of that starts with providing residents with mobility options. We want to be that city that is using innovation around mobility that attracts businesses, talent and families. With that, transit-oriented development is going to be key in how Charlotte develops in the future.

14 | Invest: Charlotte 2020 | ECONOMY

and Charlotte is not immune. In Mecklenburg County, 78,862 households were designated “costburdened” in 2017, meaning that more than 30% of their annual income went directly into housing costs. Two-thousand individuals are experiencing homelessness throughout Mecklenburg County as a result of housing unaffordability, and the number of evictions increased by 12% from 2018 to 2019, which is striking considering that evictions actually decreased between 2011 and 2016.

There are two central policies that could be followed to ameliorate this crisis: the construction of additional affordable housing and higher wages.

There is a shortage of workforce housing (affordable for households earning 80-120% of Area Median Income (AMI)) in Charlotte-Mecklenburg of 21,190 units; for households earning 30% of the AMI or below, the shortage is 27,022 units; the shortage for households in the 31-50% AMI range is 16,082; and for the 51-80% AMI range the shortfall is 7,814 units.

What is particularly striking about these figures is the fact that the greatest shortage is of housing for those at the greatest risk: households earning 30% AMI or below. Without closing this gap, it will become increasingly difficult for them to afford housing in the area. The city of Concord is approaching the issue from a quality of life perspective, said City Manager Lloyd Payne. “Through our housing authority, we have developed and either sold or leased entire neighborhoods for several years. We are determined to take it to another level. We want to ramp up our yearly house construction capacity. In 2019, we created a nonprofit entity under the guise of affordable housing to open the city to a wider array of funding options from the private sector. For 2020, I will request the city council to obligate from this point forward that a portion of our tax funds be set aside to build affordable housing, whether it be apartments, townhomes or single-family homes. We want to build additional neighborhoods throughout the city, not just in low to moderate income areas. The main goal is to provide workforce housing.”

Another means of combating housing affordability is increasing wages for many of the jobs that are available in Charlotte. The Mecklenburg County minimum wage is $7.25 per hour, meaning a person would have to work 95 hours a week to afford a one bedroom apartment listed at the area’s fair market rent of $897 per month without being cost-burdened.

For a person to only need to work a standard 40-hour week and not be cost burdened by that same $897 rent, their wage would have to be $17.25 per hour. ( )

ECONOMY INTERVIEW

Joint vision Cooperation, bold ideas needed to make the Charlotte region the country’s best market for doing business

Janet LaBar President & CEO – Charlotte Regional Business Alliance What is your vision for the Charlotte Regional Business Alliance after your first months in the position?

The challenge and the opportunity for the Charlotte region is going to be what, from an investment perspective, is going to make us the best market in the country for doing business. Our vision for the Charlotte region is to work together, incorporate bold ideas and make sure that we have the most vibrant, innovative and healthy economy in the country. This is a fast-growing region with a great deal of upside, but there are also challenges around economic mobility that this community has been grappling with. I am confident we are going to overcome that because this is a dynamic place.

What are the goals for the long-term sustainability of the region as it keeps growing?

A lot of it boils down to education. This community has many safety-net services but they are not all aligned across the region, not quite all rowing in the same direction and leveraging resources and financial support to produce different outcomes. A fundamental area has to be about investing in people. This is not only related to rising above our challenges but also about making sure that we continue to be a vibrant place that attracts talent.

What are the main issues that Charlotte faces?

The issues for most fast-growing markets in the country are similar. How do you ensure that it stays affordable? How do you make sure that there is investment in transportation, in housing stock, that there is availability and affordability for different options, while also looking toward the future? All those things matter. Projecting where population growth will happen and making sure that you are not squeezing anybody out are big issues that are not just

the purview of elected officials. There’s a role for the business community to have ownership in that too.

As a region, Charlotte’s big advantage is cost. Our cost of living and cost of doing business, especially when you stack it against competing markets or other metropolitan areas, are huge advantages for us.

Has the region taken enough steps to diversify and protect its economy from an eventual economic downturn?

I feel confident with some of the initial work that our team has done in evaluating market competencies and industry sectors. We have diversity in manufacturing,energy, logistics and distribution, in financial services, in healthcare and in tech in general.

We are in a much better position. www.capitalanalyticsassociates.com

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oundtable:

Growth accommodation Regional leaders discuss their approach to growth and what makes each an attractive destination for businesses and potentila residents.

Dena Diorio

County Manager Mecklenburg County

How does Mecklenberg County ensure it offers the talent companies require?

We work through the Charlotte Regional Business Alliance to keep in touch with what companies say they need in terms of the workforce. As a county, we provide economic and workforce development. We fund K-12 education, so we are in constant conversation with the school system regarding outcomes for K-12 students.

We are in the second year of our universal pre-k program for 4-year-olds. We work closely with educational institutions to make sure they know what the business community’s needs are and that they have the programs in place to provide the talent that businesses need. A significant investment in education will provide students with economic opportunities and mobility.

What steps are being taken to maintain housing affordability as the region grows?

As a county, we provide human services to people in need throughout the community. Our job is to make sure that the people who come to Mecklenburg County have the support system they need throughout the community. We are working to improve our parks and recreation facilities, expanding our greenway system, renovating our recreation centers, and acquiring more land for future park needs, which is becoming scarce in Mecklenburg County. Soon, we will begin an affordable housing initiative via a rental subsidy program. The program is geared toward residents who make 30 percent or below of the area median income. We are researching ways to continue to provide affordable housing options and limit the impact of gentrification.

16 | Invest: Charlotte 2020 | ECONOMY

ECONOMY ROUNDTABLE

Beth Jones

County Manager Iredell County

How is Iredell County dealing with growth in the region?

Transportation is a big topic for all of us as our counties continue to grow. We are all dealing with and trying to accommodate growth and transportation is something that connects us all. We need to make sure that we work together. We always have to be ahead of transportation.

We are constantly working with municipal and state leaders to make sure we are in communication and supportive of transportation efforts to address those needs.

What are the county’s key competitive advantages in attracting new businesses and residents?

Iredell County has many competitive advantages. We have I-77 and I-40 intersecting our county. We are close to two international airports with Charlotte Douglas and Piedmont Triad. We have the lowest tax rate of any of our surrounding counties. As the 14th-largest county in the state, we remain fiscally conservative. We make sure to spend taxpayer dollars wisely and give them good value for their dollars.

What is your approach to talent in the county?

We want to make sure to have different career paths available to our students. At the same time, we want to let our businesses and industries know that we will help them train the workforce. We have a partnership with Mitchell Community College, which has a great workforce training program. We have good dialogue with the local business community. which informs us on the job skills that they need from the workforce.

Mark Watson County Manager Union County

How is Union County approaching growth?

We are well-positioned for the commercial, industrial and residential growth that is projected. Union County is unique in that it controls a very large water and sewer operation. We have thousands of miles of water and sewer utilities underground, which can supply the water needs of current and future residents and companies.

Our housing market is hot. We are starting to see more targeted residential development for 55 and older communities. Our board has approved several rezonings for this type of community and have several more in the pipeline. The single-family home market is steady. We continue to see high numbers of building permits at a sustained level. We do not see that dropping off anytime soon. The county offers a high quality of life, while the convenience of culture, shopping, and high paying jobs is a short drive away. Also, the county has the premier public school system in the state of North Carolina. We have community leaders who strongly believe in and support public education.

What is the outlook for the county?

Union County has 14 municipalities and the majority are less than 15 years old. We are seeing the maturing of those young municipalities and the desire to collaborate as a community to provide better service. We constantly meet with leaders of these municipalities so that together we can combine our efforts and advance the progress of the county. We are seeing a lot of continuity across our elected boards, especially when it comes to creating policy and investing in economic development.

The county’s future is bright. www.capitalanalyticsassociates.com

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David Vehaun City Manager City of Rock Hill

What factors are shaping the city of Rock Hill’s growth?

Rock Hill benefits from the fact that in many ways there is a marked interest in the redevelopment of inner cities, not just in Rock Hill but throughout the nation.

There is an increasing number of people interested in moving back to these cities, and we capitalize on that rather dramatically. We have a number of older buildings in our community that are being redeveloped into multipurpose facilities, mainly apartments, restaurants and retail spaces. In 2011, we organized a group visit to Durham, N.C., to get a first-hand look at their accomplishments. That provided the vision for our community and what can happen here.

What incentives at the state or local level are spurring interest in the region?

The South Carolina Department of Commerce does a tremendous job in helping us recruit new businesses into the area. We work closely with their team when they bring in prospects. Over the last 30 years, we have been focused on developing business parks all around our community and making sure they are located within the city so it can benefit from these developments.

How does diversification of the local economy translate into infrastructure development?

The primary factor that has helped York County is the Pennies 4 Projects referendum passed in 1997 for the first time. Over the last 20 years, the proceeds have been used to build or leverage additional grant money well beyond $1 billion for road improvement works.

What does the newly opened Sports & Event Center mean for Rock Hill?

It is a dream that started in the spring of 2015, and Rock Hill now has become a destination for amateur sports.

The Sports & Event Center opened on Jan. 1, 2020, with weekend events, hosting over 7,000 people. It is a tremendous economic engine for our community.

18 | Invest: Charlotte 2020 | ECONOMY

( ) Demographic shifts Charlotte’s population is growing fast. Between July 1, 2017 and July 1, 2018, the Charlotte-ConcordGastonia Metro Area added 44,350 residents – that’s 853 more people a week and 122 more each day. The only county in the metro area to experience a decrease in population was Chester County, which had a 0.1% decrease (34 people) during the period. Mecklenburg County saw the most growth in absolute number of residents: 16,590 additional residents or a 1.5% increase in population. York and Lancaster had the most growth in the metro area in terms of percentage of total population, with both growing by more than 3%, making them the third- and fourth-fastest growing counties in the state, respectively.

In terms of demographics, 49.5% of Charlotte’s population is White, 35.1% is Black or African American, 14% is Hispanic or Latino, 6.5% is Asian, 2.8% is two or more races, 0.4% is American Indian or Alaskan Native, and 0.1% is Native Hawaiian or other Pacific Islander.

Notably, a great deal of Charlotte’s growth can be attributed to its increase in foreign-born residents, who accounted for 16.5% of the population as of 2018. There is also a marked increase in young, educated people flocking to the region, and 43.5% of the population now holds a college degree or higher.

International business Charlotte’s robust base as a commercial hub (it’s home to Bank of America and Honeywell, for instance), it’s exceptional international airport, its central Atlantic coast location, and its transparent and pro-business local government make it an extremely enticing destination for foreign-owned businesses and foreign direct investment. The Charlotte metro area is home to honorary consuls of Estonia, France, Germany, Guatemala, Hungary, Ireland, Italy, Mexico, Moldova, Nicaragua, Switzerland, and the United Kingdom.

Moreover, Charlotte is home to one of the largest Foreign Trade Zones (FTZ) in North Carolina (FTZs are special federally-designated areas in which goods and materials can be imported duty free and either stored or manufactured). The Charlotte Regional Business Alliance also offers a wide variety of services and information to businesses interested in opening up shop in Charlotte, including relevant local data, networking, referrals to law firms and tax advisers that businesses will need when establishing a U.S. presence, suitable real estate, tours of the city, and much more.

In addition to the commercial advantages Charlotte has to offer, it is also generally welcoming of immigrants and visitors from foreign countries,

ECONOMY OVERVIEW

Shannon Viera President & CEO – Greater Statesville Chamber of Commerce

For people who do not want to live in the city of Charlotte, Statesville is an attractive alternative. You can get to Charlotte from here in 45 minutes thanks to the new toll road. Our county has the 13th-lowest tax rate in North Carolina, out of 100 counties. We are also the 14th-largest county in North Carolina. We make our best effort to be open to any type of entrepreneur who wants to set up shop here. Statesville has good access to other communities and connectedness with the interstate, as well as a strong agricultural community. We are the No. 1 dairy producer in the state, coupled with the busy industrial activity in the southern end of the county.

It provides a diverse business landscape and community that are ideal for the entrepreneurial spirit.

and is home to several entities and organizations that aim to serve the international community. For example, Charlotte’s Office of International Relations works to foster relationships with individuals and businesses from around the world. The World Affairs Council of Charlotte (WACC), a member of the World Affairs Council of America, is a regional center for discussions and education on world affairs, embraces the example of global thinking, and promotes the value of a broad and inclusive perspective of community to ensure that Charlotte remains a competitive and responsible participant in the global economy. Finally, the International House preaches international understanding and offers services for immigrants in need, such as foreign language conversation hours, cultural and educational programs, an international book club, an international women’s group, language classes, free citizenship workshops, and legal assistance for low-income immigrants.

Thanks to these advantages and more, Charlotte maintains a foreign-owned business presence of 1,018 firms from 45 different countries. These companies employ more than 66,000 people locally. Germany, the United Kingdom, Canada, Japan, and France have the largest presence in Charlotte, but Switzerland, Italy, the Netherlands, China, Sweden, and Ireland also boast significant footprints.

Public sector initiatives There are a variety of nonprofit- and governmentled initiatives dedicated to the continued economic development of the Charlotte metro area. For

Local Initiatives Support Corporation partnership received $2 million in support from Knight Foundation example, the Centralina Economic Development Commission (CEDC) is a nonprofit affiliated with the Centralina Council of Governments (CCOG) and the U.S. Economic Development Administration (EDA) that serves as an Economic Development District (EDD) covering a nine-country area surrounding the city of Charlotte. As an EDD, the CEDC nurtures a diversified and innovative economic base throughout the region, provides job development resources, ensures the retention of existing businesses in Charlotte and the attraction of new ones, and emphasizes the importance of sustainability in all these endeavors. To do so, CEDC and CCOG developed a Comprehensive Economic Development Strategy for the region. The CEDS has been updated regularly since its creation – most recently in late 2017 – and has racked up numerous accomplishments over the www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

years, including developing the Workforce Education Alignment Strategy’s “Career Headlight” web portal, which connects the region’s K-12 system, colleges, and industry and provides students and adults with valuable career information; supporting four annual global competitiveness summits that bring together more than 400 business, education, and community leaders to discuss and advance Charlotte’s role in the global market; establishing the Investing in Manufacturing Communities Partnership grant to promote the region’s manufacturing sector through data-driven solutions; and supporting the Greater Charlotte Regional Freight Mobility Plan.

The Mecklenburg County Office of Economic Development also provides a variety of economic development services and initiatives throughout the county under its Economic Development Framework, with the goal of attracting, retaining, and expanding employment opportunities for residents of Mecklenburg County with a special focus on balancing this growth with social equity. Services provided under the Economic Development Framework include assistance with starting or growing a business, including financial advice and support; a small business loan program; and services for minority- and women-owned businesses.

The city of Charlotte and local business leaders

Charlotte’s growing population has been calculated to grow at an average rate of 100 people a day, according to different estimates.

Robert Carney Executive Director – Cabarrus County Economic Development The three fastest-growing markets in the Charlotte region are Concord, Kannapolis and Harrisburg, all located in Cabarrus County. We are an exploding community right now, as far as growth from residential, retail, entertainment and industrial. The challenge for us is that we have a substantial amount of companies looking to locate in our market, but we have limited amounts of real estate to fulfill their needs. One of the best ways to manage growth is to make sure that you have a healthy industrial environment. You do not want residential and retail outpacing industrial development, and that is what we are currently focused on is how do we provide more real estate options to our industrial market, so that we can fuel growth. The upside is that we are in a better position than most markets to provide a highly skilled workforce. Our fastestgrowing demographic are young professionals. That is where our market is growing the fastest and that is what is most in demand from a workforce standpoint. Of all the residential growth, we are growing in the best place to serve economic development.

20 | Invest: Charlotte 2020 | ECONOMY

CONSTRUCTION ECONOMY OVERVIEW

Michael Smith President & CEO Charlotte Center City Partners

How would you define the impact of ongoing planning decisions on Charlotte’s economy?

We’ve had four decades of deliberate planning and this decade has really defined Charlotte. For the last two years we’ve ranked as the fifth-most prolific city in the creation of new office space, only behind Chicago, New York, Washington and Seattle. The 2020 Center City Vision Plan, which we adopted in 2011, allowed us to launch into this decade with the wind behind us and we are now enjoying our most prolific decade of growth. This is happening across all categories of real estate, office, residential and hotel construction And it is not about the space being created, it is about the people who end up joining our community, contributing to GDP and office growth and investment and talent. have partnered with the Local Initiatives Support Corporation (LISC) to open the LISC Charlotte program. At launch, LISC Charlotte received a total of $2 million in support from the John S. and James L. Knight Foundation, Foundation for the Carolinas, Bank of America, Wells Fargo, Fifth Third Foundation, JPMorgan Chase, and the city of Charlotte. LISC Charlotte will leverage private sector funding and national resources in support of community investment efforts that create economic opportunity in neighborhoods that have thus far not benefited as much from the city’s meteoric economic growth. LISC Charlotte plans to make $25 million in high-impact community investment over several years, beginning with a grant to Historic West End Partners, a nonprofit that works to promote the culture, history, and quality of life in northwest Charlotte. LISC Charlotte will also work with the national arm of LISC to manage the Charlotte Housing Opportunity Investment Fund, which is expecting as much as $50 million in contributions from major banks, foundations, and investors that are zealous about combating the housing affordability crisis.

Finally, the newly-formed Charlotte Regional

In what areas is investment most needed?

With the growth we have, we know we have to invest in transportation. We have large transportation projects, including our Union Station, the multimodal Gateway Station, that is expected to become a hub for regional ground transportation, matching the city’s airport.

There are also local and intracity systems like rapid transit bus systems to complement the nearly 20 miles of contiguous southbound and northbound light rail lines already in place, a streetcar under construction, and projects to increase connectivity to areas such as Belmont to the airport to Matthews. All that infrastructure development is really needed as the city is booming with construction on the residential, office and hospitality fronts. Right now, there are almost 2.2 million square feet of office space under construction.

Of that, there are about 700,000 square feet in South End, and more in Uptown. This is not speculative; there is a lot of pre-leased space in South End. As a matter of fact, about 90% of what’s under construction is preleased. It provides us with great confidence.

We are really excited about strengthening Charlotte as a destination. www.capitalanalyticsassociates.com

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Market voices: Charlotte EDCs

Jenn Bosser

President & CEO Iredell County Economic Development Corporation

Companies looking to establish a new location or to expand are drawn to Iredell County and the Charlotte Region because of the skilled workforce and our workforce development efforts.

We attract a number of international manufacturers to our area due to our strategic location on the East Coast, concentration of talent, and our low tax rates, both with the state and in Iredell County. International companies are attracted to the amenities our community has to offer with proximity to the lake and the big city entertainment amenities in Charlotte.

Corporate headquarters operations with over 100 employees now account for over 5,100 jobs and that number is expected to increase to over 7,000 in the next several years. Over the last decade, CompuCom, Continental Tire, Movement Mortgage, Nutramax Laboratories, Red Ventures and ServiceMac USA have all selected Lancaster County as their national or international headquarters. This balance between manufacturing and corporate jobs has given us a much healthier economy that is better positioned to weather economic downturns.

Chris Plate

Executive Director Monroe-Union County Economic Development

Executive Director Lancaster County Department of Economic Development

From an economic development standpoint, we will continue to find avenues for further investment within the four main sectors of the county’s economy. We will look at the Monroe Expressway and how it can open new opportunities for growth. We want to continue to focus on growing and retaining our existing industries and then grow and add to those industries.

Our workforce grew by over 5,000 people in the last 12 months. We want to continue to grow in the right way.

Our focus over the last 10 to 15 years has been to rebuild the city’s economic base and bring jobs back to the city. We want all the people commuting to Charlotte for work to have the opportunity to work in Rock Hill. The state of South Carolina has been particularly aggressive in attracting business growth. We have had a lot of success in attracting relocations. We think it benefits Charlotte if Rock Hill is a strong urban center. The goal is to create an urban, mixed-use, walkable community that spans the area from Downtown to Winthrop University and developers have responded to the plan.

We have to be able to provide an environment where talented, creative people want to live, work and play. That is the vision.

22 | Invest: Charlotte 2020 | ECONOMY

Jamie Gilbert

Stephen Turner

Economic & Urban Development Director City of Rock Hill

ECONOMY OVERVIEW

William Dusch Mayor – City of Concord

First of all, our growth has been amazing. We’re almost at 100,000 people now. We were a textile community, and around 2000 all of that started going away, and now a lot of good things have come in to fill the void. Besides extremely robust residential growth, a lot of other important entities are coming in. Our growth is largely in part due to working with surrounding cities such as Charlotte. They are integral to our growth, and it is vital that counties and cities in North Carolina continue to work together to move forward in a similar direction.

Business Alliance supports an impressive portfolio of economic development initiatives and policy priorities that are focused on the sustainable, equitable growth of Charlotte’s economy. “It is important that we support the Charlotte Regional Business Alliance, following the merger of the Charlotte Chamber and the Charlotte Regional Partnership. After the merger, the alliance combined their research and economic development teams and now it is a much stronger asset from a research, economic development and marketing standpoint. It is a fantastic opportunity for counties and local businesses. We think it can be the best regional organization in the country,” said Executive Director of the Lincoln Economic Development Association Cliff Brumfield. The organization’s CLT Careers Campaign seeks to educate and connect underserved populations about career pathways and provide them with the training and resources they need to succeed. The Charlotte Regional Business Alliance also promotes numerous legislative policies in support of the community, focused around the areas of economic growth, innovation, infrastructure and education.

Looking ahead Charlotte has a lot of great history, a strong economic base, and countless other advantages to build upon, and has artfully capitalized upon them to continue diversifying its economy by adding more domestic and foreign businesses in old and new sectors, and attracting ever more young, educated workers.

This growth has contributed to keeping Charlotte’s unemployment level consistently low and making it one of the fastest-growing metro areas in the country.

Although an already turbulent global economy has

been further threatened by the onslaught of COVID-19, Charlotte has shown signs of good economic health and a likelihood of continued growth. Even in the event of a recession following on the heels of a protracted COVID-19 lockdown, Charlotte already has a multitude of economic development initiatives in place across the public and private sectors that can help to ensure the region’s resilience. “Mecklenburg County Manager Dena Diorio has led the efforts during the coronavirus outbreak and has been a very good leader. We have smart people doing everything they can to mitigate this situation,” said Hazen Blodgett, town manager of the city of Matthews. “Our fiscal year ends this June, so we are in the midst of preparing this budget and expect our sales tax to be impacted by the coronavirus. Property tax revenue will not be hit as hard and will stay the same. Sales tax revenue on the other hand is very elastic. We are anticipating a tight budget for next year and it remains to be seen what that will mean for new hires and other projects.

All our department heads are aware of this.”

Charlotte has bounced back remarkably well from past recessions thanks to its unique resources and proactive leadership. It appears well-placed to do so again. “We will weather whatever COVID-19 brings, whether medical or financial. It is going to be a sizable challenge we will closely examine. In February 2020, our plans for the budget, new services and new programs had several initiatives in the pipeline. Now, we are not planning on rolling out anything new for the next fiscal year. Rather, we will focus on maintaining service levels, recognizing that a number of our citizens are facing tough financial times and what we can do to assist them, both for our residents and our local businesses,” added Lancaster County’s Willis. www.capitalanalyticsassociates.com

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oundtable:

The accounting landscape The greater Charlotte region is home to accounting firms big and small. Industry leaders discuss working in the area and their competitive adantages.

Richard Battle Shareholder Elliot Davis

How has the accounting landscape evolved in the last few years?

The biggest challenge accounting firms experience is staying relevant and on the cutting edge. The landscape is changing quickly in terms of what our customers want.

Everything is happening at an accelerated pace. Being really in tune with our customers is important for us. We want to provide an exceptional customer experience, not just products and solutions, but an overall experience.

Implementing transformational change in our culture and our people will allow us to provide our customers with more than just the traditional accounting and tax services.

What is Elliot Davis’ competitive advantage?

Our value proposition for our customers is that they receive a tailored experience, with deep relationships looking to add value to their businesses. We go beyond traditional accounting solutions. It is more about understanding our customers businesses as a whole and providing solutions to get them where they want to be.

Our technical capabilities and service offerings match that of the large, national firms. The middle market is our sweet spot and where we want to be. We know how to serve those customers very well.

How is Elliot Davis adapting to technology innovation?

Technology is improving and disrupting at the same time and it is only going to increase. We are really focused on this and the change management of integrating new technologies. We are changing service offerings to our clients based on these advancements.

24 | Invest: Charlotte 2020 | ECONOMY

Adam Boatsman Managing Partner BGW CPA, PLLC

How is technology creating a difference for BGW CPA and the industry?

If you look at the accounting industry in general, with the fast pace of technological innovation, a machine will be able to do a significant portion of the work. That means that we have to start changing what we do for clients to offer services that machines cannot do. Machines cannot perform vital services such as tax planning or advise companies on how to make more money, advise companies on how to do an estate and succession plan, or advise on employee-related matters. We spent the last three years converting what we do to focus on the needs of business owners from an advisory support perspective and to do that in one package.

How are the Opportunity Zones being received?

On the development side, Opportunity Zones have made projects that might have been marginal in terms of return, suddenly very attractive from a return perspective. Having the ability to avoid a tax makes the ultimate rate of return much better. It has fostered development that otherwise would not have happened because of the marginal returns. From that standpoint, Opportunity Zones have been extremely beneficial. On the passive investor side, meaning they have a gain from one area and they want to invest in a project, those come in two categories.

Category one are the people who were used to investing in hotels and strip malls, and were very comfortable in that and kept doing it, but now they have a much bigger group to invest in. Category two are people who do not like paying taxes. They do not mind being patient for the 10-year window needed for their investments to pay off.

ECONOMY ROUNDTABLE

Donna Chamberlain Tax Office Managing Principal BDO USA, LLP - Charlotte

What is a key highlight for the firm from the past year?

In the past 12 months, while working with the Charlotte Regional Business Alliance and other internationally focused organizations, the global opportunities have really come to light. We focused on being on the alliance’s international advisory council, which aims to attract international investors to the Charlotte Metro Area. It was eye-opening to see how this city is appealing to prospective international investors. BDO’s consultants help potential investors with site selection and tax and accounting requirements, which is very exciting.

How is BDO implementing technology to help its clients?

BDO is investing in technology that helps create processes across the firm nationally that are integrated seamlessly.

Investments in software and technology make our practice efficient and portable. BDO has global offerings that feel very local. Data analytics improves efficiency and we want clients to access that data quickly. We offer global portals that allow our clients to see the statistics related to what we are doing for their company in real time.

How is BDO working with the Charlotte Regional Business Alliance?

We are supportive of the Charlotte Regional Business Alliance and joining their internal councils has been beneficial. It’s been really collaborative. The alliance is reaching out to the local business community for support as it continues to expand. Working with the alliance has been helpful in understanding what companies need, and how we can help them shape their business.

Mark Kral

Managing Partner RSM US LLP

How is the growth of your business in Charlotte indicative of the city’s growth, and where are you seeing the most opportunity?

RSM is the fifth largest audit, tax, and consulting firm in the United States, and the largest focused on the middle market. Our office’s growth is definitely indicative of Charlotte’s growth. The city is growing exponentially, and so is RSM. We’re already trying to add more office space after only one year in Uptown. We have 87 offices nationwide, each focused on various industry sectors.

Our biggest growth here in Charlotte has come in our industrial and consumer products.

How does the presence of the “Big Four” firms impact your business?

RSM is the largest audit, tax, and consulting firm focused on the middle market. Most of our clients are privately held companies with annual revenues between $10 million to $1 billion. These companies make up about 40% of the nation’s GDP and about one-third of the jobs. So we are not really competing with the Big Four.

We had some great growth last year and we’re growing more this year. In a city that’s growing as much as Charlotte, I think there’s enough work for everyone.

At RSM, we understand that business cycles have unique impacts on the middle market clients that we serve. We are providing regular updates about important economic indicators and regulatory changes to our clients to help them understand and prepare for a downturn in the economy. We have some of the best and brightest people and we add value to our clients through our unique understanding of the needs of the middle market. www.capitalanalyticsassociates.com

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Gaston County: Armed with natural resources, a healthy quality of life, a diverse economy and a strong credit rating, Gaston County is positioned for growth. It is attracting attention for all the right reasons: affordability, a business-friendly environment and a growing and skilled workforce.

Already climbing a variety of rankings, the county is poised for growth.

www.capitalanalyticsassociates.com

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Looking up: Having done many things right to diversify its economy, Gaston County is poised for growth on a number of fronts With numerous parks, trails and nature paths set against a backdrop of lakes, rivers and Crowders Mountain State Park, the largest of the county’s 12 natural heritage sites, Gaston County is attracting attention. It offers a high quality of life with a smalltown feel that helped it crack the Top 30 Best Counties to Live in North Carolina in data website Niche’s 2020 ranking.

Located in the south-central Piedmont region of North Carolina, Gaston County was formed from Lincoln County in 1846. It partially borders the state of South Carolina and contains 15 incorporated towns. Gaston County is 74th in terms of size of North Carolina’s 100 counties, measuring 364.5 square miles, but is the fourth-largest in terms of population, with 224,144 residents.

In terms of early industry, Gaston County housed three cotton mills, making it home to a booming textile industry. The county’s land was also rich in gold, lime, sulfur, tin, and iron, drawing mining activity. Although Gaston County is not as agriculturally rich as some neighboring counties, corn was abundant among early settlers and it was often used to make whiskey.

By 1870, Gaston was known as the “Banner Corn 28 | Invest: Charlotte 2020 | GASTON COUNTY

Whiskey County of Carolina,” with several distilleries contributing to the county’s economic growth.

Today, the county is an affordable and bustling mecca of restaurants and coffee shops, parks and lakes that is home to an above-average education system that helped it win an A-minus ranking on Niche for raising a family.

General economy Gaston County’s industrial and economic base is now far more diversified than it was during the 19th century, with the main economic drivers being manufacturing, healthcare and retail trade. The county benefits from its proximity to Charlotte Douglas International Airport, an extensive rail system and major seaports close by.

Among the city’s employers, Gaston County Schools leads with 3,900 employees, followed by CaroMont Health Corporation with 3,800 employees and Freightliner Corporation with 1,800. Unemployment stood at 3.8% in February 2020, almost on par with the 3.5% U.S. average for the same month, although the onslaught of the COVID-19 pandemic is likely to skewer numbers in the short term.

The Community continues to grow and attract ( )

GASTON COUNTY INTERVIEW

Ready to grow Advanced manufacturing, collaboration with academia among the county’s pillars moving forward

Kim Eagle County Manager – Gaston County How is Gaston County preparing for growth?

We have rebuilt our economy. We have been competitive as a region in recruiting advanced manufacturing facilities. Many companies bring associated divisional offices or technology centers with them. These companies manufacture products, but also need technically trained workers or access to research. We collaborate with institutions such as Belmont Abbey College and UNC Charlotte, and we have invested heavily in Gaston College for workforce training and preparedness.

What infrustructure projects are key to the county’s prosperity?

We have invested heavily in infrastructure, mainly water and sewer. We have streamlined those services to accommodate industrial and residential growth.

We have the ability to produce and treat a substantial amount of water and sewage without added capital expenditure. We are working more on the distribution end of these utilities.

We have close to $500 million worth of road and transit improvements that the state has committed to. The staff is working to modernize and widen I-85 to four lanes each way, which will be our most important asset in the region. We are also working to improve other highway interchanges, modernize bridges, and fix internal roads. This will give us more capacity to drive back and forth between cities and counties.

Why is Gaston County the best choice for businesses?

If you come to Charlotte, you may have 10 counties you want to look at and consider investing in. The challenge for Gaston County is to have the best product available for new residents and companies when they show up. You have to have diverse housing,

a quality school system, amenities such as healthcare, and a vibrant economy.

We have worked hard to provide a compelling package. We provide multiple housing opportunities, connections to major transportation arteries, and the lifestyle choices that people want. We want to be ready when development is ready. We are expanding our hospitals and healthcare system. On the business end, there several new business parks that are underway, aimed at logistics and manufacturing. There is a lot of infrastructure being put in for new business locations.

We are working hard on the comprehensive package of amenities for businesses to locate their business to Gaston County. We want to be a well-rounded answer to your business needs.” www.capitalanalyticsassociates.com

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Chris Peek President & CEO CaroMont Health

What new developments is CaroMont Health excited about?

The most significant development for CaroMont Health has been the announcement of our plans to build a second hospital in Belmont. The growth of both the health system and Gaston County has dictated the need for increased hospital services in the community.

The location of the new hospital will be adjacent to Belmont Abbey College, which is the only four-year institution in Gaston County. The location not only offers direct access to I-85, it will also allow for a very important educational partnership with the College’s future health science programs.

From the clinical perspective, earlier this year, surgeons at CaroMont Regional Medical Center performed the health system’s first Transcather Aortic Valve Replacement (TAVR) in the new, state-of-the-art hybrid operating room. This procedure and the opening of the hybrid OR puts our program on par with some of the top heart programs in the country, and certainly rivals or exceeds the achievements of others in our region.

What challenges is the hospital system likely to face as Gaston County continues to grow?

The challenges for health systems, large and small, are very similar, but it really comes down to access – how patients access their doctor, how geography and socioeconomic factors affect one’s ability and how we address the demand created by being part of one of the fastest-growing regions in the country. Healthcare and the delivery of it is changing every day. You have national retail companies, like Amazon and Apple, entering the healthcare arena with hopes of transforming the way patients interact with their doctors and how doctors receive health information from their patients. While we offer and are continuing to develop virtual tools that make healthcare more accessible, we will always be charged with operating the bricks and mortar needed to provide comprehensive outpatient care and advanced medicine in the hospital.

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( ) new industries, which can be attributed in part to the successful efforts of the Gaston County Economic Development Commission (EDC), which is dedicated to attracting and retaining business and increasing the prevalence of high-paying jobs. The EDC promotes the county and provides custom client solutions to businesses willing to expand or create new facilities in the county.

The EDC also provides support to existing industry with its Business Retention and Expansion Program (BRE). This is a critical component of support for the County’s local businesses. Through the EDC there is

The Business Retention and Expansion Program offers: • Expansion Assistance/Property Searches • Fast Track Permitting • Market Research Assistance • Employment and Workforce Recruitment Assistance • Training & Retraining – Community Connection • Business to Business Introductions • Networking Opportunities • Incentive Grant Program • Communication Assistance • Utility Assistance

coordination of many local partners to produce events such as Career Signing Day in the spring, Manufacturing Week in the fall, monthly Gaston County Association of Manufacturers’ meetings and career fairs. This is in addition to the customer service which the EDC provides to individual companies. Most recently Dymax Corporation announced it would buy 16 acres of land from KRM Development in the Gastonia Technology Park to build a manufacturing facility that will create 59 jobs with an average annual wage of $59,814 which is significantly higher than the present average annual wage of $41,739 as calculated by the North Carolina Department of Commerce Finance Center.

The highest paying industries are utilities, paying $63,514, followed by finance and insurance, paying $55,562 and real estate rental and leasing at $51,115. The lowest paying jobs are in the accommodation and food services sector, which pays $13,058, followed by arts, entertainment and recreation at $13,558 and retail trade at $20,426. The manufacturing sector provides more than 16,000 jobs, followed by healthcare and social assistance at over 12,000 jobs and just over 10,000 in

GASTON CONSTRUCTION COUNTY OVERVIEW

retail trade. Gaston County is also home to international companies, with 11 German companies leading the way, including LANXESS, Mann+Hummel and Daimler Trucks North America. Also in the county are Japan’s Firestone Fibers & Textiles and “K” Line America, and Switzerland’s Clariant Corporation.

Since 2012 the Gaston County Board of Commissioners has annually reauthorized the Small Business Investment Grant to help small businesses expand or establish in the county. Any new or existing business can qualify for the grant if they have made an investment in property that increases the business’ net taxable value between $10,000 and $1 million. The Standard Investment Grant program has supported existing and new industries, investing more than $1 million since 1999. These performance based local grants are equally applicable to new and existing businesses creating a long term environment for local government supporting businesses.

In terms of income, households in Gaston County have seen a steady increase since the economy emerged from the 2008-09 recession, with a steeper upward curve since 2014. In 2018, the latest available data, the median household income in the county stood at $52,798, up 5.6%% from 2017. Gaston County comes in below Lincoln County to the north and above Cleveland County to the west, which recorded 2018 median incomes of $62,963 and $42,728, respectively.

The county comes in below Mecklenburg County to the east, which records a median income of $64,509, but Mecklenburg is also home to Charlotte’s robust financial community. The U.S. real median household income is $63,179.

Gaston County is also improving in terms of income inequality as measured by the Gini coefficient, which was 0.473, lower than the national average of 0.479. the county’s population overall is on a growth path and is expected to increase 3.6% to 232,160 by 2025.

Manufacturing The biggest employer by sector in the county is manufacturing, creating 16,390 jobs. The county has attracted a variety of foreign firms, with a heavy presence of German manufacturing companies.

Precision tooling company Aichele arrived in 2015 with a $2 million investment and chemical company Lanxess was welcomed in 2011 with a $15 million investment. Other countries represented in Gaston County include Israel with Tosaf USA, Switzerland with Clariant Corporation, Belgium with Colortex, Indonesia with Conitex Sonoco, Spain with CTL Packaging and Australia with ERA Polymers. In total,

Patricia Skinner Former President Gaston College

What trends are emerging in the education segment?

One statewide trend we are seeing is the increase in part-time students. We are funded based on a full-time equivalent and as you get more part-time students, you still need the same student success resources.

That has been a big challenge for all community colleges. For the first time in 10 years, our enrollment has increased. We have worked hard on marketing, retention, working with public schools, and other efforts to attract and retain students.

How do you work with the business community to ensure their talent needs are met?

We have customized business programs. We work closely with our business community in Gaston and Lincoln counties to meet their needs. Because of the manufacturing in this area, we have done a lot in terms of customized training in those counties. We design courses based on company needs and are No. 2 in North Carolina in terms of customized business programs.

Companies also really appreciate our apprenticeship programs, which give our students the ability to get high-paying jobs in areas that are needed. We started with just a few companies in Lincoln County and that success attracted the interest of other companies.That’s how the program has grown.

The apprenticeships allow companies to get good employees while students get their education paid for. It’s a win-win for everyone.”

What is your key growth program?

We have a very strong nursing program. We are working with institutions such as UNC Greensboro, because we have many hospital nurses who have an associate’s degree and want to get a bachelor’s degree. We also invite them to come in and teach a couple of classes so we can help meet the needs of the hospitals. www.capitalanalyticsassociates.com

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GASTON COUNTY OVERVIEW

33 international companies are present in the county from 16 countries.

In May, Southern Business and Development named Gaston County “a location of choice” for Foreign Direct Investment (FDI) associated with advanced manufacturing facilities. In the last 25 years, over $370 million has been invested, creating around 1,000 jobs. Among those investments is the $30 million

by Dhollandia North America which constructed a 272,000-square-foot advanced manufacturing facility and North American corporate offices. The Belgium family owned company plans to create 200 jobs.

2020 will see Gaston County develop its longawaited Apple Creek Corporate Park, for which the county began acquiring land in 2018. The county acquired about 330 acres of a former golf course and other parcels to set up the industrial park to neighbor the existing 350-acre Gastonia Technology Park, which is nearly fully occupied. The first phase of this master planned industrial park project already has a very high level of interest from two companies. Both projects have already received approval from the Board of Commissioners for conveying property in the Apple Creek Corporate Center. Together they will create high-paying jobs that are above the county average, with some guaranteed to be as high as $75,000. If these projects come to fruition then the first phase of the Apple Creek Corporate Center will be completed. “I think the main sector growing in the region is technology. That is where the emphasis will be for this region, and with that comes the education component that is being addressed in Gaston County.

Workforce development is a key component of this. We are making sure that our employee base is prepared for

the next level of tech-based jobs that are coming to the area,” said Mount Holly City Manager Danny Jackson.

Gaston County’s strong manufacturing industry is led by the Gaston County Association of Manufacturers (GCAM), an association that meets once per month to discuss strategies and best practices. The meeting includes personnel from across the board, from engineers to managers to increase collaboration and encourage links with academia and government.

Gaston College and Gaston County Schools are both partners in the initiative.

Local industries are pitching in to combat the coronavirus. An engineer at Texlon Plastics created a mold for headbands and bottom reinforcements for medical face shields at the beginning of April. Since the mold was created, Texlon has been manufacturing 6,000 headbands and 6,000 reinforcements each day. Caro-Polymers Injection Molding in Bessemer city joined the efforts and both companies are part of Charlotte MEDI, an initiative formed in March to produce protective face shields for healthcare workers.

Parkdale Mills and Beverly Knits, both headquartered in Gastonia, are part of a group that also includes Winston-Salem-based HanesBrands, Fruit of the Loom, American Giant (which has extensive Carolinas ties), AST Sportswear, Sanmar, America Knits and Riegel Linen that are producing face masks.

Real estate By early 2020, real estate website Zillow was calling the housing market in Gaston County “hot,” and a seller’s market. The median home value stood at $177,803, up almost 6% in the last year. It has one of the lowest median property values of surrounding ( )

Market voices: County Leaders

Tracy Philbeck

Gaston County is where the smart money is. With easy access to one of county’s biggest airports, workforce development programs at Gaston College and a tremendous local healthcare system, we provide a perfect landing spot for businesses looking to expand, re-locate or start from scratch. Our county leadership has a vision for our community that builds upon our rapidly growing manufacturing sector.

Chairman Gaston County Commission

Quality of life has been a key focus for the city. We want to be connected to the Catawba River via a greenway system that we are developing. We will have around 9 miles of greenway development near the river and 200 acres have been preserved for eco-tourism, such as canoeing and kayaking. We will have a bridge near the Dutchman’s Creek greenway area that will help with development near the river. The greenway system will stretch from I-85 to Highway 16 once it is completed. Mount Holly is home to very active residents who like to swim, bike and kayak. We want to connect with nature, which is part of our logo. That is our niche in the Charlotte Metro Area.

Becky Smith Mayor Bessemer City

Bryan Hough

Mayor City of Mount Holly

We are happy with the growth we have experienced in Bessemer City in recent years. Last year we had over 50 residential homes that had been built and that far exceeds what a normal amount of new homes has been. We have had two major industrial businesses that have located here, one being from Israel and the other from Belgium. This is in additional to other established businesses that have made considerable additions to their structures. It might not sound like much to a large city, but for Bessemer City, we have been very pleased with this progress.

Our homeless population is a prevalent worry. Our view is that the solution lies in the coordination between our city and county governments and our faith and business communities. We are also looking at ways that our workforce programs can reach out to those experiencing homelessness in Gastonia. Most of the resources that this population cater to are located in our Downtown: the Salvation Army, the Department of Social Services, to name a few. As far as employment goes, our figures are healthy. We are getting people trained so they can perform well at their jobs and make the money they need to be productive.

Walker Reid

Mayor City of Gastonia

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GASTON COUNTY OVERVIEW

Robert Pressley President – Coldwell Banker Commercial MECA Our commercial brokerage market share in Gaston County is well north of 50 percent. We represent most of the largest employers there, have done work for most of the municipalities or with them, developed land, adaptively re-used old mills and buildings and have repositioned smaller buildings in pockets of mini-urban centers, such as Belmont, McAdenville, Cramerton, Lowell, Stanley and Gastonia, to name a few. Gaston County’s biggest hurdle is its lack of product and desperate need for more office and medical office space, industrial warehouse space, retail shopping space and mixed-use projects.

( ) counties, despite its proximity to the Charlotte metro area. This could be one reason why home ownership is 65.4%, above both the state and national averages. One of the biggest real estate trends is mixed use and Gaston County is jumping in with both feet. The city of Gastonia is the developer of a major project that broke ground in December, the Franklin Urban Sports and Entertainment (FUSE) District in Downtown Gastonia. The site will include a 5,000-seat, $26.2-million stadium, restaurants and office spaces in a true mixed-use development. The stadium has attracted a North Carolina craft-beer company to take advantage of thirsty sports fans. And $14.2 million has already been allocated to transform the old Trenton Mill into 81,862 square feet of residential space containing 84 apartments. Already, FUSE has attracted $75 million in private investment In retail, an ambitious plan was announced in November 2019 by Charlotte-based US Developments to acquire the two-story, 919,000-square foot Eastridge Mall in Gastonia and redesign the entire district. The developer entered into a formal MoU with the city of Gastonia late last year, with the city endorsing the plan to bring new mixed-use construction to the real estate surrounding the existing mall. US Developments wants to use the land currently in operation as a parking lot to construct a hotel, restaurants, multifamily housing and office space, a bowling alley and a movie theater.

Gaston Aquatics has also announced plans to build a $6 million, 35,000-square-foot aquatics center on the site.

The county also has the hotel sector well-covered. In June 2018, developers broke ground on a new Fairfield Inn & Suites by Marriott in Mount Holly. The project involves an investment of roughly $13 million, and about 60 people could work there once it’s complete.

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CaroMont Health has earmarked $300 million in capital projects and facility improvements in throughoutGaston County over the next five years.

GASTON COUNTY OVERVIEW

Transportation Traffic is among the biggest concerns for companies looking to relocate and also for the millennial generation that is shaping the work, live, play concept.

In short, no one wants to be stuck in traffic. For Gaston County, this is a key selling point. Commute times for residents average 24.5 minutes, lower than the U.S. average of 25.1 minutes, and just 1.46% of Gaston County residents have super-commutes that last 90 minutes or more. The preferred mode of transport is overwhelmingly the car, with the average household owning two cars. Over 85% reported they drive alone, with just 9.33% carpooling and 3.26% working from home. Just 0.7% walked to work, 0.3% used public transport and 0.05% traveled to work by bicycle.

Authorities have been making efforts to improve connectivity in Gaston County for many years,

particularly to take advantage of its position a stone’s throw from metro Charlotte. The city of Gastonia, along with the city of Lowell, are seeking $18.5 million in federally sponsored BUILD Discretionary Grant funds to complete the $37 million package needed to implement the Lineberger Connector project between the two communities. According to the city of Gastonia’s proposal, braiding the communities together through the overly congested I-85 exits 21 and 22 will unlock the development potential of approximately $900 million in project value for the Greater Gaston area. The grant application has been rejected three times so far, but the county is making a fourth push for financing in 2020.

Infrastructure To help private developers and continue attracting new business to the county, the public sector is getting involved in its own ambitious infrastructure project. Starting in 2024 with an investment of $262.8 million, it will widen a 10-mile segment on I-85 from US321 in Gastonia to NC273 in Mount Holly from six lanes to eight. The Charlotte Area Transit System also approved plans in 2019 to extend its light rail service across the Catawba River to Gaston County by 2030. These are all efforts to expand Gaston County’s tourism and entertainment offerings and take advantage of its position as one of Charlotte metro’s closest neighbors.

The community is already well-served with rail infrastructure, with the Piedmont & Northern Railway (PNRW) operating over 13 miles of track from Gastonia to Mount Holly. Progressive Railroad purchased and renovated the former Weyerhauser plant creating an intermodal and transload facility on the 14 acre site in Gastonia. The city provided Progressive Railroad with support to renovate the 191,000 square foot plant built in 1954. Although Gaston County is close to Charlotte Douglas International Airport, the city of Gastonia is considering extending the Gastonia Municipal Airport’s runway, opening up more opportunities to accommodate a broader range of aviation activities to take off and land there. To improve connectivity even more, a feasibility study is being conducted to explore adding an additional Catawba River bridge crossing near the massive River District development just across the river in Mecklenburg County. According to infrastructure titans Hugh McColl, former CEO of Bank of America, and Johnny Harris, CEO of Lincoln Harris, Gaston County needs these links to the Charlotte metro area to ensure its continued growth. www.capitalanalyticsassociates.com

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GASTON COUNTY OVERVIEW

Gaston County’s cultural, artistic and outdoor offerings make it one of the most dynamic counties for families looking to move in the region.

Healthcare The most recent County Health Rankings & Roadmaps Report ranked Gaston No. 66 out of 100 North Carolina counties in the state in terms of overall health outcomes. The Robert Wood Johnson Foundation and the University of Wisconsin Population Health Institute found Gaston ranks a vastly improved 56th in the health factors category based on behaviors, socioeconomic issues and environment and 37th in clinical care, which measures factors like access to insurance, preventive care and the ratio of healthcare providers to patients. But the picture has been improving. In 2017, Gaston was in 71st place and last year it was No. 67. Development of medical facilities is helping the outlook for the county. Recently, CaroMont Health announced a $325 million investment in Gaston County over several facilities. CaroMont Regional Medical Center-Belmont is expected to open by 2023 and will create 300 jobs by 2026, the health organization says. The Belmont hospital will have an 36 | Invest: Charlotte 2020 | GASTON COUNTY

emergency department, a 66-bed inpatient unit for admission or observation, a labor and delivery unit, operating rooms and surgical capabilities as well as diagnostic services with a laboratory and imaging.

The project is expected to generate $750 million in economic impact. Gaston County’s healthcare industry is also adapting to coronavirus concerns. CaroMont is offering telehealth and virtual doctor visits in the face of the outbreak. It announced the service on April 6 and as of April 8, more than 450 people had already used the new technology. Other healthcare providers in the area, including Foot and Ankle Specialists of the Mid-Atlantic, have similar offerings.

Education In 2017, universities in Gaston County awarded 1,614 degrees, with 313 Bachelor’s degrees being awarded.

The majority of the degrees were awarded to women, while just 561 were awarded to men. The most popular degree course was general business administration and

GASTON COUNTY OVERVIEW

serve students statewide. “Education has been one of our focuses,” Steve D’Avria, CEO of the Gaston Regional Chamber told Invest:, talking about efforts to support the growing tech sector. “One approach is through an early college program that allows students to get their associates degree in high school. Also, Gaston College has the Center for Advanced Manufacturing, and they work on how to make that sector more automated.

We’re actually also offering classes through Gaston College right here in our chamber offices.”

Arts and culture The Gaston Arts Council, established in 1979, is a nonprofit umbrella organization for the arts that encourages, promotes and supports broad-ranged cultural and educational programs. Programs include Artist Corner, Art for the Heart and Lit Up and the agency also offers grants for artists and arts organizations. Gaston’s arts and culture scene is one of the reasons why Belmont city was recognized as one of the “Coolest Suburbs in America” by lifestyle website Apartment Therapy. Gaston County also has 12 natural heritage sites of state or regional significance and 19 parks. There is no shortage of activities for those who love the outdoors. Between the cities of Kings Mountain and Gastonia lies the Crowders Mountain peak.

management with 28.1% of grads, followed by general education with 12.8% and elementary education and teaching at 7.35%. That year, the university with the largest number of graduating students was Gaston College, awarding 70% of total degrees, followed by Belmont Abbey College and Paul Mitchell the SchoolGastonia, which awarded 158 degrees. The median cost of private education in the county is $18,500. In 2018, Gaston County passed a referendum for a 25-cent sales tax alongside a $250-million school bond to finance construction of three new schools and provide repairs and renovations to existing schools. Gaston County has two top public schools in the region in terms of career and college readiness. Gaston County schools were also among several North Carolina K-12 programs that will split $810,000 in grant funding from the Duke Energy Foundation, Duke announced in April. Gaston County students will also benefit from the $20,000 granted to Education NC, $80,000 to FIRST North Carolina and $50,000 to the NC Agricultural — three programs that

Looking ahead Overall, Gaston County is in a strong economic position, with Moody’s awarding its $20.8 million Limited Obligation Bonds an Aa3 rating as a result of strengthened residential income and wealth levels, as well as a decline in the county’s debt levels. But it warned that a downgrade may be possible should the county experience a substantial contraction in the tax base and wealth levels, material declines in reserves, significant escalation in fixed costs related to debt burdens or non-appropriation for the county’s lease obligation. Entering into a period of difficulty like that imposed by the Covid-19 pandemic, Gaston County will be greatly served by its well-diversified economy.

Its businesses are resilient and already adapting to the new normal.

Capital Analytics would like to thank Gaston County for its contributions in compiling this chapter.

To learn more, visit their website at: www.gastongov.com

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Legal: It has been a long road back to strength since the Great Recession for Charlotte’s legal sector but as the local economy grows and diversifies, law firms are regaining their foothold. Consolidation through mergers and acquisitions and an influx of larger national and international firms have also reshaped the landscape, which places it well to deal with the COVID-19 pandemic.

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Firm ground: Charlotte’s legal sector survived the Great Recession and most believe it will emerge just as strong from current uncertainties Although it has made great strides since the onset of the Great Recession a little more than 10 years ago, the legal market in most metro areas is still not the same as it was in 2007. Law firm consolidations, fewer attorney jobs, and competition from nontraditional legal service providers have all left their mark and forced lawyers to be more tech savvy and better marketers than ever before to receive a slice of the pie.

Although Charlotte was among the metros hardest hit by the recession given its history as a financial hub, and although its legal market suffered tremendously as a result – even leading to the closure of the city’s only law school – the landscape today is brighter . Many large national firms are continuing to move into Charlotte, often merging with or acquiring local firms while adding jobs. Charlotte also continues to attract diverse talent, as local firms prioritize recruiting for skilled lawyers without regard to race, gender or sexual orientation.

Together, these factors are making Charlotte an attractive destination for lawyers and creating an everstronger market, which should also help it cope in the era of COVID-19. “The downturn of 2007-8 was highly instructive. It was steeper and sharper than downturns we witnessed in prior decades and we were primarily a 40 | Invest: Charlotte 2020 | LEGAL

one-industry banking town. That is no longer true, to our great benefit,” Jason Solomon, partner-in charge at the Charlotte office at Alston & Bird, told Invest:. “Charlotte and the region certainly have their challenges, but I do think that the city has done a commendable job in reinventing itself as a modern, diversified economy.

Since 2010, the broad range of industries that have come to town and planted seeds here, such as technology or transportation, prevent the scale from tipping quite so heavily as it once did. Charlotte weathered the storm when it was primarily banking driven. I believe that with our diversification we are sturdier and can weather any coming storms. We have a history of reinventing and rethinking the city and regional focus. 2020 will be a wait-and-see year as several wildcards settle their impact on our activities, such as the elections, the COVID-19 virus and the economic implications of a short or longer-term recession.”

History In the wake of the Great Recession, the legal industry was hit particularly hard, and this was no less true in the Charlotte Metro Area as it was in the rest of the country.

More than 10 years after the historic downturn ( )

LEGAL INTERVIEW

Evolving needs Charlotte’s strong position as a banking center and the emergence of the tech industry are shaping the region’s legal practices

Tom Mitchell Managing Partner – Moore & Van Allen What were some highlights for the firm in 2019?

2019 was another record-setting year from a revenue standpoint for Moore & Van Allen. We are an AmLaw 150 law firm, which means we are one of the top 150 law firms in the country based on revenue.

Our business expanded in many of our core areas, such as finance, mergers and acquisitions, private equity, intellectual property and regulatory and investigations. As the business grows, we continue to hire attorneys to help us service our clients efficiently. We have approximately 325 lawyers, most of them based in Charlotte. We also offer strong contributions in the public service and pro bono arena. For example, we worked on the merger of the Men’s Shelter of Charlotte and Urban Ministry Center last year. We are very proud of this work and can already see the benefits the merger brings to our community.

How have the legal needs of businesses evolved in the last few years?

Charlotte has always been a strong banking center.

At Moore & Van Allen, our finance group has been one of our largest practice groups for many years.

Recently, with the amount of large companies moving their headquarters to Charlotte, corporate and transactional legal practices in the region have become more diverse. For example, with more technology companies in Charlotte creating jobs in the region, legal practices such as intellectual property, data security and privacy continue to expand. The relocation of large companies to Charlotte has had a significant impact on the legal sector here.

How is Moore & Van Allen shaping the next generation of legal talent?

Charlotte offers a competitive and unique quality of

life. The sophistication of our legal practices allows us to recruit top talent locally and nationally. We showcase Charlotte as a great place to live and work.

With our depth and sophistication in over 20 practice areas, we can provide opportunities early on to our newer attorneys, allowing them to develop their practice and skills more quickly than they might in other cities.

Also, we have been intentional in our efforts to emphasize diversity at Moore & Van Allen. For example, we host a diversity conference each year for first year law students where we expose them to the practice of law. We also have a strong mentoring program, which contributes greatly to sustaining the pipeline of talent necessary to maintain a diverse workforce and client base for our firm. www.capitalanalyticsassociates.com

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LEGAL OVERVIEW

As Charlotte’s economy continues to grow and diversify, recruitment and retention of legal professionals remain a top priority for law firms in the region

( ) struck legal services in Charlotte, the market is quite different than it was before. First, Charlotte now has far fewer of its homegrown firms, many of which were acquired or merged with larger national firms during the wave of consolidation that followed the recession, a trend that continues today.

The ongoing evolution of the legal profession since the Great Recession has not only led to the closure of some of Charlotte’s law firms or their consolidation with outside firms, it also led to the shuttering of the city’s law school. Until 2017, Charlotte was home to Charlotte School of Law, but UNC Chancellor Phil DuBois stated that the still-incomplete recovery of the legal sector following the economic crash of 2008 rendered it imprudent to continue the project. There are still some 50,000 fewer available attorney positions in the country than there were at the peak level in 2007, and UNC officials determined that the market left law school grads with grim prospects for employment, particularly when measured against the average debt accrued by students in pursuit of a law degree. This was particularly true for recent grads of Charlotte School of Law, where only 23% of graduates found full-time employment requiring a law license in 2016, the last 42 | Invest: Charlotte 2020 | LEGAL

year before it closed. This compared to 92% of Duke grads finding full-time licensed work the same year.

For now, Charlotte remains the largest U.S. metro area without a law school, a fact that is heightened by the need today for skilled lawyers as the area’s economy grows and diversifies. “From our perspective, the city’s growth is driving increased competition because every law firm in the country, and indeed some international groups, are looking to establish a footprint here. Larger firms are still being affected by corporations in-sourcing their legal work, but that is less true for us given our focus on the middle market. Many of our clients do not have those in-house resources,” said Darrell Shealy, managing partner at Johnston, Allison & Hord PA. “The ability to recruit talented workers is also a huge issue for us. There is a great deal of demand in commercial real estate, for example, because in that practice we compete with all of the larger firms in the city. It’s tough to find lawyers who meet our hiring standards because there is such strong competition.”

For some firms, the growth that is attracting firms to the city is also a key in attracting talent to the city.

“At Katten, we have never had an issue attracting top talent. We have over 50 attorneys and add a few more

CONSTRUCTION LEGAL OVERVIEW

Steve Meckler Charlotte Managing Partner Shumaker, Loop & Kendrick LLP

How has Charlotte’s growth affected the firm in terms of recruitment and company growth?

We are always looking for good lateral talent to acquire and bring over. As the legal market becomes a little more saturated here with firms moving in, the competition for those lateral hires is obviously greater. There has been a huge amount of growth in manufacturing clients moving into town. Some have acquired some of our clients and brought them down here, others have been new clients, or we’ve had clients move here that were headquartered out West.

It has increased our business. Their demands are increasing as they take a stronger look at their legal spending.

every year through our summer programs. We have also hired a significant number of attorneys laterally from other firms, locally, and from out of town. There has been no shortage of people who want to work and live in Charlotte, which has allowed us to find great lateral talent,” said Daniel Huffenus, managing partner at Katten Muchin Rosenman.

The changes have also reinforced the need for lawyers in Charlotte and elsewhere to employ savvy marketing tactics to find clients and grow their firms in the ultracompetitive post-recession landscape. This means relentlessly networking by attending conferences and other events, being open to collaboration with other lawyers, and just generally connecting with other people in the industry in a way that fosters building on one another’s skills and knowledge and helping one another find opportunities. It also means having your finger on the pulse of the latest trends in legal tech, despite the legal industry’s historical aversion to change, and embracing the practice of law in the digital age. “Law firms need to use technology to provide services more efficiently. There is a lot of competition in the legal market, with many good law firms, and you have to be able to do it better, not necessarily

What are some of the pitfalls for newcomers entering the market?

Talent acquisition is tough for them. Building connections is tough for them unless they’re already doing work for a client that’s here. Charlotte is the land of opportunity, but it’s also the land of who you know.

How is Shumaker handling recruitment and retention of employees?

We don’t tend to see a lot of turnover. We treat people well, pay them fairly, and we like people to have a balance. We have a culture here that we protect aggressively, so that people are not dreading coming into work on Monday. We’re making sure that when we make offers to people those offers are attractive.

What challenges are you facing in the Charlotte market?

As businesses move in, and people move in, there’s a demand on infrastructure and there’s a demand on planning. The continued challenge for Charlotte is to act regionally, which I think they’re improving upon greatly. You see more regional organizations coming together, like the Charlotte Regional Business Alliance. www.capitalanalyticsassociates.com

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Christopher Lam Partner Bradley Arant Boult Cummings LLP

How has the legal landscape changed with so much economic growth in the region?

From a legal perspective, a lot of firms from outside North Carolina decided to set up an office here, and not all of those have remained. According to American Lawyer, however, there are 59 law firms with a Charlotte office that are not headquartered here. This remains a very popular place to be for lawyers and that’s because of the way our business community has diversified.

We are known as a banking and financial services hub, and while this is still a key part of our economy, we are so much more than that, with energy, manufacturing, fintech and other sectors emerging. That diversification is good for us as lawyers too, as it better equips us to weather a potential downturn. For example, our firm has experts in multiple practice areas and industries, which allows us to serve clients with those needs and protects us against a downturn in one or two particular sectors.

How have the legal needs of companies evolved as new technologies and developments emerge?

The core legal needs for businesses have largely remained the same – corporate, employment, litigation, real estate. But with new regulations, there is a greater need for expertise in compliance, specifically in data privacy, and particularly with new regulations such as GDPR and CCPA going into effect. That impacts almost every company.

How does the Charlotte legal market compare with other markets such as Chicago or New York?

Those cities are larger and more diverse and sometimes those legal markets can seem more attractive, whether it be a higher salary or more opportunities. In Charlotte, however, because of the diversity of the business community, we have sophisticated legal services here to rival the likes of New York, Chicago and Washington, D.C. We also have a cost of living that is more advantageous, meaning lawyers can have great opportunities with a lower cost of living. That’s the best of both worlds.

44 | Invest: Charlotte 2020 | LEGAL

quicker but definitely more efficiently. In the old days, you would have a big litigation case that you put nine people on and they would come in the morning, turn on the billable hour clock and work all day. But there are not many cases like that anymore, and few firms that operate in that fashion. You have to be able to do everything more efficiently. The big area where we see technology helping to improve processes is in document reviews. We can have a construction project with 15,000 emails, and technology can help to quickly review those and find the most important documents.

The old days of going to a warehouse full of boxes and shelves and going through them one by one are gone.

Technology can help you sort through large quantities of documents and accurately identify the important ones,” said Tate Ogburn, partner at Poyner Spruill LLP. As the legal profession goes digital, the privacy of information has become an even greater priority.

“Every business executive I know is worried about cybersecurity and we now have a top-notch privacy and data security practice that stays on top of the latest developments in Europe and California and elsewhere that can directly affect how you do business,” said Julie Theall Earp, managing partner at Fox Rothchild LLP, adding that communication is now more important than ever. “A major challenge for law firms is tailoring our communications to match each client’s style.

Our clients have many different billing systems and communication guidelines. With the right software, and with Fox Rothschild’s terrific administrative support, we are able to ensure that our teams make it easy for clients to communicate with us, using the tools they prefer, with clear and concise communications.” Adds Katten Muchin Rosenman’s Huffenus: “We upgrade our business systems constantly. We are looking into artificial intelligence as aid in document reviews when it comes to litigation, as well as to help with document production in terms of transactional work.”

Landscape Of course, just because Charlotte doesn’t have a law school does not mean it doesn’t have a vibrant legal community. There is a constant flow of new firms into Charlotte as the Southeast remains a magnet for the clients lawyers typically serve. “The legal needs of the Charlotte community are very sophisticated.

Major national and global companies, such as Bank of America, Wells Fargo and Duke Energy, bring sophistication to the business world, which translates to the legal market. Firms in the Charlotte market have to provide high-end legal services because of the sophistication of the work that is demanded by

LEGAL OVERVIEW

Julie Earp Managing Partner – Fox Rothschild LLP

Charlotte is a growth market for our law firm for all the same reasons that North Carolina has repeatedly been ranked at the top of Forbes Magazine’s list of Best States for Business. The economic climate is business-friendly, so our clients are thriving and we are growing with them. We took a major step in November 2018 when Smith Moore Leatherwood joined Fox Rothschild. This move achieved several things at once. Most importantly, for our clients, we now have a national platform with 27 offices coast to coast and more than 950 attorneys. This is particularly important for our clients that are expanding or considering expanding into new regions.

our clients,” said John McDonald, Charlotte office managing partner at McGuireWoods. By 2019, there were 59 law firms with non-headquarter offices in Charlotte, 30 of which are AmLaw 200 firms. For example, Offit Kurman opened a Charlotte office in 2019 and added 27 lawyers to the city, and Seyfarth Shaw also established a presence with the opening of a 10-lawyer satellite office. Dallas-based Haynes and Boone also opened an office in Charlotte in 2019.

The firm ranked 83rd in the National Law Review’s ranking of U.S.-based firms based on size, with 575 lawyers across 16 offices globally. Haynes and Boone’s Charlotte outpost will initially start small with three full-time attorneys, and then expand as the needs of the firm and its clients expand. Other major national firms operating in Charlotte include Troutman Sanders and K&L Gates.

Part of what attracts major firms like these to Charlotte is its location and its history. The city is strategically located between two other major metros with substantial legal markets: Washington, D.C. and Atlanta. Charlotte is also an established finance and banking hub, boasting the second-largest banking sector in the country after New York City, and is home to Bank of America. However, Charlotte also learned from the Great Recession how important it is for a city to diversify its economy and not depend on the banking sector alone. Therefore, the city has fostered the growth of its healthcare, aviation, and manufacturing industries as a means of attracting business. “The Charlotte Metro Area is doing things the right way when it comes to economic development and recruitment of new industry. This will no doubt benefit residents and existing businesses over the long haul. The state of

North Carolina and the local governments in Charlotte once again demonstrated they can aggressively recruit world-class companies like Honeywell late last year with the more flexible incentive package it was able to put together. That was a huge project win for this area,” said John Hunter, Partner at Womble Bond Dickinson US LLP told Invest:.

Tax reform Now that it’s been in effect for some time, the impact of the 2017 Tax Cuts and Jobs Act is now being felt by individuals and businesses throughout America. Law firms in particular have had to grapple with the changes in tax liability for partners, as well as the firm itself.

The Act’s new rules for state income tax deductions mean that a greater share of many attorneys’ incomes could be subject to federal income tax. Fortunately, married attorneys with adjusted gross incomes below $315,000 when filing jointly with their spouses and single attorneys earning below $157,700 will qualify for a business income tax deduction that will likely defray their increased tax obligation entirely. The tax liability of law firms under the Act depends on the firms’ gross revenue and whether they operate as a flow-through enterprise. Partners of flow-through firms with income below a certain threshold can claim the pass-through deduction on their flow-through earnings. Finally, although corporations benefit from the much-discussed reduction in the corporate tax rate, from 35% to 21%, the personal service corporation exception means law firms are capped at a tax savings of 2%.

The Act also includes exciting opportunities for real estate investment in the form of Opportunity Zones, specially designated areas designed to attract www.capitalanalyticsassociates.com

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LEGAL OVERVIEW

Stuart Goldstein Managing Partner, Charlotte Office Cadwalader, Wickersham & Taft LLP There are basic economic reasons to explain the dramatic growth in structured finance. One of the drivers is the relatively low interest rates at this time. People who want to invest in fixed-income securities are looking for value. You can buy U.S. 10-year Treasuries, but the yield on that instrument is less than 2%. If you are a pension fund or money manager, you are looking for higher rates, and structured finance offers attractive returns to investors from a relative yield perspective. We started with real estate finance and capital markets and securitization when we opened our office here in 1996, and we’ve seen those areas grow year after year. Those engines have really pushed us and have fueled our tremendous success.

private real estate investment where it is most sorely needed by providing capital gains tax deferrals to investors. The president has credited the zones with injecting jobs and investment into 9,000 previously neglected or “blighted” neighborhoods across the country, 17 of which are in Charlotte. However, some activists and critics of the zones claim that, rather than providing equitable redistribution of wealth and a redevelopment of blighted areas that benefits all residents equally, they have led to gentrification and the greater enrichment of the privileged through luxury and high-end developments that displace the poor residents of these neighborhoods, rather than helping them. As the Opportunity Zones are still a fairly recent innovation, it will take some time before their true, long-term impact is felt, but for now they do seem to be facilitating investment; whether that investment benefits everyone remains to be seen.

Diversity and inclusion Today’s law firms are unanimous in their opinion that fostering a diverse and inclusive workplace is not only morally proper, but is also in the best interest of their business. This is because hiring lawyers and staff without restrictions based on race, nationality, gender, sexual orientation, or similar characteristics not only ensures that everyone has a fair and equal opportunity to succeed, it also ensures that the firm is able to maintain the plurality of ideas and perspectives among its attorneys that is essential to providing high-quality legal services that comprehensively address clients’ needs. It’s no surprise, then, that clients prefer to work with the 46 | Invest: Charlotte 2020 | LEGAL

Creating diversity in the legal profession has been a chief priority for legal firms throughout Charlotte.

LEGAL OVERVIEW

most diverse firms due to the tendency for these firms to be more socially progressive and to provide a higher caliber work product.

A traditionally white, male-dominated profession, the law has made considerable strides in welcoming minorities in recent years. For example, the two largest law firms in the Charlotte Metro area, Moore & Van Allen and McGuireWoods, also top the list in terms of how many of their attorneys are women.

According to a list published by the Charlotte Business Journal in February 2020, Moore & Van Allen has the most attorneys in Charlotte, with 293 working at its local office, and 104 of those attorneys are women – 20 more than last year – and 15% of them are partners.

McGuireWoods employs 178 attorneys locally, 74 of whom are women, and 15 are partners. Other firms with more than 50 local attorneys that performed well in terms of number of women attorneys are: James

McElroy & Diehl (48% of attorney’s are women), Hedrick Gardner Kincheloe & Garofalo (42%), and K&L Gates (38%). Winston & Strawn represented the 20-40-lawyer firm group, with 45% of local attorneys and 40% of local partners being women.

To cultivate diversity among their ranks, Charlotte’s law firms have not only endeavored to hire with an eye toward inclusion, they also engage in a variety of initiatives and public outreach programs, and truly put diversity and inclusion at the core of who they are and what they do. Moore & Van Allen, for example, was the founding firm member of the Mecklenburg County Bar’s Legal Diversity Clerkship Program and an original signatory of the Mecklenburg County Bar’s Call to Action Diversity Initiative. The Legal Diversity Clerkship was established in 2006 to improve attorney diversity in the Mecklenburg County legal community by offering prestigious summer internships at Charlotte law firms and corporate legal departments to first-year law students who come from diverse backgrounds and who are also among the top of their class.

Another local firm, Robinson Bradshaw, established two affinity groups to support minority lawyers: the Robinson Bradshaw Women’s Initiative, which provides internal and external mentorship and networking opportunities for its women attorneys, and the Lawyers of Color Affinity Group, which offers similar mentorship and networking opportunities to lawyers of color. Parker Poe has a series of diversity recruiting and retention initiatives aimed at fostering inclusion within the firm, such as the Parker Poe Scholars Program at Johnson C. Smith University (JCSU), a historically black university in Charlotte, which provides a scholarship and mentoring for undergraduate students at JCSU who aspire to become attorneys; the THRIVE program, which provides minority law students with a day-in-the-life experience at the firm to show them what life is like in practice; and a focus on recruiting attorneys at the Southeastern Minority Job Fair in Atlanta, Georgia.

Looking ahead As in most major metro areas, the legal sector in Charlotte suffered in the wake of the Great Recession.

The sector’s recovery has been slow and is still ongoing, and in the middle of it, law firms have had to learn to navigate the new tax landscape under the 2017 Tax Cuts and Jobs Act. Still, Charlotte remains a strong legal market thanks to its strategic location and status as a banking and financial services hub, and large, national and international law firms continue to move in. www.capitalanalyticsassociates.com

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Real Estate: Charlotte’s real estate market is outperforming the national averages on every front—office, mixed-use, retail, industrial—fueled by a continued demographic inflow, attractive job opportunities and corporate heavyweights like Honeywell relocating in the Queen City.

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Real Estate in numbers: Total Office Inventory: 5.0% Average Annual Change

Total Inventory

4.5%

Total Inventory (SF)

55,000,000

4.0% 3.5%

52,500,000

3.0% 50,000,000

2.5% 2.0%

47,500,000

1.5% 1.0%

45,000,000

0.5% 42,500,000

Annual Growth Rate – Total Inventory

57,500,000

0% 2015

2016

2017

2018

2019

2020

2021

2022

Average Office Asking Rent: 16.0% Average Annual Change

Average Asking Rent

14.0%

$35.00 Total Inventory (SF)

12.0% 10.0%

$30.00

8.0% $25.00

6.0% 4.0%

$20.00

2.0% $15.00

0% 2015

2016

2017

2018

2019

2020

2021

2022

Market Rankings: MARKET

TOTAL SF BUILT 2015-2019

TOTAL INVENTORY

TOTAL INVENTORY CHANGE RANK

PERCENT CHANGE IN INVENTORY

PERCENT INVENTORY CHANGE RANK

Atlanta

7,005,500

149,201,890

14

4.93%

18

Austin

10,054,904

56,125,427

8

21.83%

2

Baltimore

4,229,085

70,100,209

21

6.42%

15

Boston

7,792,319

168,041,437

13

4.86%

19

Charlotte

5,751,019

54,163,821

18

11.88%

8

Chicago

8,091,897

251,519,383

11

3.32%

24

Dallas

20,541,571

224,359,492

1

10.08%

10

Denver

8,498,932

114,765,120

10

8.00%

13

Detroit

869,452

67,473,828

28

1.31%

29

Houston

15,685,862

169,963,275

2

10.17%

9

50 | Invest: Charlotte 2020 | REAL ESTATE

Annual Growth Rate – Average Asking Rent

$40.00

Population Growth: 2,800,000

150 Total Population

140

2,700,000

130 2,600,000 Total Population

120 2,500,000

110

2,400,000

100

2,300,000

90 80

2,200,000

70 2,100,000

Average Daily Population Growth

Daily Growth

60

2,000,000

50 2015

2016

2017

2018

2019

2020

2021

2022

Employment Growth: 1,300,000

140 Total Emplyment

1,250,000

120

1,200,000

100

1,150,000

80

1,100,000

60

1,050,000

40

950,000

20

900,000

Average Daily Employment Growth

Total Employment

Daily Growth

0 2015

2016

2017

2018

2019

2020

2021

2022

RENT 2015

RENT 2019

TOTAL RENT CHANGE 2015-2019

TOTAL RENT CHANGE RANK

PERCENT RENT CHANGE 2015-2019

PERCENT RENT CHANGE RANK

$22.77

$28.95

$6.18

15

27.14%

11

$36.93

$47.15

$10.22

5

27.67%

10

$24.00

$25.22

$1.22

28

5.08%

28

$34.62

$44.26

$9.64

7

27.85%

9

$22.55

$32.24

$9.69

6

42.97%

3

$28.75

$33.60

$4.85

17

16.87%

21

$23.96

$28.06

$4.10

22

17.11%

19

$25.37

$30.43

$5.06

16

19.94%

15

$18.37

$19.77

$1.40

27

7.62%

27

$30,27

$22,18

-$8,09

29

-26.73%

29

All data sourced from JLL All data was compiled prior to the COVID-19 outbreak

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Magnet: Whether a millennial or a baby boomer, Charlotte has something for everyone On average, close to 122 people move into Charlotte each day. This influx of new arrivals looking for job opportunities in the city sets the stage for an attractive real estate market and demand shows no sign of slowing down, although COVID-19 is threatening to put a damper on the sector.

In addition to its reputation as a live-work-play city that successfully caters to a variety of expectations, including sports, theaters, restaurants and nightlife, investors looking at Charlotte’s real estate are drawn primarily by two factors: demand and affordability.

The city’s median home value is $242,438 (March 2020), according to the Zillow Home Value Index placing it just below the national average of $248,857.

S&P’s November 2019 CoreLogic Case-Shiller National Home Price Index, widely viewed as a barometer of the U.S. housing market and broader economy, placed Charlotte second in home price rise with a gain of 5.2 percent against a national average of 3.2 percent.

In parallel, Zillow’s Index has consistently shown Charlotte placed among the most favorable longterm real estate investments in the country: since 2015, the median home prices in the city have appreciated by close to 45.2 percent. According to FortuneBuilders, a real estate investing education 52 | Invest: Charlotte 2020 | REAL ESTATE

and business development company, in the early months of 2020, Charlotte’s properties showcased an average 68 days on the market for people looking to sell; while the foreclosure rate was one in every 1,480, or 6.7 percent. According to the Charlotte Regional Realtor Association, the city’s influx of people has helped keep housing inventory levels low, averaging only a 2.1-month supply of homes.

Speaking to Invest: pre-COVID-19, President of Lake Norman Realty Abigail Jennings described a market that was bustling, “The real estate market continues to be very strong in the Lake Norman and Charlotte region. As a full-service firm, Lake Norman Realty, has seen increased activity in every department of our company and in every community in our area, from real estate sales and rentals, to relocation and commercial services. We attribute our success to our personal touch and customer service. That is our foundation.”

The great unknown in the wake of the pandemic is how long the impact will last, although the market has understandably slowed. One indicator of the market’s strength is the availability of finance and that is a mixed bag. “Several lenders have stepped out of the market or put a pause on making decisions ( )

REAL ESTATE INTERVIEW

Changing climate The arrival of major corporate HQs demonstrates the positive evolution of Charlotte’s business environment

Johno Harris President – Lincoln Harris How would you characterize the region’s business climate?

Getting Honeywell was a big win for the city of Charlotte as we continue to diversify the area and as its economy continues to develop and grow. The arrival of companies like Honeywell, Lowe’s, Dimensional Fund Advisors, and Albemarle is evidence that Charlotte’s business climate is changing and that the city offers a great quality of life for residents with continued growth and opportunity. All of this solidifies what we have been saying to the nation: that we are more than a banking town.

What is driving HQ relocations to Charlotte?

In the past, relocation decisions were driven by CEOs and where the C-Suite wanted to live. Today, those decisions are driven by employees. It is as much an HR decision as it is a C-Suite decision. Companies are looking at places where they can recruit, retain and have a great workforce. Previously, students graduating from local universities were moving away from the region to find work in other marketplaces. That is not happening anymore because of the diversification of the companies in the area and the different opportunities available. That means the community with the city must address the needs of employees, such as housing, entertainment, and other lifestyle amenities. You can see this in the growth of places like South End, Noda, Uptown, Ballantyne and SouthPark.

What are the key challenges for developers?

Today parking is still an important part of development.

It is imperative that there is a partnership between the community and the private institutions that are doing the development to offer parking solutions.

Charlotte is a perfect example when it comes to providing infrastructure with options like ride-sharing

services, the light rail, and other public transportation.

However, there is still huge demand for parking. In Uptown, most of the surface parking lots are gone because of the ongoing development, yet there still has to be parking for employees. Legacy Union has one of the largest parking decks in Uptown with more than 3,100 parking spaces to accommodate its tenants.

Is Charlotte being overbuilt?

Charlotte has not been overbuilt. Most developments being built today have been driven by pre-leasing with little speculative space being offered to the market. It continues to be more difficult to get a development deal done today given greater scrutiny by lenders and equity partners. However, the dynamics of the capital market are healthier today than they have ever been. www.capitalanalyticsassociates.com

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REAL ESTATE OVERVIEW

Marcie Williams President – RKW Residential Our primary strength lies in a robust data analytics practice, exceptional customer service and focusing on operational excellence for the 20,000 units we manage. From a technology standpoint, we focus on how to attract and retain residents and from a sales’ perspective, we understand what it takes to attract qualified prospects to lease at our communities. Our digital marketing department analyzes the metrics that determine a qualified prospect and to help evaluate our sales effectiveness.

Once the phone rings, we can locate the call and know from which internet listing they found the property they are interested in. We also use a CRM platform to ensure our sales team is nurturing its leads to convert them into applicants. On an annual basis, we provide all our managers, service supervisors and others with RitzCarlton training. This is a robust program that touches on resident retention and lateral service for our team members.

( ) in lending. The good news for us is we are getting calls to help find alternative lending options. We still have lenders willing to lend in this environment, and the agencies are still lending. Over the last 30 days those lenders still in the market are being more conservative on underwriting or including more conditions on their loans,” said Kevin Jenkins, vice president of NorthMarq-Charlotte. “We are seeing a pause in acquisitions, but we are seeing more appetite for refinancing. The investors who may have wanted to put it on the market and sell are now thinking of refinancing and hanging on for another three to five years, until we get past this current environment.”

to soar even after an increase in development has brought close to 29,000 new units online since 2015.

Case in point, during the first eight months of 2019, an additional 4,500 units came online, representing 13,700 apartments. Investments for this type of project are reported to surpass the $2 billion mark, fueled by the city’s population growth and the state’s low-tax policy. The report also highlights the $90 million ongoing first phase of the proposed Gateway Station, the first step in the Gateway District mixed-use neighborhood development. The first phase is scheduled to be completed by 2022.

According to Yardi Matrix, following 2018’s record transaction volume of $2.5 Residential billion, close to $1.7 billion According to Neighborhoodscout. in multifamily assets were Kevin Jenkins com, a real estate data provider, traded from January to August NorthMarq-Charlotte three- and four-bedroom single2019. Multifamily properties family detached homes are the most common housing in urban neighborhoods continue to draw capital, units in Charlotte. Other types of housing that with investors mostly eyeing upscale properties. are prevalent include large apartment complexes, CBRE Group, a commercial real estate services duplexes, row houses and homes converted to and investment firm, published a 2019 Southeast apartments.

US Real Estate Market Outlook that said urban On the multifamily front, Yardi Matrix’s Multifamily living in Charlotte is nourished by two of its Report Fall 2019 showed that demand continues largest demographic groups: millennials and ( )

We are seeing a pause in acquisitions, but we are seeing more appetite for refinancing.

54 | Invest: Charlotte 2020 | REAL ESTATE

Market voices: Residential real estate

Maren Brisson-Kuester COO HM Properties

The millennial generation has different segments, which means different buyer profiles. The older millennials are having families and characteristically do not want to be in multifamily homes. Then, there are the millennials who are moving from overseas or other large cities and they live wherever the energy is happening. Then, there are the millennials who are looking to buy their first condo. This generation is large, which means it represents the largest buying power. Sadly, they also have the largest debt amount of any generation. I think all these factors will impact purchasing power, as well as length of time renting, and the market will have more multiple homeowners. We are seeing multiple parties on deeds, which was not happening as frequently before. Millennials are also buying properties with their parents in mind and are spending little money on renovating their homes, which is very different from other generations. They prefer to move instead.

More than likely that the trend will remain the same: multifamily, threestory walk-up, big single-family home developments. However, the times call for smarter, more creative developments. Urban center areas that could be road-free. The concept is similar to living on a college campus, where everyone has their everyday needs within walking distance: grocery store, office space, restaurants, among others, parallel to efficient and modern public transportation means. Charlotte is in a good position to be at the forefront of innovation.

This next generation of leadership in Charlotte is incredibly diverse and is poised to embrace more creative, forward thinking. We are in a unique position to be a catalyst for changing the way we live and interact on a daily basis, with autonomous cars and smart city technology as the tip of the disruptive iceberg.

The residential component to that shift definitely exists.

Pat Riley

President & CEO Allen Tate Companies

Daniel Cottingham

CEO Cottingham Chalk

The Charlotte MSA (Statesville to Rock Hill) is blessed in so many ways. Because of annexation, taxes compared to other like cities, are very low and the quality of life is very high. We have reasonable home prices, low taxes, a year-round mild climate, mountains and beaches within hours, arts, culture and sports, renowned medical facilities, and a top American Airlines hub linking us to the world.

Last year, the Allen Tate Companies entered into a joint venture with Pittsburghbased Howard Hanna Real Estate, the first of its kind among independent real estate firms. Together, we rank as the No. 1 independent real estate company in the country. Howard Hanna is a natural feeder to the south, as the market leader in Pennsylvania, Ohio, and New York.

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REAL ESTATE OVERVIEW

Transit-oriented and mixed-use developments characterize much of the construction activity happening in Charlotte.

( ) baby boomers, which in turn fosters increased multifamily development. “The most growth right now is coming from the multifamily side, and for us, on the property management and leasing of smaller multifamily developments. We develop for our own account, however we also manage and lease for third parties. When you have 120-plus unit apartments, you can put the property management and leasing on site. There are a number of developers that have looked into developing smaller sites but don’t have the in-house expertise to handle property management or leasing. Our My Niche Apartments management team has created its own

The lion’s share of mixed-use developments are in Charlotte’s Downtown and South End 56 | Invest: Charlotte 2020 | REAL ESTATE

‘niche’ in developing expertise in the leasing and management of small multifamily assets,” said Bob Otten, CEO of Lat Purser & Associates.

The city also has an expanding mixed-use development (MUD) landscape. A characteristic urban feature often combining commercial, residential, social and at times industrial uses in a single infrastructure that is more pedestrian-friendly, MUDs are taking the Queen City by storm. This specific type of urban development is well-suited to the city’s dense urban growth. Charlotte’s Uptown and South End are concentrating the lion’s share of the increased number of MUDs. Chief among them, Legacy Union, a 10.2-acre site located next to the Bank of America Stadium. It will include hotels as well as residential, office and retail space. Bank of America is poised to set a foothold over the largest portion of the 33-story office tower being built at the site. It will be Charlotte’s fourth-tallest building to date. The Ally Charlotte Center is another development to keep an eye on. Ally Charlotte Center is a 26-story, 378-foot tall tower anchored by Ally Bank. It is designed to be a future full-service hotel with associated retail. The InterContinental brand also has plans in Charlotte as it chose the city to house North Carolina’s tallest hotel as part of the Carolina Theater redevelopment, bringing back to life the city’s oldest theater, closed since 1978. ( )

REAL ESTATE INTERVIEW

Value focus Investors see potential to upgrade Class B properties to provide a Class A feeling

Chase Monroe Carolinas Market Director – Jones Lang LaSalle How are the different segments of the real estate market performing?

We are not seeing a slowdown in Class-A properties because of the economics associated with them.

In fact, they continue to thrive in our market due to new absorption. Class-B properties are being purchased, however, with investors focusing on value add to upgrade those properties and create a Class-A feeling. As a result, there has been growth in rental rates. In fact, Charlotte leads the country in year-over-year percentage growth for rental rates.

Investors who invest in lower Class-A and Class-B properties are driving this trend to alleviate the gaps in the rental rate between those properties and the Class-A properties. There has also been an influx of institutional industrial development and multifamily development.

How is Charlotte approaching the growth it is experiencing ?

Charlotte has been forward thinking in how it has handled growth in the area. We have developed more schools to accommodate the growing student population. In terms of traffic, when you put more people on existing roads it creates more traffic.

Charlotte is fighting congestion and fortunately we are not as congested as many of the other major metropolitan markets similar to Charlotte. Public transportation is on the minds of city officials.

The Light Rail has spurred development in the transit corridor that it sits on, from UNC Charlotte to South Blvd and 485. The development along the UNC Charlotte and South Blvd corridors are two of the largest multifamily development markets in the country. The retail and office development that follows the multifamily development are nicely filling in as well. As a result, those areas have become

popular relocation sites for young professionals after they graduate from school and look for other places to live.

How is technology impacting JLL and how you’re implementing innovation?

JLL has formed JLL technologies, a new business division that will align and expand its technology and digital initiatives, accelerating innovation in commercial real estate for its investors and occupier clients. The $100 million global venture fund has invested in 14 proptech startups around the globe to date. We use the technologies in multiple ways that help our clients save money and reach their clients at a faster, better pace. Technology is at the forefront of JLL’s leadership. www.capitalanalyticsassociates.com

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oundtable:

Commercial real estate Leaders in the office, industrial and retail segments discuss Charlotte’s advantages, challenges, infrastructure and the emerging trends impacting the sector.

Darryl Dewberry

Chairman & CEO The Spectrum Companies

What is making Charlotte a more attractive city for companies to set up their headquarters?

Over the last few years, several elements have come together to make Charlotte an even more attractive city to live and work in and to help promote Charlotte in a more powerful way that includes surrounding counties as one unified region. The Charlotte Regional Business Alliance brings the region together in a new way from an economic standpoint. Charlotte Center City Partners has made changes that expanded its reach outside the CBD to both the south and north. The latest game-changer was the city creating a group headed by Tracy Dodson as an assistant city manager to focus on coordinating the private and public sectors in the recruitment of new companies to our city.

What challenges could Charlotte start facing as it continues to grow?

Charlotte has to make sure it does not become complacent. We have transformed our public sector, adding a lot more perspectives that we had 10 years ago. It causes some friction, but overall, everybody works together really well. There is a lot of collaboration and different perspectives coming together as the community becomes more diverse, and this is producing ideas and developments that are more dynamic and attractive long term.

One of our biggest challenges is to make sure that we have the infrastructure in place: water, sewer service, electricity, and services in general. That is an area where our community has done a great job relative to competitor locations.

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Brett Gray

Managing Principal Cushman & Wakefield

How is Cushman & Wakefield implementing new technologies to provide better service?

We’re a real estate company and we need to use technology to foster decisions. We have a ton of data, so for us it’s figuring out how to best use that data. We invest in emerging technologies to find solutions that we can use in our day-to-day business. An example of these investments would be proptech by Saltmine. It’s a latest technology that creates 3D models of what a client’s space can look like. We work with them using internal resources, where you’re not using tenant, or landlord money to hire an architect.

How does Cushman & Wakefield view the commercial real estate landscape?

If you look at the past 12 months like a report card, it’s arguably the most exciting time in the history of Charlotte. We look out everyday to cranes looking into our windows, and you see the growth of the light rail happening. The airport is expanding. The logical places of growth are emerging. It followed predictable patterns, where before some of the wealth was concentrated, but now you’re seeing emerging corridors appear.

Opportunity Zones help drive some of that investment. Companies are selling their properties for record prices, and moving into emerging corridors.

When you think of a big city, you put a dot in the middle of the city and there are no gaps expanding outward a mile or two. Charlotte still has some opportunity to develop around those gaps, and you’re starting to see that happen.

REAL ESTATE ROUNDTABLE

Karen Mankowski

Associate Director Newmark Knight & Frank

How would you describe the commercial market in Charlotte and the rental segment?

Office space is a great sector in Charlotte given the banks, accounting firms and groups that follow the banks. Industrial is also doing well. Charlotte is a huge distribution hub, so industrial is a large segment of the commercial real estate market in the region. Capital markets is another important sector.

Building rents have really taken off. Select submarkets are seeing 5% growth year over year. The growth of Charlotte’s business district has been phenomenal.

There are many class-A trophy assets under construction and rents are breaking the $40 per square foot threshold for that kind of office product. The light rail triggered a lot of the development in areas like South End. Much of the development is mixed use and many of the projects have an office component. The region is also adjusting to the influx of millennials. They switch jobs typically every three years, they do not own cars. These are demographics that we have not experienced before in Charlotte, but which have triggered a wave of success.

How is infrastructure playing into the market’s development?

Developers are addressing infrastructure solutions to a certain extent, but some areas of the city are maxed out.

I-77 has been expanded and toll lanes were added. The I-77 corridor has a huge connection to I-85. From an industrial perspective, I-85 and I-40 are corridors that can take you to different parts of the country. Also, the Charlotte Douglas International Airport has been key to bringing industries to the region.

Lawrence Shaw

Managing Partner Colliers International

What are some unique opportunities offered in Charlotte compared to other markets where Colliers operates?

Charlotte is a very business-centric city. It has a young, energetic inner city centered in the Downtown area, and that area has also spread south into South End, and north into North Davidson and the North End. You also have other areas with unique opportunities for young families to live just south of the Downtown area in historically older neighborhoods that are not so expensive that younger families can’t afford to locate there.

What emerging trends have you seen in the commercial real estate vertical in the past year, and what do you attribute that to?

The gentrification of older buildings. It’s a real hot segment of the market. Older industrial areas are being repurposed for office and retail, to serve population growth along the north-south light rail line.

How has the expansion of the light rail line affected the growth of Charlotte from a real estate perspective?

The light rail line started being built before the recession, going south. During the recession, real estate slowed down, but the light rail continued to be built. As we emerged from the recession, the light rail was the driver for the redevelopment of the South End and Lower South End. Now, it’s complete to UNCC, so its done the same for the north side. All along the light rail you’re seeing older industrial areas that are being repurposed for higher and better uses. www.capitalanalyticsassociates.com

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REAL ESTATE OVERVIEW

( ) Commercial According to Avison Young’s Charlotte Fourth Quarter 2019 / Industrial Report, The Urban Land Institute ranked Charlotte fourth on its list of U.S. markets to watch for overall real estate prospects in 2020 and its industrial real estate performance is telling. Avison Young states that the largest 4Q19 delivery was a 216,000-square-foot building located in Riverwalk Business Park in York County, while the largest completion of 2019 was Amazon’s 855,000-squarefoot multistory fulfillment center in the Airport/ West submarket. The ongoing project pipeline for 2019 totaled 7.2 million square feet. Sitting at the top of this pipeline in terms of size is a 1-millionsquare-foot building that was set to enter the market in 1Q20 in Iredell County. It is one of the largest industrial buildings under development to date in North Carolina. While these additional deliveries translate into increased pressure on vacancy in the near term, overall conditions will remain healthy due to Charlotte’s outperforming economic factors, as well as its access to critical East Coast transportation corridors and population centers.

As per Avison Young’s Industrial Report, sales of industrial assets in 4Q19 reached$354 million, adding up to a yearly total of US$1.1 billion and matching 2018’s record. Avison Young states that the largest transaction of the quarter was the sale of Stanley Black & Decker’s 1.2-million- square-foot distribution facility in York County, for which WP Carey paid $94 million. Moreover, Somerset Properties and Waterfall Asset Management paid $63.8 million for Premier Distribution Center at 1900 Continental Boulevard in the Southwest area. The transaction

included a contiguous site extending over 26 acres for future development of close to 330,000 square feet.

Meanwhile, Crescent Communities is developing a 104,000-square-foot, light-distribution building in York County’s Stateline Logistics Center, expected to reach completion by 3Q20, and Rowan County will be home to a new 700,000-square-foot, $55-million fulfillment center by late 2020 for Chewy.com, an online pet supply retailer. CBRE estimates close to 50 percent of the U.S. population lives within a one-day truck drive of Charlotte, making it a prime location for large distributors and a significant consumer base for “last mile” distribution chain users.

On the retail front, store closures highlighted the impact e-commerce is having on the segment. Avison Young’s 2019 report states that Charlotte’s retail sector’s annual absorption was down notably in 2019, to 368,448 square feet in 4Q19, in stark contrast with the 1.7 million square feet in 4Q18. Despite the impact from the “Amazon Effect,” the market witnessed new and expanding retailers looking to set up shop in Charlotte and capitalize on its strong demographics and rising job growth. Among the new arrivals was Dollar General, with five new Charlotte-area stores in 2019. Harris Teeter opened a new 81,000-squarefoot store in Riverbend Village, Northwest Charlotte, while temporarily closing its Park Road Shopping Center store in early 2020 for remodeling. In terms of construction, 1.1 million square feet of retail space was under construction in 4Q19. “All along 485 there are different exits along which significant retail growth is happening,” said Michael Sposato, Owner of Carolina Realty Advisors. “Each one of those small cities, such as Cornelius, Mint Hill, Harrisburg

REAL ESTATE OVERVIEW

Flint McNaughton CEO, Founding Partner – SunCap Property Group The biggest challenge today in the commercial real estate development industry is the rising cost of construction and land and how that affects underwriting. As costs rise, so must rents. When markets were trying to recover from the recession, contractors remained aggressive in their bidding and costs remained low. They were trying to keep the lights on. However, as the market recovered and their pipelines became full again, the aggressive bidding began to wane. Many contractors can pick and choose their projects now.

In a hot Charlotte market, costs of labor and materials are up.

and Pineville, are all growing. Their respective landscapes are constantly changing, in three- to six-month increments. Old buildings being knocked down, new ones built, farm country being turned into new retail – these are but a few of the dynamic changes that are observable.” Andy Misiaveg, partner at The Shopping Center Group, adds that retail has changed dramatically since the Great Recession.

“Prior to that, retail was driven by single-use land usage, where a developer would buy 50, 60 acres and the entire development would be retail oriented, with major retail anchors for the project and by a department store, or a large format discount stores such as Walmart, Sam’s Club and Target. Since then, the current generation of retail offerings has really been about grocery-anchored shopping centers and mixed-use projects.”

Last but not least, creative office space is slowly but surely consolidating its footprint in Charlotte to secure young talent with an attractive alternative to traditional office spaces. Driven by aging warehouse conversion projects, office building renovations and Greenfield construction, Charlotte’s commercial real estate market is enjoying an added boost spearheaded by the influx of technology companies coming into the region. A precedent was set with the opening in late 2019 of Duke Energy Corp’s 83,000-square-foot lease of office space in Optimist Hall, once a textile mill located in Uptown Charlotte. “Charlotte has a very good operating environment with factors such as taxes, utilities, and labor rates being very competitive compared to other areas. Also, the union environment is very low. Very often we see a company may have five locations in the Southeast and they are consolidating two or three of them in Charlotte. We see that all

the time. The region’s strong market fundamentals coupled with the growing population base are really driving a lot of the growth,” said Christopher Skibinski, managing director and principal, Avison Young Charlotte.

Headquarter central Charlotte’s metro area is home to seven Fortune 500 companies: Bank of America, Honeywell, Nucor, Lowe’s, Duke Energy, Sonic Automotive and Brighthouse Financial. Other large corporations located in the greater Charlotte metropolitan area worth mentioning include Albemarle Corporation, Compass Group USA, Dixon Hughes Goodman, Food Lion and Wells Fargo’s Regional Headquarters for East Coast Operations. Colliers International revealed in a Research and Forecast Report concerning Charlotte’s Office space in 2Q19 that record levels of leasing activity has led the Queen City as to be included among the national leaders in office absorption, trailing spearheading cities such as New York and Seattle by posting 4.4 million square feet of net absorption.

Added to that, Charlotte showcased an overall 8.9 percent of office space vacancy rate.

The city’s favorable business environment has attracted notable newcomers. New leases include home improvement heavyweight Lowe’s, which has chosen Charlotte to be the home of its new Global Technology Center, which will be leasing 357,000 square feet of an upcoming tower developed by Childress Klein and Ram Realty. United Rentals is moving into 93,000 square feet at University Highlands and Wray Ward signed a deal for 38,000 square feet of adaptive reuse product in Charlotte’s FreeMoreWest neighborhood.

Overall, the city’s office market counted a total of ( ) www.capitalanalyticsassociates.com

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oundtable:

Mixed-use communities The millennial generation is buying a home later in life, and they want to have all their ammenities in place, helping to fuel the rise of mixed-use properties. But affordability remains an issue.

Clay Grubb

CEO Grubb Properties

What key factor has supported Charlotte’s real estate development?

The single greatest investment Charlotte has made is in mass transit. If you follow our growth, it directly correlates with our investments in mass transit. The South End area has exploded. They are now building the most expensive apartments in the city in South End, something you would not have imagined 10 years ago.

The density and retail in that area is phenomenal. You see the same thing happening in the north. Both sides of North Tryon are designated Opportunity Zones. As a result, that will likely be the fastest-growing address in probably the United States over the next three to four years.

What needs to be done to widen the availability of affordable housing When it comes to affordable housing, many of the challenges have to do with zoning and regulations.

Building housing is extremely expensive and risky, and very few folks are sympathetic. Mostly, people think developers will make a lot of money so they should be charged more fees. Every time fees are added, especially on a per unit basis, it directly impacts the affordability for everybody.

Construction prices go up on average half a percent a month. There is no relief for it. As a result, it has a direct impact on rent and cost of living. Today, 80 percent of millennials cannot afford the price of a new apartment in America and 40 percent of Americans cannot afford the price of a new apartment. It is a real crisis.

62 | Invest: Charlotte 2020 | REAL ESTATE

REAL ESTATE ROUNDTABLE

Daniel Levine

President Levine Properties

What makes Charlotte an attractive place to live for those considering a move here?

People come to Charlotte for a variety of reasons, many of which are centered on outstanding quality of life opportunity. Cost of living is reasonable and career choices abundant. Many are surprised by the quality of the city’s development, especially in the areas of sports, arts, entertainment, and office space. Charlotte punches above its weight class and that makes it attractive.

How are millennials impacting real estate development in the region?

Millennials traditionally have chosen an urban lifestyle.

This cohort experienced luxury student housing at university and demands the same lifestyle in their apartment choices. However, they are not buying homes nearly as quickly as people their age once did.

They saw their parents suffer after the crash in 2008 and do not want to go experience the same. Developers are building apartments that are near the center of the city in close proximity to work, entertainment, and concentrations of urbanity.

What are your expectations for the Charlotte region over the next decade or more?

Charlotte is positioned very nicely for continued growth over the next generation. Our family is committed to bringing thoughtful development with aspirational place-making as the central theme. The First Ward and other infill locations around Center City will continue to see growth as more people choose Charlotte and diversity of urban neighborhoods.

Todd Mansfield

CEO Crescent Communities

How has the economic boom in Charlotte influenced the multifamily and commercial markets?

Growth in multifamily, commercial offices and industrial real estate has been unprecedented. That is particularly true on the multifamily side. It has been an extraordinary time in the city, and for us, it has been a great opportunity.

The city has urbanized dramatically over the past 10 years and that is one reason why Charlotte is attracting significant inbound business activity. Our transit systems, the quality of our urban planning, the effectiveness of the city in terms of economic development and regulatory balance, coupled with our inherent quality of life have driven very significant population and employment growth here.

What impact are millennials having on multifamily developments?

What we have seen in the 14 markets where we operate is that location is preeminent criteria for the millennial renter. Renters want to be near nodes of activity, have access to amenities and they want to be able to get to their places of employment quickly. As a result, many of our multifamily developments are around transit. We have built more transit-oriented developments in Charlotte than anywhere else. The same thing is happening in the suburban environment as well. We have nodes that are becoming mixed use, like the Montford District and southeast Charlotte. These are environments with dining, shopping, jobs and residences. Most residents want to be in areas that have that array of amenities and benefits.

That has driven our development pattern to favor locations that are mixed use in nature. www.capitalanalyticsassociates.com

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REAL ESTATE OVERVIEW

( ) 1,188 buildings, representing a total inventory of 77.96 million square feet.

Rentals and affordable housing In January 2020, Apartment List reported Charlotte’s year-over-year rent growth of 2.6 percent in December 2019 was the eighth-highest among U.S. cities with at least 250,000 residents. According to Apartment List’s updated April 2020 report, Charlotte rents increased 2.5 percent in comparison to April 2019. Median rents in Charlotte stand at $993 for a one-bedroom apartment and $1,158 for a two-bedroom. Charlotte’s year-over-year rent growth mirrors the state average of 2.5 percent while it exceeds the national average of 1.9 percent.

When comparing the Queen City’s rental rates with those across the rest of the country, this city offers apartment rentals with lower than average prices: Phoenix stands at $1,080, Denver at $1,360, Seattle at $1,670 and San Francisco at $3,100, as reported

by Move Matcher. Looking ahead, Zillow, an online real estate database company, is expecting rents to increase at a slower rate in 2020 than in previous years, with San Francisco remaining at the top spot

Charlotte offers diverse residential real estate opportunities for millennials, growing families, and baby boomers.

REAL ESTATE OVERVIEW

as the country’s most expensive rental market. It also expects millennials to fuel demand growth for housing in suburban areas as they look to grow their families.

Rent increases make Charlotte primarily a more attractive residential property buyer market compared to rentals. Attom Data Solutions’ newly released 2020 Rental Affordability Report shows Cabarrus, Gaston, Lancaster, Lincoln, Rowan and York to be the goto areas for property purchases whereas Iredell and Union are more competitive on the rental side.

Like many other growing cities, affordable housing remains a hurdle, especially as the population expands. The challenge is sizable as city officials report a shortage of as many as 34,000 affordable housing units in March 2020. To tackle this issue, Charlotte City Council voted on July 22, 2019 to allocate millions in bond money to finance seven affordable-housing projects. Moreover, it approved $12.8 million from the Housing Trust Fund (HTF), the city’s primary funding source for affordable housing, to build or rehabilitate hundreds of affordable units, with income restrictions ranging from below 30% of the Area Median Income (AMI) up to 120% AMI. The city is also looking to capitalize on federal incentives to support economically depressed neighborhoods. The tax reform bill passed in 2017 included the creation of

Opportunity Zones to bolster economically depressed areas. Charlotte has 17 of these areas, designated by local leaders. These include East Charlotte, North End and North Tryon, Wilkinson Boulevard and surrounding the airport, Freedom Drive, West Trade Street, Beatties Ford Road and Rozelles Ferry. Defined as a tract of land eligible for investment funding, Opportunity Zones are designed to bring in new development and assist local businesses to thrive.

Hurdles The city’s unbridled growth is not without its own set of challenges. In 2014, the Chetty Study ranked Charlotte last among the 50 largest U.S. cities and Mecklenburg County 99 out of 100 counties in upward mobility. As a response, a nonprofit was created in 2017, Leading on Opportunity, which is focusing on affordable housing, early-childhood education and career preparedness and training together with a coalition of philanthropic and other nonprofit agencies, local government and major employers.

Moreover, the city’s demographic boost is outpacing the growth of available housing, generating steep price increases in the latter. UNC Charlotte published a study in 2019 that showed the city’s price per acre increased from close to $195,000 in 2014 to more www.capitalanalyticsassociates.com

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Ned Curran CEO Emeritus Northwood Office

Is there one particular real estate development segment where you are seeing more activity in the city?

Residential leads the way; it has not slowed like in other cities. Distribution and manufacturing continue to grow, and we have a unique distribution hub of state highways and rail networks associated with the airport.

The office sector has trailed a little, but in recent years it’s been catching up, which is a reflection of job growth. We have seen robust office development recently that has outpaced supply creating a very good landlord market.

What are the main challenges for real estate development brought about by the city’s fast growth?

As in any rapidly growing city, our transportation system can’t keep up with the population growth. We are committed to the expansion of the light rail, but also expanding bus rapid transit services and embracing shuttle services. We are trying to throw everything at it. Addressing congestion is not a single solution, it is always a combination of factors.

We are also trying to get ahead of the affordable housing issue. In Charlotte, we have chosen to address affordable housing solutions along with solutions for economic mobility. Almost every CEO, and every large organization, is part of a group tackling the economic mobility challenge and associating that with affordable housing.

What is your outlook for the growth of the Charlotte area?

We will continue to grow across all sectors. We continue to diversify our economy, which only gives us greater strength. When there is a downturn in the economy, not everybody suffers. Some have disadvantages, some have advantages, but we are all components of an economic system and with our great diversity, we will be able to weather it better.

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The activity in Charlotte is directly impacting the growth of surrounding cities and municipalities as the area continues to attract healthy population growth.

than $325,000 in 2018. The availability of land is another hurdle, but also an opportunity, according to Larry Wilson, division president of KDC Real Estate Development & Investments. “Land availability is a challenge. It is becoming a precious commodity.

Many of the good sites have already been developed.

But that creates an opportunity for re-development.

In every jurisdiction, developers have to be aware of capacity. There has to be an open dialogue between developers and agencies that have jurisdiction to make sure that things are taken care of on the front end. In some markets, it takes longer for agencies to approve projects, but I don’t think that is the case in Charlotte and Mecklenburg County. I think the permitting process in the region is quicker than other cities where we operate.”

As developers scout for more land, towns and communities with abundant and relatively inexpensive land, such as Indian Land, Fort Mill, Indian Trail and the city of Belmont, are witnessing an increasing number of new subdivisions. While Mecklenburg County was the

CONSTRUCTION REAL ESTATE OVERVIEW

centerpiece for the post-2008-09 recession recovery in real estate, with 68 percent of the region’s population growth happening there in 2011, 2018 has turned the tables: Mecklenburg County only accounted for 36 percent of the region’s population growth, as per the U.S. Census Bureau. York and Lancaster have claimed the crown for the fastest population growth.

With that growth comes the need for new real estate initiatives but cost and the availability of skilled labor, which go hand in hand, have became major challenges.

“Unemployment rates are so low that many of our tenants are not able to find workers for their businesses and it is impacting construction costs,” said Dennis Moser, president of The Moser Group. “It is a challenge throughout the region but also an opportunity. In Union County, we can partner up with local entities like Wingate University and South Piedmont Community College to create short, trade-focused certification and workforce training programs where students can graduate quickly and step right into the job market with the required skills. The labor market is so tight that as a member of the real estate industry, we have to help solve those challenges.” Bill Simerville, managing director and principal at Foundry Commercial, says that despite costs and labor challenges, his outlook on the market is positive. “At one point, we had an unsustainable demand for construction services, both commercial and residential. We had rising labor and material prices. The initial talk of tariffs, and the spike in steel and concrete prices, made new construction very difficult to price. That has now stabilized, and even come back a little bit. However, the labor has not.

Fortunately, in the same way that capital has flocked to Charlotte, so has everyone else looking for work, and that is across the board, virtually in all trades.

The new general contractors that show up and do not bring subcontractors with them are contributing to the problem. They are aggressively pricing projects based on being able to hire subcontractors that they do not have relationships with, and winning bids and then re-trading them or not being able to execute. This erodes confidence. Then there are the new-to market general contractors that show up with subcontractors and will complete a project quickly. It is similar to 2007-2008, when the residential housing boom was at its peak and out-of-market subcontractors caused our workforce to spike by tens of thousands of people to perform those trades. When the projects stopped, they all left to find work elsewhere, and it took a long time to get them back. We are there again. Last time it was just residential, now it is residential and commercial.

We have more capital, more vendors, and more

David Ravin President & CEO Northwood Ravin

How are you following the move toward sustainability and incorporating more walkability and green spaces into your developments?

I categorize our projects in two ways: first, infill projects, whereby we build greater density into an already-established area, and second, creation of new activity as part of our project. If we are not within an immediately walkable site, we are working to bring all those features onto the property. This is the kind of category our Plaza Midwood development would fall into. Although there is some walkability there already, we have brought many more of these amenities onto the site. The same thing will happen in Ballantyne where we will bring a lot of connectivity into the project. We want to provide the same advantages as residents would have moving into an infill location.

As more people move to the region, how has the profile of renters evolved alongside this?

Because people are now choosing to rent for longer periods they want a nicer living space. Especially now that student housing is evolving to provide so many features, after graduating people are not willing to compromise on quality. There also is not as much appeal to move out to the suburbs as previous generations, which also ties in with the push toward walkability and convenience.

The profile of those moving to Charlotte are coming for jobs in technology, business and medicine, which are very demanding industries. That means the convenience aspect is much more important to them.

They want to stay longer, so this demographic is actually getting older.

Another phenomenon driving demand is the increase in empty-nesters who have houses in the suburbs but no longer have any commitments keeping them there.

They’d like to try living in a more urban environment. The really high-end units have attracted an older demographic and now we have a much broader spectrum of renter, as opposed to the profile of renters in the 1990s. www.capitalanalyticsassociates.com

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REAL ESTATE OVERVIEW

competition now. But the fundamentals have never been as sound. Lenders remained disciplined. We are not looking at see-through office buildings. It is harder to get deals done; there is a lot of competition, but I have never been as bullish on Charlotte as I am now.”

Looking ahead The low levels of housing inventory in the Charlotte region translated into a 6.1 percent increase in the median sales price in January 2020, amounting to $251,000, as per the Charlotte Regional Realtor Association. What is more, the condo-townhome market saw the largest surge, with an increase of 10.6 percent and a median price of $208,000. If this trend holds over the mid- to long-term, Charlotte may become more of a sellers’ market rather than a buyers’ market.

On average, homes in Charlotte sell after 56 to 64 days on the market, an upward trend, according to Norada Real Estate Investments. “In a healthy, balanced market, it would take about six months for the supply to dwindle to zero. In terms of months of supply, the Charlotte market can tip to favor buyers if the supply increases to more than six months of inventory. However, looking at the current trends, we don’t see things stopping anytime soon. The inventory will decrease further and there may be a 3.8 percent increase in home prices in Charlotte by Jan 2021,” Norada states in a report on the investment climate for Charlotte’s real estate market, although it should be noted the full impact of the COVID-19 pandemic was not yet felt in the United States at the time of publishing the report.

Tastes also are changing, with the advent of the millennial generation, while technology is leading to changes in how people look for and buy housing. “The real estate business model is changing and I’d like to compare it to what Uber did for the transportation industry, or what Amazon did to retailers. iBuyers use technology to buy real estate, and deal with consumers, buyers, and sellers directly. As a real estate company, we have introduced this type of technology as well, but we also make sure that we offer personalized service through our agents. I believe there’s still a demand for traditional brokerages.

Technology can replace inefficiencies and help in many ways, but knowledge of local markets is still extremely important in our profession,” said Yuriy Vaynshteyn, president and CEO of Engel & Volkers Charlotte.

On the infrastructure side of the equation, the priority is to increase mobility across Charlotte to both increase quality of life, decrease transit pressures and reappraise certain areas. In 2018, Charlotte opened a $1.2 billion, nine-mile light-rail extension from Uptown to UNC Charlotte, doubling the length of the original 10-mile route extending from Uptown to I-485. Building on that transportation push, Charlotte’s city council approved a $50 million expenditure to design a 26-mile light rail project: the Silver Line. It is designed to extend from Matthews along Independence Boulevard to Uptown and then west, past the airport and on to Gaston. The project lacked funding as of November 2019 as the infrastructure pipeline priority includes a light-rail extension to Pineville and Ballantyne, as well as a ( )

Market voices: Affordable housing

A. Fulton Meachem President & CEO INLIVIAN

“We are very excited for the new INLIVIAN brand. We will continue to develop new mixed-income housing. We have about 590 units that we will be developing in 2020 and 2021. Through our multifamily revenue bond program, we are helping developers and our partners to develop about 2,100 affordable housing units. With our partners, we are also investing in homeownership for our residents. Last year, we helped 18 families reach the dream of homeownership. It is more than just housing; it is about opportunity as well. If families live in areas of higher opportunities, you can increase their economic mobility. That is the foundation for our management decisions.

If you take a snapshot of Charlotte’s Downtown, the landlords and ownerships have changed sometimes two or three times for many of the buildings. Cap rates have compressed, which drives up prices, and all that coincides with rising construction costs. As a result, rental rates may be 7 to 10 percent higher. Coupled with the higher construction costs, it is about penciling it all in to make it financially feasible to make deals. These costs are not substantial when you compare them to Chicago, Los Angeles, New York or Atlanta. But it is the watermark here, and when you have budgeted for a certain number and it changes, it is a big deal for business owners. We have to pull out the toolkit to figure out how to be creative with the deal structure, such as providing longer terms for receiving free rent, or tenant improvement dollars to put into a retrofit, or finding spaces where tenants can take as is. With factors like limited Downtown parking and rising rents, some companies have to make tough decisions.

Julie Porter President Charlotte-Mecklenburg Housing Partnership, Inc.

Cristy Nine Corporate Managing Director Savills USA

The partnership is celebrating its 30th anniversary this year. It was formed to reinvest in target neighborhoods in Charlotte, mostly along the Statesville Avenue corridor in the northwest of the city. Our work varies from housing projects to parks and covers anything that can improve the economic mobility of the community. We also invest in homeownership strategies for first time buyers and administer down payments of assistance programs.

Lastly, we are a real estate developer. We have built around 500 single family homes and have a portfolio of 2,200 multifamily properties across 25 different developments.

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( ) 25-mile commuter line connecting Uptown to Iredell County. The transportation advances have deeply impacted what and where buildings are going up. “Many years ago, there was no class-A office space to speak of in the South End market that has morphed into Midtown. The norm was older, industrial buildings. When the light rail came in, it drove development of new apartments, attracting an influx of millennials, riding the light rail to Downtown for work. Major employers then decided to locate their offices in Midtown, with the main objective to attract and retain talent. In the 1990s, office locations were primarily determined by where the decision-makers lived. Now, that model has been completely turned on its head. Lots of new medical offices are also under construction, driven by the two major hospital systems here: Atrium Health and Novant Health. Their main campuses are located within two miles of each other,” said Grey Pool, partner at Selwyn Property Group. In terms of in-demand areas, Matthew Hagler, founding investor at KW Commercial-Ballantyne, agrees that the South End is gaining traction: “The South End is a prime area for new development. It offers the most expensive land costs to date and retains the highest desirability among the millennial portion of the population. By our estimates, 100 people per week move into Charlotte and the lion’s share of this new inflow is made up of millennials. The South End neighborhood’s design favors pedestrian use of its extensions, enabling a comfortable walkability factor.

To adapt to the growth of the millennial population, real estate developers are providing amenities that we have never seen before, with a steady increase in the number of buildings that provide access to or include

movie theaters, gyms, stores and restaurants, all within a five-minute walk.”

Infrastruture plays such a vital role that some counties counties have taken it upon themselves to not only do the work but to pay for it. One case is York County and its penny tax. “Fifteen years ago the citizens of York County imposed on themselves a penny sales tax for road construction and from that tax $600 million in road improvements have been built. No other county has that kind of new road infrastructure. We basically paid for it ourselves,” said Skip Tuttle, principal and broker in charge at The Tuttle Company. “Most road money comes from municipal and state sources, but York County was not getting our fair share so we created our own source. The state was so impressed by that that they matched what was raised from the penny sales tax.

Every single major artery in the county is now either a five-, seven- or eight-lane road.”

In January 2020, Moody’s Analytics predicted that the Charlotte-Concord-Gastonia metro area is set to outpace the state and country throughout the year in job growth and development. This was, however, prior to the COVID-19 outbreak. The virus’ immediate impact is on recreational services such as restaurants and tourism. The long-term is more uncertain. As of April 2020, close to 10 million Americans filed for unemployment and the timing of a US economic rebound is largely dependent on how early the infection curve is flattened. On the real estate front, demand for office space and apartments has been replaced by an extended home-office practice. It remains to be seen how Charlotte’s absorption rates will evolve for the mixed-use and office pipeline that came online in 2020 prior to the outbreak.

Construction & Infrastructure: A growing population is a boon to the construction industry, which has so much work it’s hard to keep up. As an essential service in Charlotte, the sector also appears to be in a good position to survive the likely fallout from the COVID-19 pandemic, as developers continue to receive necessary financing and forge ahead with projects.

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Forging ahead: Despite COVID-19, projects in this ‘essential’ sector continue to rise out of the ground As Charlotte’s population continues to skyrocket, its construction sector booms with it. Before the COVID-19 pandemic, the industry had a great deal of work and investment. A shortage of skilled labor was the biggest problem alongside a relentless rise in costs. Depending on the extent of the fallout from the pandemic — a recession is expected — most experts believe the builtin strength in the sector will see it through.

“Charlotte is a city that attracts all types of people, from entry-level to executives. It is a cost-effective place to do business with a high quality of life that offers good access to a strong talent pool. There are many companies coming here and there is a great deal of job growth. Charlotte continues to expand farther out. It is not as crowded as other major cities but it has grown extensively in the last five to 10 years.

There is planning for infrastructure investment, such as roadway expansions, that is anticipatory and forward-looking,” Gene Lowe, president and CEO of SPX Corporation, told Invest: summing up some of the factors his company chose to move here from Michigan in 2004.

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economic center and banking hub, it’s businessfriendly local government and legislation, and the Opportunity Zone program instituted as part of the Tax Cuts and Jobs Act in 2017 (of which there are 17 such zones in Charlotte). All of these factors compound to make Charlotte one of the hottest destinations for new construction in the Southeast.

Of course, continued growth is predicated on the outcome of the global COVID-19 pandemic, and more importantly how long that impact lasts. The ongoing public health crisis has forced the closure of many businesses and the furlough of their employees in the interest of “flattening the curve” and stopping the spread of the virus. If these conditions persist for too long, they could have catastrophic impacts on all industries, including construction. A positive sign in mid-April was the talk among state and federal governments to start easing restrictions, although what form that would take remained unclear.

Charlotte’s construction industry has another advantage in fighting the impact from the virus: it has been deemed an essential service by both Mecklenburg County and the state, meaning that projects can continue. ( )

CONSTRUCTION INTERVIEW

Skills shortage The vacuum in skilled labor created by the previous recession continues to make a mark on the current industry

Curt Rigney Senior Vice President – Batson Cook Construction How have you seen the needs of the construction industry evolve in the region?

One of the biggest issues is that we’re still feeling the effects of the recession as it relates to skilled labor and manpower. When the recession hit, a lot of people left the industry to never return. There was a huge downturn at colleges in terms of admissions for construction management so there is a substantial gap that is only now beginning to be filled. Workforce development is one of the industry’s top needs and, while a lot of people talk about it, it’s a matter of looking at what is being done about it.

With around 100 people a day moving to the area, how is this impacting the construction market?

The population growth is tremendous for Charlotte itself. Atlanta and Austin are well-known as superhot markets and, while Charlotte is relatively undiscovered, it is not far from the growth of these other cities. The residential market is starving for product right now. There is going to be some definite challenges, which I’m sure a lot of the leadership in Charlotte recognizes, including transportation and infrastructure. To grow and be a thriving city, it is not ideal to experience logjams in roadways, and also in water and electrical infrastructure. Charlotte has so far done a great job of developing its Uptown area and growing outward, rather than creating urban sprawl.

The light rail project has generated a great economic boom. The South End corridor has surged in growth, not just in apartments but in 20-story office buildings. The rental market in the South End can be higher than in the Uptown area. From an economic perspective it has been a tremendous success, but from an infrastructure perspective, it remains to be seen what other routes can be built out from this.

How is technology disrupting the construction industry?

Modeling, which has been around for a while, has made great strides recently. It has proven very successful in detecting issues early on and now, we can even incorporate virtual reality as part of the modeling process. This has greatly enhanced and simplified the planning process. In construction, the more you can plan and understand from the outset, the safer and more efficient you become. That being said, construction is one of the wonderful industries that do not require a four-year degree or any real advanced training, meaning there is a construction job out there that is accessible to everyone. Construction is not at all a minimum wage job. Coming out of high school, people have the potential to earn very close to the median salary. www.capitalanalyticsassociates.com

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Zach Pannier Business Unit Leader DPR Construction

As a nationwide contractor, what was the plan when you decided to open shop in Charlotte?

DPR established local roots in Charlotte in late 2015.

Even before that, going back to 2010, we worked here with some of our national customers. What brought us into the Carolinas was a relationship with an advanced tech company, and, being a customercentric organization, we go anywhere for the right client. The development in the Southeast has somewhat mirrored the strategic development we’ve had here in Charlotte, although Charlotte has grown exponentially quickly. We have six business units in the Southeast.

How have deals evolved in terms of financing as the region expands?

We are not a transactional contractor, so we are really looking at the horizon, playing long ball. We are maybe less opportunistic because we want to make sure that if we are doing business with a customer, we are there for the long term and that they realize the value that we bring to the table. Whether the economy is really hot or cold, we don’t tend to change our margins as a result of that.

How are you navigating through the tight labor market in the region?

We want to have a 50/50 ratio of folks doing work versus folks managing work, and we do that by employing our own workforce. We have segments of our workforce that are experienced in concrete, drywall, doors, frames and hardware, electrical packages, and different pieces of the physical work. We also have a variety of business arms with the organization. We also have a company in Orlando that builds prefabricated bathroom pods.

It is really the combination of leveraging our in-house capabilities and expertise that adds value, but also allows us to control quality and scheduling because we have our own manpower. It is a big deal for us in Charlotte and in other markets.

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Charlotte’s population growth mixed demand across sectors and access to capital create a landscape ripe for a construction boom.

( ) Sector performance The U.S. construction sector continued to grow throughout 2019, with a 4.1% increase in spending between November 2018 and November 2019 to total $1.324 trillion and employment growth in 63% of 358 metro areas analyzed by the Associated General Contractors of America (AGCA). Most contractors surveyed had expected that the dollar value of projects and their workforces would continue to grow into 2020.

The rate of hiring remained stymied by an industrywide shortage of qualified labor, which is also fueling higher costs. “We have had a tremendous increase in labor costs over the last two or three years because of the tight labor market. Skilled labor is still in short supply and wages for skilled positions have risen tremendously in this period.

The biggest cost increase has been the labor costs. For developers, it gets to a point where if construction costs get too high it does not make sense to move forward with a project. We value-engineer and reduce costs to make the projects viable. Developers know what the end revenue will be so they have to account for all the different variables to make the projects work,” said Jack Blythe, president of Blythe Development.

How does this performance break down in North Carolina? In general, results were mixed. Considerable growth was seen in the Triad, while the Charlotte Metro Area declined slightly. Specifically, the CharlotteConcord-Gastonia metro lost about 1,900 employees over the course of 2019 – a 3% drop. Durham-Chapel Hill added 100 employees (+1%) and Raleigh added 1,600 workers (4%).

However, this minor slip in terms of total industry employment by no means indicates a floundering

CONSTRUCTION & INFRASTRUCTURE OVERCONSTRUCTION OVERVIEW VIEW

construction sector in Charlotte. In fact, Charlotte remains one of the fastest-growing metro areas in the country, and along with that comes a flurry of new construction and renovations that are keeping contractors busy.

Opportunity Zones The 2017 Tax Cuts and Jobs Act (TCJA), in addition to enacting one of the most sweeping reforms of the tax code in years, also presented exciting opportunities for real estate investment in historically underdeveloped parts of metro areas across the nation. Called Opportunity Zones, these specially designated areas attract private investment by offering capital gains tax deferment to anyone who invests in a real estate development project within the zone and then holds that investment for a set amount of time. At least 90 percent of the money invested must be spent on an already operating business, equipment, or real estate within a designated Opportunity Zone. The longer the investment is held, the greater the tax benefit to the investor – with capital gains tax deferment on holdings of five and seven years, as well as reduced tax liability at the time payment is eventually made; if the investment is held for 10 or more years, no capital gains tax is owed on the appreciation of capital gains invested in the project. Like other major metro areas, Charlotte is home to numerous Opportunity Zones of its own – 17 in all.

Investors in Charlotte are, overall, excited at the prospect of the increased investment that may be sparked by the region’s Opportunity Zones, and investment was just starting to heat up when COVID-19 struck. Although the TCJA was passed in 2017, additional clarifying rules and guidance around Opportunity Zones were not forthcoming until one set of additional rules were released in October of 2018, and another in April of 2019, and this delay in guidance caused many investors to pump the breaks on Opportunity Zone investments at first. However, with the two sets of rules released, investors became more comfortable about proceeding with more complex deals. Grubb Properties in Charlotte launched a $200 million qualified Opportunity Zone fund in 2019, and again in 2020, that seeks to purchase old office buildings in Charlotte’s Opportunity Zones and convert them into parking decks and apartments.

In general, multifamily residential developments are the most common being launched in Opportunity Zones around Charlotte to date. Experts also expect to see a proliferation of coworking spaces within Opportunity Zones. Finally, Opportunity Zones will likely be a catalyst for community-oriented development. Obviously, there are clear public policy goals underpinning the

Keith Poettker President Poettker Southeast

What were some of the reasons that Poettker chose to expand into the Charlotte market?

In 2015, one of the initiatives that emerged from Poettker’s strategic planning was to develop a Southeast regional market. Our business is relationship-driven and has grown over the last 40 years through repeat clients and referrals. The initiative to open a new office was necessary to support, grow and develop relationships formed in the Southeast region. We researched and visited six regional cities, ultimately choosing Charlotte because it is a financial hub and it is centrally located to the clients we serve. Charlotte welcomed Poettker with open arms, identifying a need for competent contractors in the market and graciously showcasing a desire and willingness to build a relationship with Poettker, making Poettker’s final decision an easy one.

How has new technology affected Poettker and how are you implementing it?

Technology has come a long way in the construction industry, from aerial drones, to underground surveying equipment and streamlined communication tools.

New drone technology is used to digitally capture asbuilt documentation on projects as well as real-time construction progress photos and elevation models that capture our grading efforts, informing us where grade is present and needed for the project’s development.

Ground penetrating radar is another useful technology that is beneficial for locating and documenting unforeseen utilities. Frequently, abandoned, undocumented utilities exist on sites, that could cause conflicts and construction delays. Proactively identifying utilities and formulating a plan for potential interference during construction helps avoid delays and minimize additional tie-in costs and impact to neighboring facilities.

Communication in the last five years has greatly improved in the construction industry. New cloudbased communication technology is used to ensure all stakeholders involved in a contract have easy access to real-time, current project information. www.capitalanalyticsassociates.com

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Michael Byrd Charlotte Division Manager – Brasfield & Gorrie

Charlotte is a city that is attracting young talent. It has a lot of sports, arts, culture and entertainment. Our city has boomed in the last 10 years, but we still have a close-knit area where people can live, work, and play within the city. Companies like Honeywell and LendingTree are coming to the area because of the young talent pool, which is better than those in similar cities.

We have to continue to be a city that is not afraid to grow. I think Charlotte is embracing its growth. As a city, we have diversified beyond banking. That is how you help combat a recession. The outlook for the industry in 2020 is very strong. Construction companies look at the workload of design companies and see if they are busy. We are watching what architects are doing right now, and they are all very busy. For the next 12-24 months, we feel very good.

Opportunity Zones, particularly the revitalization of economically depressed areas, and many developers will likely seize this opportunity to generate advantages for themselves and the community. Ten percent of Grubb’s fund, for example, will specifically target communityoriented developments in the six Opportunity Zones in West Charlotte near historic Five Points and Johnson C. Smith University, and any return on these projects above 10% will be returned to the community.

Existing small-business owners within Charlotte’s Opportunity Zones are similarly excited by the prospect of incoming investment and the renewed life it will breathe into the areas surrounding their businesses. However, some residents are concerned that the result will be gentrification that sends their rent skyrocketing and prices them out of their own homes. It will be essential for investors and the community to balance the benefits for businesses and investors with the needs of the people living in the Opportunity Zones.

Financing trends As Charlotte continues to attract more than 100 new residents each day, one of the most salient construction trends has been an increase in new housing. In fact, housing inventory was down 19.5% at the beginning of 2020, which meant construction companies were trying to keep up with demand. A lot of this development is taking place outside of the city of Charlotte in erstwhile seemingly distant or rural areas such as Weddington, Waxhaw, Fort Mill, Lake Norman and Lake Wylie for 76 | Invest: Charlotte 2020 | CONSTRUCTION & INFRASTRUCTURE

the simple reason that these areas still have a surplus of available land for housing development.

There is also an uptick of infill subdivision development, where developers purchase desirable land where various city services are already available and construct new housing. Notable examples of infill subdivisions in and around Charlotte are Opus Myers Park, a luxury, multifamily condominium development that boasts an exclusive location at the corner of Queens Road and Providence Road and consist of 24 residents across five buildings; Kenwood Sharon Lane, a subdivision of 10 3,900- to 4,600-square-foot detached homes; and Ashton Ridge, a development consisting of 21 single-family homes in South Charlotte, including four floor plans of up to 3,800 square feet that sell for under $1 million.

One bright sign amid the uncertainty caused by the COVID-19 pandemic is that projects are continuing to secure funding. One example is the successful financing of a 16-story office building in Charlotte’s South End. The development, which includes ground-level retail space and is scheduled for completion by the end of 1Q21, secured a $95.6 million loan from PCCP LLC. The property, 2151 Hawkins, is being developed by Atlantabased Portman Holdings and National Real Estate Advisors LLC of Washington, D.C. Residential The first quarter of 2020 kicked off the year with many signs of the continued strength of the nationwide housing market. Interest rates have been slashed and

CONSTRUCTION OVERVIEW

are holding below 4% for the most popular mortgage, a 30-year fixed, but the market continues to be plagued by a scarcity problem caused by homeowners staying put and an inadequate number of new houses being built.

However, that began to change as 2019 wore on and should continue to correct throughout 2020. The number of new homes sold in 2020 should break 750,000, which is an 11% increase over 2019’s total and a 13-year high.

This will accommodate for a persisting sluggishness for the sale of existing homes as their owners continue to favor staying put. This push and continued need for new construction has resulted in the National Association of Home Builders being at its highest confidence level in two decades, according to the NAHB/Wells Fargo Housing Market index. In addition to being great for contractors and developers, the increase in supply should help to alleviate the scarcity problem and temper appreciation in most metros, but the National Association of Realtors has identified 10 metros that will likely still experience appreciation that outpaces the rest of the country in 2020 – and Charlotte is one of them.

One of the factors that keeps the market so tight in Charlotte is the breakneck pace of its population growth. The city is growing by more than 100 residents every single day, making it so that houses can’t be built fast enough to stay ahead of demand and creating an incredible opportunity for the construction sector.

“Recently, multi-family townhomes have been in great demand. Primarily, we have been a single-family home builder. However, in the last two years, multifamily townhome building has made a huge impact on this market. That is primarily because of land use and land opportunity, as well as the municipalities and the types of projects they are approving. The challenge lies in the

The COVID-19 pandemic did not totally halt plans for new construction in Charlotte with some projects securing financing.

cost of the land and trying to make it affordable,” said Michael Conley, division president at Eastwood Homes.

Charlotte’s meteoric population growth is in part being driven by its attractiveness to millennials, a group that is reaching its peak earning and home buying years. The Queen City was the 34th-most popular destination metro in the country for millennials in 2019, thanks to its rich job opportunities at vibrant companies, aesthetic charm, wealth of recreational activities, and relatively affordable cost of living. “The influx of millennials is also having an impact on the market. That type of buyer has different expectations than buyers from other generations.

Millennials are looking for convenient lifestyles, low maintenance, and little to no repairs or renovations. They also want to stay connected to the city,” added Conley.

Despite the draw for millennials, Charlotte still has a housing supply problem to face as these new residents continue to move in. Builders in Charlotte have

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CONSTRUCTION OVERVIEW

responded by making plans to add a record number of apartments in 2020 in an effort to meet demand and alleviate rising rents. Estimates show that 9,130 rental units will be completed in 2020 – a massive 42% increase over 2019’s completions. However, most of these new units will be in the luxury apartment category, since the cost of land and materials, on top of municipal fees, makes it economically nonviable for many builders to focus on low- to mid-income units. This means that, even as the supply goes up in Charlotte, the city may continue to struggle with the availability of affordable housing.

“Pricing, I think, will continue to be a concern for builders and developers,” said Conley. “The pressure for builders is in acquiring land. Land prices are escalating exponentially and are putting pressure on affordability.

Municipalities are also expanding regulatory guidelines on lot development for homebuilding. As such, builders need to consider the costs of the land and the costs to develop their projects. These factors will influence affordability in the future.” However, there are plans to build affordable housing where possible. Some of the residential construction projects in the pipeline include 308 units, which will be at least 5% workforce housing, on Harrisburg Road in east Charlotte; 280 apartments at the corner of Old Statesville Road and West W.T. Harris Boulevard on the north side of the city; 92 new for-sale properties consisting of a mix of duplexes, triplexes, and single-family homes on Neal road in the University area; and a 250 mixed for-sale and for-rent units in the North End, with some earmarked as affordable housing.

No matter the goal, however, you need land, which is among the hurdles that builders like TRI Pointe Holmes face. “Land availability has always been an issue. There is also the complexity regarding zoning, entitlements, and permit fees that continue to escalate so the cost of development becomes more expensive and affects affordability from a consumer standpoint. Those are the biggest problems. Every municipality is a little bit different and we have a dozen in the Charlotte market, so you have to really understand the municipality and partner with it to get the best result,” said Gray Shell, the company’s division president.

Commercial Charlotte’s long history as a commercial and banking center and emerging strength as a tech hub have helped it to attract many Fortune 500 companies and educated millennials. Its modern and attractive Downtown, and the presence of Charlotte Douglas International Airport also add to its appeal. In fact, Charlotte Douglas is actually a barometer for the long-term health of Charlotte’s commercial real estate market, as the major $2.5 billion 78 | Invest: Charlotte 2020 | CONSTRUCTION & INFRASTRUCTURE

expansion of the airport, called Destination CLT, is the kind of infrastructure project that a city undertakes when it is in a period of growth. That growth is evident in the high demand and low vacancy rates for office properties.

Highway 51 and the I-85 corridor are particularly hot spots for insurance and financial firms seeking office space. The Piedmont Triad is also a major destination for office space, with some 24 million square feet of such space already present, alongside 75 million square feet of industrial space. Charlotte also shines in the industrial submarket thanks to its emergence as an e-commerce logistics hub in recent years. Proof of the region’s value as an e-commerce center can be seen in Amazon’s plans to construct a $200 million robotic fulfillment center in Charlotte. Retail property is also seeing a lot of demand and low vacancy rates, particularly in up-and-coming retail meccas like South Park.

The healthcare sector is another area that is keeping developers and constructors busy, said David Harker, manager of Harker LLC. “What is happening in Charlotte right now with the Atriums and Novants of the world is incredible. These firms are making a strong commitment to enhancing their footprint in this market. We started a medical office division to have a strategic, focused effort because that is where we see growth. Historically, the hospital systems in Charlotte have worked with the largest construction firms. For the type of work that we do, there hasn’t really been an effort by anyone to specifically go after the job sizes that we are interested in, which is around $600,000 on average. We see this as a huge opportunity for us to replicate the success we have had with corporate interiors in the medical office side of the business.”

Looking ahead Pending the outcome of the COVID-19 pandemic and the accompanying lockdown, Charlotte’s construction sector will likely continue to enjoy impressive growth alongside that of the city’s population. People continue to move to Charlotte in record numbers, many of them educated and high-earning millennials looking to find good jobs at one of the many established employers in the metro and put down roots here. Homebuilders are having trouble completing properties fast enough to keep up with the tide of new residents, which is good for business but potentially problematic for housing affordability.

Charlotte is also a prime place to invest thanks to its long history and continued status as a banking center, it’s business-oriented legislative environment, and the presence of 17 Opportunity Zones within its jurisdiction.

Again, depending on the ultimate fallout of COVID-19, Charlotte should remain one of the country’s top construction markets.

Sustainability: Charlotte’s utilities recognized the power of sustainability and are making moves toward renewable energy sources Like many major metro areas, Charlotte residents rely on the services of a handful of key utility providers.

Duke Energy Carolinas and Charlotte Water are the primary providers of water, electricity and natural gas in Charlotte. All are undertaking a variety of initiatives to provide better service and pivot to more renewable energy sources.

Water Charlotte’s primary water provider is Charlotte Water, and the median monthly combined water and sewer bill for a Charlotte Water customer is $67.00. Although some customers in Charlotte pay as much as $175.15 per month, the average consumer is able to enjoy relatively low rates thanks to the fact that Charlotte Water customers are typically high-volume users, and the utility has a fund balance to fall back on and the ability to issue bonds.

Another provider servicing more rural areas outside of Charlotte, Carolina Water Service, does not have these resources to fall back on, and must therefore routinely charge its customers water and sewage bills in excess of $100. Despite customers’ frustration with the size of their bills, the utility stresses that its rates

are fairly and accurately assessed on the basis of what it costs to maintain its infrastructure and provide its customers with clean, safe water.

The city of Charlotte is similarly dedicated to infrastructure maintenance and improvement to ensure that residents receive safe drinking water and that sewage is disposed of with minimal negative impacts on the environment. To this end, the city is constantly undertaking projects to ensure that its infrastructure is up to date. The list of ongoing and recently completed projects includes: the replacement of galvanized steel water pipe at Piedmont Park; the installation of a new wastewater pipe to serve customers in the Starmount neighborhood, from Edgewater Drive to Rosecrest Drive; the replacement of water pipes under the 2500-2600 blocks of Newland Road; the installation of new wastewater pipes to eliminate the redundant Brandywine, Caldwell Commons, and Win Hollow pump stations; and many similar projects, particularly water and wastewater pipe installation or replacement.

Another major infrastructure improvement project that was recently completed in the greater Charlotte metro area is the completion of $65 million in www.capitalanalyticsassociates.com

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Rich Cerretti Charlotte Market Leader JE Dunn

What would you say has been a game changer in terms of infrastructure for Charlotte?

I think the city was visionary in putting the LYNX Blue Line system in place before the growth got to the region. I came to Charlotte from Atlanta where the general development model was to build everywhere no matter what. It just exploded, but trying to connect that later with transit solutions is almost impossible.

With the Blue Line in place, the city is directing the developers where to build. Thousands of multifamily and mixed-use developments have been built along the Blue Line system. Think about how that would have looked spread all throughout the city. Because the rail was built before the development happened, everyone knows exactly where to put the development projects.

If you put it along the rail line, it will lease up and the proforma will work.

Where do you see technology taking the construction industry?

The real trick to construction and technology is in adaptation and being willing to take advantage of these tools. By far the biggest enhancement has been virtual design construction, which allows us to put the building in a 3D space. That has enabled everything else. Whether it is setting up walls with robots or prefabrication, it all starts with being able to visualize the space in the virtual world before you ever start putting it together in the real world.

How is the construction industry better positioned to face an economic downturn?

The most important lesson leaders in the industry learned from the last economic downturn was the need for diversity in the market. I hope that the last recession was unique in that it impacted all markets.

It started in the residential and multifamily market, but it bled over into everything. Everybody was impacted, not equally, but everyone was impacted. I think this is less likely to happen in a future downturn.

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The Charlotte region has employed aggressive and aspirational municipal and community-wide efforts to reduce waste.

renovations to Two Rivers Utilities’ water treatment plant in Gastonia. Thanks to the upgrades, the 97-yearold plant will be able to continue providing clean water for another 50 years.

Electricity The electricity provider for Charlotte residents is Duke Energy Carolinas. Toward the end of 2019, Duke announced a 6% across-the-board rate increase that was precipitated by the utility’s need to raise an additional $291 million in revenue. The increase would equate to a 6.7% increase for the average residential customer and 5% for commercial and industrial customers. This means that a typical household using 1,000 kilowatt-hours each month would see their bill increase by $8.06, to a new total of $116.26 per month.

Duke assured its customers that the rate increase was necessary and that the added revenue would be furthering three important goals. The first goal is improving the quality of services provided to customers by making improvements to their infrastructure, such as installing smart meters, integrating more renewable energy to the grid, and improving outage response times. The second goal,

INFRASTRUCTURE ANALYSIS

which ties into more reliance on renewable energy, is further reducing reliance on coal by closing some coal units earlier than previously planned and contributing to the cleanup of coal ash throughout North Carolina. Finally, the third goal is finding ways to make energy costs more affordable for low-income customers. Duke also plans to spend $2.5 billion over the next three years on various projects to upgrade the grid throughout the state.

Alternative energy The city of Charlotte has ambitious plans to power all municipal buildings with zero-carbon energy by 2030. In furtherance of this goal, the city recently announced that 25% of municipal buildings in Charlotte, North Carolina’s largest city, will run on the output of a 35-megawatt solar farm in Iredell County, with Duke Energy facilitating the deal under its Green Source Advantage program. By switching all of these buildings from carbon energy to solar, the city expects to save roughly $2 million on energy costs over the course of the 20-year contract. As for decarbonizing the other 75% of Charlotte’s buildings, the city is still working on long-term plans but hopes

that Duke Energy’s grid will become cleaner as the utility continues to invest heavily in solar, wind, and other renewable resources through 2025, with hopes of reducing its carbon emissions by 40% by 2030.

Charlotte Water is also capitalizing on renewable energy sources to reduce its carbon footprint. As the largest public water and wastewater utility in the Southeast, Charlotte Water recognizes that its massive fleet of vehicles poses a significant environmental hazard if they continue to use fossil fuels. Therefore, the utility has committed to taking steps toward greater environmental stability by launching a pilot program under which dozens of its vehicles will run on cleaner renewable diesel. In the first three months of the program, with only 34 trucks running the renewable diesel, Charlotte Water reduced its greenhouse gas emissions by roughly 75 tons, the equivalent emissions of a typical passenger vehicle that has been driven 183,000 miles. Extrapolated out to one year under the program, the emissions reduction would equate to 300 tons, the equivalent of 732,000 miles driven. The switch was also painless: no upgrades or retrofits were required to run Charlotte Water’s existing fleet on the renewable diesel. www.capitalanalyticsassociates.com

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Kevin Poet Vice President of Operations – Siemens

The Charlotte region has a developed ecosystem around providing talent. The university system in the region is superb. There is an abundance of opportunities for university partnerships in research, development, and workforce training. For example, we do our apprenticeship program through Central Piedmont Community College. They helped develop the curriculum and advised on the training courses, length of time, and certifications. They really helped put together a good structured approach to the needs we were trying to fill, and this is happening with other universities across the region as well. For companies looking to relocate to the region, those kinds of available relationships are a selling point.

Charlotte expects to save about $2 million from switch to solar Looking ahead As the world continues to grapple with the threat of global climate change, the pivot from fossil fuels to renewable energy will continue to be an important goal for all utility companies. “Transformation and change is happening across the Carolinas energy economy. There is less fossil energy consumption, while technology and clean energy efforts are expanding. The real expansion will happen in technology, distributed generation and microgrids.

Utilities will focus on retiring their coal plants and on electrification, especially as it relates to vehicle electrification,” said David Doctor, president and CEO of E4 Carolinas.

In Charlotte, Duke Energy and Charlotte Water continue to look for ways to reduce their carbon footprints while maintaining or even improving customer service. Unfortunately, this also likely means increasing rates to support the necessary upgrades to their infrastructure to accommodate alternative and renewable energy usage.

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Charlotte is looking to balance its carbon footprint reduction and its desire to improve service levels, but higher rates are likely.

Transportation & Aviation: Charlotte’s booming population numbers create a challenging environment in terms of ensuring cost-effective, reliable and safe mobility options, a challenge made even more difficult with the COVID-19 outbreak. Against this backdrop, ride-sharing, autonomous vehicles and other innovative solutions are consolidating a market footprint amid more traditional transportation options.

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Urban mobility: The Queen City is getting ready to provide the transportation of the future, today Since the 2010 Census, Charlotte’s population has grown 18%, to the point where 122 people a day are now moving to the area. Population growth in the surrounding metropolitan area is even faster, partly because millennials are aging and looking for larger, affordable homes outside of the Queen City.

With that growth come common issues related to mobility: traffic congestion, transit times and air pollution. Add to that the COVID-19 pandemic and Charlotte’s transportation and aviation officials have their hands full as they work to design the mobility options of the future.

Landscape According to the annual Urban Mobility Report published by the Texas A&M Transportation Institute in August 2019 using data from 2017, drivers in metro Charlotte spent 57 hours throughout the year stuck in traffic delays, representing an average extra cost of $1,160 in gasoline expenditure from an extra average consumption of 22 gallons. About a third of these delays happen during midday or overnight, moments in the day that used to be intuitively considered as low-traffic periods.

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In more general terms, the study outlines that by 2025, the average American will spend 62 hours in traffic throughout the year. City authorities will require outside-the-box thinking in partnership with the private sphere, bolstered by specific research efforts and technology use as the usual approaches, including increasing the road network length and width, bolstered public transportation, injecting efficiency in traffic operations and rethinking land development, are not easing the gridlock as expected. Complementing this study, INRIX, an analytical data company specialized in traffic pattern examination, found that Charlotte metro drivers averaged a speed of 15 mph in their last mile, ranking the Queen City as the 24th-most congested urban area in the United States in 2019 as per its Global Traffic Scorecard.

The impact of this issue reaches far beyond traffic hours and economic impact in terms of added fuel consumption. San Francisco-based Go Safe Labs reported in a traffic safety study published in February 2020 that Charlotte witnessed 21,818 traffic accidents in 2019, second only behind Houston, Texas, with 22,188 wrecks. This is despite that figure actually showing a 13 percent decrease in the number of traffic accidents ( )

TRANSPORTATION & AVIATION INTERVIEW

Future 2040 Charlotte launches a comprehensive plan that sets the path for the kind of city it wants to be in 20 years

Taiwo Jaiyeoba Director of Planning, Design & Development/ Assistant City Manager City of Charlotte What is the vision behind Charlotte Future 2040?

The comprehensive Charlotte Future 2040 plan, launched this year, will set the path for the kind of city we want to be over the next 20 years. We are the 16thlargest city in the country based on population and the fifth-fastest growing city. It is important that we have a citywide conversation about how we plan our land-use in a smart, environmentally sensitive and sustainable way, and how that connects with transportation. The comprehensive plan provides us the avenue to do this and will set us on the path to guide capital investments over the next several years. At the end of next year, we plan to deliver the final draft to the city council and it is expected to be adopted by the spring of 2021.

How is the city updating its current zoning ordinances?

While we are working on the comprehensive plan for the city, we are also working to update our planning and development ordinances and regulations, which we last updated in 1992. We want to pull the ordinances together in one place and consolidate them so that they are updated at one time and can communicate with each other to mitigate inconsistencies or conflicting language. At the end, we will have a document that is visual and easy to read. It should not be only developers and industry leaders who understand the regulations but also the people whom they will impact. It allows for a lot of transparency and allows predictability for developers because they will know what they are expected to do. For example, in November, the city council approved an ordinance amendment to rezone over 1,500 acres along the Blue Line corridor so developers that want to develop transit-related projects don’t have to go through a rezoning process. This saves time, but it also allows the community to know what

is coming. We want to continue to make sure that we position Charlotte for smart and healthy development.

How will zoning updates help accommodate Charlotte’s growth?

About 84 percent of our land area is zoned for singlefamily dwellings. The building of duplexes and triplexes is limited due to the current zoning standards. As we revisit the unified development ordinances it will allow us to expand the opportunity to build different kinds of housing. We want to look at areas zoned for singlefamily dwellings and begin to introduce townhomes, duplexes and triplexes. This approach will help build and deliver affordable housing units, and allows residents to stay in place as they age. This approach will also help us achieve equity as a city, as people of different socioeconomic backgrounds will be able to access the same kind of resources, such as good schools, good policing systems, sidewalks and street lighting. www.capitalanalyticsassociates.com

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Liz Babson Director Charlotte Department of Transportation

What is the current state of the transportation system in Charlotte?

In the last few years, the state legislature was changed to reprioritize transportation investment throughout North Carolina. As a result, there is a tremendous amount of investment at the state level that is coming to Charlotte.

Some $3.2 billion in state transportation investment is earmarked for this city. Those are projects that will improve the freeway systems throughout North Carolina.

How is the DoT working with the private sector to speed up projects in Charlotte?

We work to find ways to take our capital investment and align it where we know new development or redevelopment is happening. The Camp North End project north of Uptown and the River District are good examples where we anticipated the type of development and redevelopment we want to see happen and set aside capital investment dollars to partner up with investors and developers. It allows us to see projects developed quicker. The challenge is finding ways to do that that are equitable and balanced.

What role is technology playing in improving transit operations?

We have close to 850 traffic signals and close to 350 miles of fibers that communicate with 90% of those signals. From one central location we can change signal timing for the entire city. That fiber infrastructure also manages our traffic camera system, which is comprised of around 450 cameras located throughout the city. It’s a shared system. We work very closely with the police and fire departments. We have the infrastructure in place to test and implement new smart traffic technologies. We are looking at the possibility of leveraging the connected traffic system with people’s smartphones to share information from the traffic signal operations with pedestrians who want to know when the bus is coming or commuters who want to know when the traffic lights will change.

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Charlotte’s mobility push includes pedestrian and cyclist-friendly streets and employing a regional approach to mass transit projects.

( ) compared to 2018, which totaled 25,172 accidents.

It comes as no surprise that as Charlotte’s City Council’s annual planning retreat came to a close in January 2020, one of the four main takeaways was the establishment of an ambitious regional transit plan, along with affordable housing, higher development standards for buildings, more police and larger green spaces .

Initiatives and investment Chief among Charlotte’s ambitions to provide a disruptive transportation system for its residents boils down to going beyond county lines. Charlotte Area Transit System (CATS) planners have all hands on deck on the design phase to materialize its plan regarding the Lynx Silver Line extension. CATS’ drawing board blueprint shows the new light rail covering Stallings through Matthews, Uptown Charlotte, past Charlotte Douglas International Airport (CLT) and across the Catawba River to Belmont, covering a total distance of 26 miles. In short, a single line traversing Union, Mecklenburg and Gaston counties, something unprecedented in the light rail system’s track record.

The project is expected to come online by 2030.

While extremely beneficial from a mobility standpoint,

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the project is not without its own set of hurdles.

Primarily, financing. The project is estimated to cost anywhere between $3 billion and $8 billion, although it lacks a precise cost structure. Traditionally, financing for such works has been found from federal and state grants. For a project of such magnitude, new levels of collaboration between counties, municipal authorities and local agencies will be required, setting a valuable precedent of cross-county project development.

Moreover, the Queen City is poised to adopt the foundational guidelines of its Charlotte Future 2040 Comprehensive Plan. It is on track to be adopted by the city council by early 2021. The city’s authorities expected the area to grow by an additional 200,000 jobs and 250,000 people over the next 20 years, for which it must plan accordingly. That planning consists of a blueprint for the city’s next growth phase, establishing a set of clear goals and aspirations. It is meant to guide the design and implementation of specific, strategic policies that encourage equitable investment in infrastructure, as well as new regulatory tools such as the Unified Development Ordinance. The plan covers several fronts, including transportation, facilities and services, environment and sustainability, land use and

a community design plan, county and regional plans, parks and greenway plans, and housing and economic development plans. Its essential premise is to tackle the economic and social disparities that Charlotte’s growth has brought about in some of its areas. Its primary enactment tool is community engagement throughout the planning process. To date, it has accumulated 500,000 interactions between city officials and local inhabitants, more than 20 methods of engagement, and more than 330 key stakeholders.

Specific to traffic and mobility, the city of Charlotte is enacting Vision Zero. Inspired by the original initiative born in Sweden in 1997, the Queen City is deploying a strategy to eliminate all traffic-related deaths and severe injuries. The city reports that its recent growth has added up to 200,000 new drivers, pedestrians and cyclists on its streets. While the number of crashes are reported to have decreased 4 percent in 2017 compared to 2016, the number of fatalities from these crashes increased 35 percent over the same period. Launched in 2018, Vision Zero is set on putting an end to these deaths and injuries by 2030. To do so, the strategy included the creation of the Vision Zero Task Force. Chaired by the Charlotte Department of Transportation (CDOT), it counts over 60 members from different backgrounds, such as public health, transportation, police, firefighters, medics, policymakers and community advocates. It is mandated to provide feedback and input on the implementation of the city’s Vision Zero Action Plan. In 2019, Vision Zero highlighted an 18 percent decrease of fatal crashes compared to 2018, the construction of protected bike lanes, extending cycle tracks, reduced speed limits, the implementation of street lighting improvement measures, 22 new traffic lights with full pedestrian accommodations, 43 new pedestrian crossings and piloted speed cushions and speed tables to slow neighbourhood traffic.

Sustain Charlotte, a nonprofit organization, is at the origin of Walk2Transit, an initiative created in February 2018 to give a voice to bus riders and transit advocates toward tangible improvements to the walkability of Charlotte’s highest need bus stops. According to Sustain Charlotte, three out of every four public transportation trips in the CATS service area correspond to bus rides, while close to 80 percent of “all-purpose” riders reach their bus stops on foot. The initiative was also created as a complement to the city’s Charlotte Walks, a pedestrian plan drafted by the CDOT and adopted by the City Council in 2017.

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requires an in-depth assessment of the existing, available infrastructure and determining the expansion and maintenance needs accordingly, parallel to the need of new infrastructure. Multimodal transportation is the order of the day for the Queen City, as outlined by its Transportation and Planning FY2018 and FY2019 Strategic Focus Area Plan, which includes the consideration of streets, transit, bikeways, sidewalks, freeways, arterials and high-occupancy toll lanes.

As early as 1998, Charlotte designed the 2025 Integrated Transit/Land Use Plan. It originally aimed to provide choices in mode of travel, materializing a regional transit system and fostering economic growth and sustainable development. Today, Charlotte provides bus rapid transit, streetcars, light rail and commuter rail options to its residents. Through implementation of the 2025 Integrated Transit/Land Use Plan, initiatives that ensured cohesive and complementary growth to both the transit system and the city’s land use policies were able to emerge. The plan was updated twice since, in 2002 and 2006, to cover the 2030 horizon, bringing about the 2030 Transit Corridor System Plan. This update centers future growth within five primary transportation corridors that link Charlotte’s vital centers of economic activity, including rapid transit, bus, streetcar and facility improvements to better serve the region.

The major update for this plan was the consideration of integrated land use planning and transit-oriented development (TOD). TODs’ main purpose is to foster a pedestrian-friendly environment, multiply

connections to rapid transit stations and create a sense of community. Also, the centerpiece of Charlotte’s 2030 Transit Corridor System Plan is the Charlotte Gateway Station. This future multimodal station will consolidate public transit and intercity transportation modes in Uptown Charlotte. It will bring together the intercity Amtrak service as well as the proposed Southeast Corridor (SEC) extending from Washington D.C., through Raleigh, Charlotte, and Atlanta, Georgia; CATS local and express bus services; CityLYNX Gold Line streetcar service; inter-city bus services; taxi and ride-sharing services and improved bicycle and pedestrian access.

Going one step further, the Charlotte City Council adopted TOD Districts on April 15, 2019. The goal is to develop urban neighborhoods that provide nearby transit stations so people can live, work, consume and practice leisure activities without sacrificing mobility choices. To do so, TOD Districts must adhere to development standards, under which these districts develop an extensive and robust combination of streets, sidewalks and bicycle paths.

Charlotte Douglas International Airport According to the North Carolina Department of Transportation’s (NCDOT) Division of Airports’ North Carolina: The State of Aviation report released in 2019, the state’s public airports inject $52 billion into the economy and employ 307,000 people. The state’s 10 commercial airports and 62 general aviation airports also accumulated $12.6 billion in personal income and

John Lewis CEO – Charlotte Area Transit System (CATS)

Charlotte has been a leader in adapting public transit to growth, particularly when compared to other southeastern cities. This effort, which has started to come to fruition, started in the 1990s. Imagine in the mid-90s, a southeastern city outside of Atlanta discussing major rail transportation systems. That was anathema anywhere else. But Charlotte clearly had an idea of how it wanted to be and how to get there, based on a couple of fundamentals. One, building a community that talent wanted to relocate to and then waiting for the economic development that would follow the talent here. This became a conversation about land use and planning, that then evolved into a mobility discussion. Charlotte had to figure out how it wanted to grow, and that evolved into a centers, corridors and wedges plan, which is now our 2030 Transit Corridor System Plan.

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TRANSPORTATION & AVIATION OVERVIEW

Charlotte Douglas International Airport is considered one of the major economic drivers of the Queen City.

$2.2 billion in state and local tax revenue. In parallel, it fostered an aviation and aerospace industry-friendly environment. The CLT reflects the importance of such facilities as a major economic driver for the Charlotte MSA. In 2019 alone, it serviced 50.16 million passengers, registered 578,263 aircraft movements and moved 183,900 tons of cargo. Also in 2019, it injected more than $16.2 billion into the area’s economy and $23 billion in economic activity throughout the state, as well as $1.1 billion in state and local taxes.

The airport, which is among the Top 10 busiest in the world, averaging 1,600 daily aircraft operations, is also a driver of the Queen City’s current HQ relocation phenomenon, being cited as one of the major reasons important companies across all spectrums choose to relocate to the region. To maintain and embolden the airport’s active role as a sustainable economic driver by catering to future demand, it launched Destination CLT, a $2.5 billion renovation and construction campaign that will bring about a nine-gate concourse expansion, new elevated roadway, the expansion of the terminal curb, the renovation of its existing terminal building, commercial development of its contiguous land and a fourth parallel runway by 2025.

In December 2019, CLT broke ground on the construction of its new 366,000-square-foot terminal lobby expansion, adding 175,000 square feet of new space and renovating the existing 191,000. The works are expected to conclude by 2025. It is the largest construction project in the airport’s history, representing a total investment of $600 million.

CLT is also an operational hub for American Airlines,

which is in the midst of including the airport into its three-year expansion plan. American Airlines added four gates on Concourse A to its portfolio in November 2019, opening the door to new flights toward dozens of markets from Charlotte, which became operational a month later. CLT now provides more than 700 peak-day flights for the airline to operate.

Airports are traditionally designed to enable efficient operations for both airplanes and vehicles and have only recently shifted their attention to enhanced user experience, which is the highlight of the new and improved CLT. By fusing technology, art and design, as intended by the Charlotte-Mecklenburg Arts and Science Council, the airport will be able to integrate digital artwork with data culture. Artist Refik Anadol is reportedly involved in this portion of the CLT’s renovation effort. He specializes in transforming architectural facades into immersive digital canvases by using LCD technology.

Light rail The LYNX Blue Line light rail service first began operations in 2007, making it the Charlotte region’s first light rail service. It is 18.9 miles long and operates region’s first light rail service. It is 18.9 miles long and operates from I-485 at South Boulevard to UNC Charlotte’s main campus in University City. It comprises 26 stations, including 11 park and ride locations. In 2015, CATS opened the CityLYNX Gold Line streetcar service as a complement. Fast forward to 2018 and it opened a 9.3-mile extension. CATS officials initially calculated this extension would average 9,100 trips per www.capitalanalyticsassociates.com

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Brent Cagle Aviation Director Charlotte Douglas International Airport

What are the main ongoing projects under the Destination CLT expansion plan for the city’s airport?

Destination CLT is a $2.5 billion to $3 billion capital program that started three to four years ago. We have now completed four of the 10 projects: the terminal curb front, the A concourse phase 1 expansion, and the connector and new food court for the plaza that serves the D and E concourses. The terminal lobby expansion is underway, and we are very close to finishing the design for phase 2 of the A concourse expansion. We are also conducting the environmental assessment required by the FAA for a fourth parallel runway. The projects in general should be completed roughly by 2027, with the last project being the runway.

How is passenger growth performing and how does that impact the community?

Charlotte Douglas International Airport is experiencing very high growth in local passenger numbers. Growth has increased 5% every year for the last five years and jumped 9% for 2019. But when you think about major metropolitan areas like Dallas or Atlanta, we still have a lot of growing to do.

As the city grows, and the local traffic base expands, the size of the airport will also grow. Right now, the airport is probably a little bit outsized for the community, but that is great because it means we offer far better air service than most cities our size. Raleigh-Durham International Airport in North Carolina, as a comparison, services about 13 to 14 million annual passengers and they have roughly 50 to 60 direct, nonstop flights and four or five daily, direct, nonstop international flights.

In Charlotte, we have 50 million annual passengers, but when you look at the local traffic, we have about the same as Raleigh. The reason for that is because we are an American Airlines hub, the second-largest hub for the world’s largest airline. We have all these connecting flights. We have over 170 daily nonstop flights, and 38 nonstop daily international flights.

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week, but ridership numbers came in 50 percent higher, overshadowing its most optimistic projections.

Light rail has thoroughly reshaped the Queen City’s South Corridor, attracting over $1.5 billion in TOD along the LYNX Blue Line. The Blue Line Extension is on the cusp of showcasing a mirroring economic effect for the Northeast Corridor. As per CATS estimates, it has attracted new private development to the tune of close to $500 million in projects at different stages of development. CATS’ projections of economic development in the area are expected to reach $4.4 billion by 2035.

Next-generation transportation In September 2018, The North Carolina Department of Transportation greenlit the blueprint of a project meant to convert one of its Piedmont passenger trains, which provides daily service between Raleigh and Charlotte, from diesel fuel to hydrogen fuel cells. Should this project materialize, the state would be at the forefront of what is called the “hydrail” technological revolution, together with countries such as Germany, China and Canada, which are dabbling into this sustainable energy source. Added to cutting greenhouse gas emissions, the technology is estimated to represent cost savings ranging from $10 million to $16 million per mile as the train would no longer require the deployment of the traditional overhead wire that has powered trains so far. In contrast, creating a hydrogen fuel filling station costs between $1 million and $2 million. The project is still working to obtain financing.

Such initiatives showcase how cutting transportationrelated greenhouse gas emissions is at the center of the Queen City’s Strategic Energy Action Plan to reassert itself as a low-carbon city. A by-product of the Sustainable and Resilient Charlotte by 2050 Resolution unanimously passed by the city council in June 2018, the ambitious plan looks to have the city’s vehicle fleet and facilities fueled by 100 percent zero-carbon sources by 2030. The measuring stick to become a low-carbon city is set to below 2 tons of CO2 equivalent per person annually.

On that note, the CLT took its first step toward bus fleet electrification by purchasing five 35-foot Proterra Catalyst E2 electric buses and five 125 kW Proterra plugin charging systems in June 2019. When the purchase was announced, CLT’s COO Jack Christine shared that the airport’s goal was to fully transition its fleet to zeroemission vehicles. Moreover, Charlotte-based Duke Energy pledged in April 2019 $76 million to bolster electric vehicle adoption across the state, including school buses, public buses and fleet vehicles, alongside 2,500 charging stations throughout North Carolina.

TRANSPORTATION & AVIATION OVERVIEW

Dec Lee Vice President of CLT Operations – American Airlines

We are the second-largest hub within American’s network.

Depending on the time of the year, we are also the sixth largest airport by departures in the world, and we’ve been adding flights. Charlotte 700 refers to our original plan to have 700 flight departures a day, but we are actually over 700 departures a day now. Whenever we add that number of flights, we have to work very closely with the network team. Every time you want to add options for customers, you have to make sure that you can handle that and still have a great operation.

We have a great collaboration with our network team and with the airport to build the right flight schedule.

Parallel to that, the city launched in 2018 a pilot project aimed at drafting and implementing its Shared Mobility Program, with the objective of providing both different and sustainable transportation choices for its residents.

The program enables private operators to manage a fleet of electric scooters within the city. E-Scooter enables users to rent an electric scooter from virtually anywhere through a smart-phone application, after which it must be parked once the ride ends. The pilot program also included dockless bike share. By November 2018, Charlotte’s city staff published a draft Shared Mobility E-Scooter Plan to further advance the discussion relating to permanent e-scooters rules. Finally, in January 2019, Charlotte established the permanent rules and inherent permitting program for using e-scooters.

Three suppliers provide e-scooters services: Bird, Lime and Spin. As per the April 2020 Charlotte’s e-scooter monthly report compiled by the CDOT, Charlotte users have ridden over 2.28 million miles on e-scooters since May 2018. n March 2020, the average Charlotte e-scooter user took between one to three trips, traveled 1.03 miles per trip and spent 10.93 minutes scooting per trip, although the pandemic led to the removal of all scooters with the future uncertain. Prior to COVID-19, the CDOT considered e-scooters a significant opportunity to not only reduce CO2 emissions but also complement existing transit options in the first- and last-mile portions of transit connections.

Ever since the announcement of Google’s self-driving car venture, Waymo, in 2009, a series of both new and existing companies are increasingly betting on this technology as the transportation means of the future.

Connected, data-sharing autonomous vehicles hold the potential of deeply changing a city moves around.

CCOG expects self-driving vehicles to dominate Charlotte’s roads by 2030 According to Centralina Council of Government’s (CCOG) Preparing the Greater Charlotte Region for: Connected & Autonomous Vehicles document published in April 2019, Connected Autonomous Vehicles (CAV) can contribute to economic activity by creating more jobs, optimizing the use of existing road infrastructure, crash reduction, travel time dependability, improved energy efficiency and new models of vehicle ownership. The CCOG anticipates that Charlotte’s roads will welcome a mixture of traditional and self-driving cars in the 2020s and that by 2030 the latter will take up the lion’s share.

For now, though, gas rules although for how long is anyone’s guess. “While there are many electric vehicle options, the demand is not as significant when you look at the entire stock of vehicles sold,” said David Smith, CEO of Sonic Automotive. “As technology improves and prices come down, customers will increasingly begin to gravitate toward those options. Electric vehicles are still a little bit ahead of their time, but there are certainly more brand options on the market, and that www.capitalanalyticsassociates.com

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Charlotte’s light rail has been an integral part of the city’s development and maturation as a global city.

segment continues to grow. We are looking at how the electric car phenomenon will change other parts of the industry, like servicing, and what impact that could have on us. We have been watching the development of the car-sharing segment as well, but people love their cars. While people may want to use car-sharing services from time to time, they still want their own cars, so we continue to see an increase in revenue based on the demand for cars, coupled with our excellent guest experience.”

Looking ahead Charlotte has all hands on deck to tackle its present and future transportation issues to continue fostering its growth in a proportionate manner based on the area’s local needs. As a testament to the state’s commitment to the future of its transportation and aviation industries, the NCDOT announced in December 2019 it would be allocating $1 million grants to transportation research programs at three public universities — N.C. State, UNC, and N.C. A&T — over the next three years. NCDOT’s initiative, named University Transportation Centers of Excellence, will enable the chosen institutions to work with transportation experts at other academic institutions across the state, including Appalachian State University, North Carolina Central University, the University of North Carolina at Charlotte, Duke University, and Fayetteville State University. Research subjects will be centered around the growing use of electric, autonomous, and other fuel efficient vehicles, as well as transportation technology that unlocks 92 | Invest: Charlotte 2020 | TRANSPORTATION & AVIATION

transportation system progress and improvement of citizen mobility and safety.

On the mass transportation side of the equation, city officials’ discussions are less about whether light rail and bus lines require extensions than about how to best plan, design and carry them out, specifically on the financing side. The added layer of complexity was brought about by the COVID-19 outbreak, which will undoubtedly strain the available funds for the pipeline of transportation projects Charlotte has consolidated in recent years. On the trucking and transportation industry front, the virus outbreak is putting added pressure on the supply chain inherent to the provision of specific goods. Industry analysts’ estimates have yet to find common ground as to when Chinese ports will return to their pre-COVID-19 capacity. Once that happens, peak shipping season is expected to stretch over 25 weeks compared to the traditional 10, as companies restock their depleted inventories for highdemand goods like raw materials and perishables.

Regardless of how the virus outbreak evolves, it remains clear that the Queen City is intent on laying the bedrock of the city’s future transportation system through citizen engagement, providing access to reliable, efficient and cost-effective transportation that encourages environmental and traffic-congestion relief. Charlotte officials remain convinced that transportation is a key component for improving Charlotte’s growing economic gaps. It unlocks, in turn, access to better-paying jobs and increases quality of life by reducing commuting times.

Banking & Finance: The banking and financial sector in Charlotte, the second-leading financial hub in the United States, continues down the path of growth as consolidation further strengthens the local industry. The impact from the COVID-19 pandemic remains uncertain, but could also spur deeper adoption of the technological advances made in recent years.

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Top-notch: Charlotte’s financial services industry is enjoying faster growth than the national rate Charlotte has become a financial hub that has outpaced the growth of the overall U.S. banking sector in recent years. Even as the COVID-19 pandemic ground economic activity to a virtual halt during the early months of 2020, the expansion of the region’s financial sector is expected to continue for the foreseeable future.

Jobs in the financial industry increased by over 47% in the Queen City between 2000 and 2019, nearly four times faster than in the United States as a whole, a report by S&P Global Market Intelligence said, citing data from the Bureau of Labor Statistics. Around 82,000 people in the city work in finance, or about an 82,000-strong workforce out of a 1.3 million workforce in the larger, Charlotte Metropolitan Statistical Area (MSA).

Even in the middle of the coronavirus outbreak, business in the sector continued, moved by the city and the state’s progressive banking culture and an industrywide focus on developing fintech. Truist, the result of the merger between BB&T and SunTrust in a deal valued at $66 billion, one of the largest financial deals of the last decade, announced on April 1 the acquisition of the 47-story Hearst Tower for $455 94 | Invest: Charlotte 2020 | BANKING & FINANCE

million, which it renamed Truist Center. The center will be Truist’s new national headquarters. The two merging banks were previously based in WinstonSalem, North Carolina, and Atlanta, Georgia.

That move adds Truist to an exclusive but growing list of top-notch banks calling the city home or deploying a large part of its operations to the banks of the Catawba River, among them First Bank, Wells Fargo, Bank of America, RSM US LLP and J.P. Morgan.

North Carolina was one of the first states to allow banks to open branches in different cities without the need of a new charter, which has encouraged growth.

“Charlotte is one of the world’s top financial centers and an emerging fintech hub, and Truist is proud to be a part of this thriving business community,” Kelly King, Truist’s CEO, was quoted as saying.

Landscape After falling behind San Francisco, Charlotte climbed up the rankings and in 2019 it was the second-largest banking center in the country, behind behemoth New York City. Together, financial institutions in the city held around $2.3 trillion in assets as of June 2019. The Charlotte MSA is also home to a number of national ( )

BANKING & FINANCE INTERVIEW

A new footprint BB&T merged with SunTrust to create a new banking behemoth called Truist and decided to call Charlotte home

Heath Campbell Metrolina Regional President Charlotte – Truist What factors led to selecting Charlotte as the location for Truist’s headquarters?

BB&T has a great heritage in Winston-Salem in the same way that SunTrust does in Atlanta, however our leaders, in the true spirit of a merger of equals, selected a new city in which to base Truist.

Charlotte was a natural choice. Both BB&T and SunTrust had operations here, and it is one of the world’s top financial centers and an emerging fintech hub, with access to incubator and accelerator programs, data science and education programs. The area has the second largest population of financial services professionals behind New York City. Charlotte also sees more than 33,000 newcomers each year, attracted by career opportunities, diverse living options and a favorable cost of living.

How will the cultures of BB&T and SunTrust mesh as Truist establishes itself in the market?

There are not a lot of mergers of equals because they are hard to pull off. The cultures of the organizations need to be compatible – and they were with BB&T and SunTrust. While we have different practices, we shared very similar vision, mission and values. We took different strategic paths in how we went to market, but what we stood for was very similar. As Truist, we are doubling down on our community bank philosophy.

We are building a client-centric business model.

BB&T and SunTrust had complementary strengths – for instance, SunTrust built an investment banking platform that was unparalleled and BB&T had a strong legacy in community banking and insurance – and we are combing those strengths to benefit the clients and communities we serve.

How will Truist tap into Charlotte’s financial services workforce?

I’m particularly proud that when we announced this merger, we not only committed to being best in class for our clients, but recognized that our teammates are at the heart of great client experiences. Truist is a dynamic place to work offering industry-leading benefits and opportunities for all sorts of professional positions, including insurance, investments, and core banking.

We’re making our mark on the industry by offering one of the strongest benefits programs and great opportunities to build careers - a total rewards program to attract and retain the best talent: The unusual combination of offering both an industryleading 401(k) matches and a pension plan to most teammates; industry-leading time off programs to ensure maximum flexibility in planning life events; and Financial Wellness programs. www.capitalanalyticsassociates.com

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Dee O’Dell Executive Vice President, Consumer and Business Banking, East Region – U.S. Bank With the amount of growth here in Charlotte, one of the main challenges is finding the right real estate location for the branches that we want to build. They need to be in the right place.

Another challenge is finding unique ways to communicate and connect with consumers. To really state our commitment to the community and do something significant, we are going to be the title sponsor of the Rail Trail Bridge that will be part of the light rail that goes through Charlotte. The light rail has a pedestrian and bike trail right next to it, but when you get to Interstate 277, the inner loop, there is no bridge across it. We are investing in the infrastructure to link the south of Charlotte to Center City, in a partnership with Mecklenburg County, the City of Charlotte and the North Carolina Department of Transportation.

( ) banks that are headquartered here, including No. 2 U.S. lender Bank of America, NewDominion Bank and Carolina Premier Bank, in addition to Truist.

The city’s banking and finance sector is helped by an unprecedented expansion both in infrastructure and real estate, as its mild weather and ease of access, thanks in great part to the American Airlines hub at Charlotte Douglas International Airport, make Charlotte a strong contender for investment dollars.

And it has become “one of the world’s hotbeds of innovation in fintech, the space in which digital technology and financial services intersect,” a report

by Rebusiness Online said, where tech giants such as IBM have put money in large incubators such as Queen City Fintech, and where a growing number of fintech firms have raised over $2 billion and counting.

Another incubator, the Carolina Fintech Hub, is among the main reasons Truist decided to move to Charlotte, according to the S&P Global report.

“The group works to identify, build and retain talent in the area, including creating upward mobility opportunities for promising talent,” the report quoted Tariq Bokhari, the Carolina Fintech Hub’s executive director, as saying.

“While the landscape is very competitive with brick and mortar branches in the region, online fintechrelated companies offering deposits and loans continue to rise. However, there is still a segment of people who want to know their banker and prefer the personal relationship we provide,” Jim Marshall, president and CEO of blueharbor bank, in an interview with Invest:.

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The Fed’s March decision to lower interest rates to near zero could further squeeze bank income Performance An extremely long period of low interest rates in the country, amidst a growing economy, has also allowed banks to grow and surpass market expectations. The country’s largest bank, Bank of America, beat Q4 2019 net income expectations by reporting 74 cents per diluted share, above the expected 68 cents per share, according to a report by the Charlotte Business Journal. “In a steadily growing economy marked by solid client activity, our teammates produced another strong quarter and year, allowing us to increase investments in our customers, communities, and employees, while keeping a close eye on expenses,” Brian Moynihan, chairman and CEO, was quoted as saying. “We also delivered for shareholders in 2019 by returning a record $34 billion in excess capital through dividends and share repurchases.” The bank cited ( )

Market voices: Fintech

Jeff Douglas

CEO Wyndham Capital

As a digital lender, we focus on the home buyer, as well as the homeowner who has a mortgage. We can help a homeowner that already has a mortgage refinance, tap into equity or consolidate debt. Even before COVID-19, we were seeing many homebuyers come online before they even saw a real estate agent. This year we saw a surge, where we were gaining a lot more traction with the borrowers, helping them much earlier on in the process than we ever had before. There is a new level of empowerment that is going on digitally in terms of being able to search for homes online and apply for loans online, whether it is through a lead aggregation service or through a great application process like Wyndham Capital. The behavior of consumers will more than likely continue to move online to seek information moving forward.

We are keeping our eye on the regulatory environment and technology.

Four years ago, the Department of Labor was crafting the rules on retirement investments. Although those plans did not get implemented individual states started to take up the cause. The SEC has stepped in and come up with the Best Interest standard, which will go into effect in June of this year. It is designed to raise the bar on the type of treatment clients deserve. Having a variety of standards may be a challenge as we work with clients all over the US. We see technology as a great tool to use to better serve our clients. We believe in a human adviser model, supplemented by technology tools. We are excited about the steps we have taken to better serve our clients while working to offer the highest quality advice and financial production options to our clients.

Michael Praeger CEO & Co-Founder AvidXchange

Tim Flanagan President MassMutual

Our rapid growth began in 2011-2012. There were two catalysts for that.

One was that we are a software as a service, cloud-based technology platform.

Up until then, companies were really hesitant to adopt cloud-based technology for financial applications. The mindset was to run these services internally, behind a firewall. And then we had the growth of companies like Salesforce and Concur that created momentum and customers started becoming comfortable.

We then added payments to our existing accounts payable solution. We were growing at 15% to 20% annually up until 2012, and since then, we’ve averaged around 40% growth per year. That is a reflection of the growth of Charlotte, but also of the general marketplace adopting our technology.

www.capitalanalyticsassociates.com

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oundtable:

Community advantage Leading community and regional bankers provide their perspective on the challenges they face and the advantages they offer customers.

Jim Engel

CEO & President Aquesta Bank

What benefits does a community bank provide?

Many large, national banks have expanded their presence in Charlotte. At Aquesta Bank, our consumer growth rate is very high because large banks are targeting a different level of customer. On the retail front, consumers want to have a bank that knows who they are and can help when they face challenges. A community bank offers that opportunity. A few years ago, it was believed that community banks were at a disadvantage in terms of technology, but that is no longer the case since technology costs have decreased over the years. Community banks offer the same caliber of technology as the large banks.

Consumers have a wide range of banking options.

They can go with the very large banks, but if they are looking for expertise when it comes to their personal circumstances, they tend to go to the community or regional banks. Our clients have direct access to the top decision-makers in the bank. When they have unique issues, they are able to get quick decisions from people who have the final word. When that happens, many consumers are happy that they bank with a community bank.

What are the preeminent challenges you face?

With low unemployment rates, hiring talent has been a challenge for the banking industry. Aquesta Bank has been growing rapidly and we have been hiring many team members. It is an ongoing challenge. Cybersecurity is another challenge that both community and larger banks are facing. Banks are targets. It is something that all banks take very seriously.

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Phillip Jurney President TowneBank

What differentiates your TowneBank from others in the area?

There are over 15 banks that surround our location in South Park. We all do the same thing. We lend money and take deposits, as well as provide services, such as mortgages and insurance. The real difference is in how you deliver it.

Our members know who we are. We do not have 1-800 numbers. The members know who their relationship bankers are. The fact that we do not have 20 locations in the Greater Charlotte Area means we can control service.

From the service level, we can control the output of what we do everyday for our members. What sets us apart is how we deliver our services and how quickly we can correct mistakes when they arise.

One thing I am proud of is that we give back to the community. An example of this was when we provided the name rights for Junior Achievement of the Central Carolinas’ TowneBank Opportunity Headquarters, which is a 30,000-square-foott. facility in Camp North End focused on preparing public and private school students for workforce readiness, financial literacy and social mobility.

What is the biggest challenge the banking indsutry faces?

The biggest challenge for the banking industry, which really started to occur in the second half of 2019, is the margin squeeze. Rates are falling. Prime rates dropped 75 basis points in 2019, which is the first time they have fallen in a number of years. Loan rates also dropped pretty significantly. Deposit rates also dropped. The deposit market is pretty competitive, whether it be local banks, online banks or credit unions.

BANKING & FINANCE ROUNDTABLE

Jeffrey Mylton

Charlotte Market President HomeTrust Bank

What are the greatest challenges facing community banks in Charlotte?

A lot of community bank growth has been done by boosting the balance sheet with real estate. I think everybody understands you have to be diversified.

You have to have a deposit base in order to lend. Real estate’s great, but you can’t do everything with real estate. There are so many more business opportunities for a bank when it’s servicing business customers.

As this market grows, people are looking for a bank that can satisfy their needs. Other than a few things that a big bank does, such as mergers and acquisitions, we can do what they can do. Most of the time we can provide it either more efficiently or less expensively.

We’ve seen just about all but about two community banks disappear here in Charlotte, but you’re also seeing big growth in credit unions. I think the reason that they’re becoming so active is because of the void of community banks. People would rather deal with a personal relationship where somebody locally cares.

Big banks don’t provide that. So you’re seeing us thrive as one of the few left, as well as the credit unions.

How is HomeTrust responding to the emerging millennial market?

Whether it’s remote data capture, creating our app so you can do all your banking services on your phone, or Popmoney, where you can transfer money between different accounts, those are all things that can continue to evolve. And as they evolve we continue to make sure we have what we need to be competitive.

Douglas Smith

Charlotte Market Executive First Bank – Charlotte

Which niche does First Bank does fill within the Charlotte market?

In 2017, there were five banks headquartered out of Charlotte and now there are two, Bank of America and Truist. The landscape has changed a lot. Most regional and national banks are swimming upstream from a client perspective. They are looking more for midmarket clients with half a billion dollars in revenue or higher. Our opportunity is with operating companies that have $5 million to $100 million in revenue. I think there is a void there, not just in banks but also regarding the expertise of bankers in that market. Other regional banks offer business banking or a smaller commercial focus, but I don’t think they have our background or our emphasis on commercial banking. We also have a lot of knowledge in commercial real estate and look for project opportunities ranging in size from $2 to $25 million. As a community bank, we have the opportunity to be nimble and quick in our decision-making.

Which financial services are most in demand by your clients?

Aside from commercial, the mortgage space is hot right now, given where interest rates are. For a while, we were slowing down on refinances but I think that even those people who refinanced two years ago now see that rates could have dropped to 1% or 1.5%, and they are back at play in the market. Acquisition activity is still decent, but the rates environment is definitely driving a lot of activity to the mortgage side. We have a Small Business Administration (SBA) division, which does very well for us from a fee income perspective. www.capitalanalyticsassociates.com

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Lee Fite Regional President – Mid-Atlantic Fifth Third Bank

How has Fifth Third Bank evolved in the Charlotte market?

When Fifth Third Bank entered the Charlotte market in 2008, it was a challenging time for the economy and there weren’t a lot of banks investing. Throughout that time, Fifth Third decided to invest in people to grow in the market, rather than invest in branches. We needed to ensure that our business in the Carolinas had a stable footing, and that we had the infrastructure to support growth. We knew that the economy in the region was special. Last December, we opened four branches in one day in Charlotte. We will open many more branches throughout the Carolinas and the Southeast over the next couple of years.

Consolidation and merger and acquisition activity will likely remain a major trend in the banking sector as banks grow and evolve to better serve customers and industries.

What is Fifth Third’s competitive adantage?

At Fifth Third, our competitive advantage is our people.

This is a people business. We have a regional leadership team. You don’t have that at a lot of banks. Fifth Third is one of the largest banks in the country; we have access to expertise and capital. What makes us unique is our focus on local coverage. Every part of the country is unique, there is a special flavor, and we want to be in tune with that. We want to be responsive when people have needs locally. We are also making investments in technology to help set us apart. We have invested in systems that track data and process and improve turnaround time for clients to open accounts and do business with us. We also developed our app, Fifth Third Momentum, which allows clients to pay down student debt faster.

( ) low interest rates as a factor for the decline in its net interest income, which was down 3% in the quarter, which was partially offset by loan and deposit growth.

Bank sector income could be further squeezed after the Federal Reserve decided in March to reduce interest rates to near zero amid the uncertainty surrounding the effects of the COVID-19 pandemic on the U.S. economy. Federal Reserve board members viewed “the near-term U.S. economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain,” according to minutes from the central bank’s March 15 meeting. Officials also “noted that financial markets had exhibited extraordinary turbulence and stresses.”

What challenges do you face?

Changing consumer needs and preferences amid an evolving regulatory environment present challenges that impact growth in this industry. Regulation is expensive, complex, and can be hard to understand. Investment in technology can also be a challenge. Clients want to have access 24/7. They don’t always want to do things online, or face-to-face, but they do want to have that choice.

Consolidation The one key trend that has marked the sector in recent years is consolidation, which has meant in many cases, big national lenders buying up smaller community banks that often cater to the small-business clientele.

Chris Cole, senior regulatory counsel for Independent Community Bankers of America, a Washington, D.C.based trade group, was quoted as saying in a report

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BANKING & FINANCE OVERVIEW

by the Charlotte Observer that, while the move by national banks will result in a “win-win” situation for consumers in the city, it could also challenge local financial institutions. “To compete, community banks in the Charlotte region will have to increase the rates they pay savers … Those banks will also be putting more effort into customer service, which they already heavily focus on,” the report quoted Cole as saying.

Marshall, of blueharbor bank, echoes that sentiment.

“I think there will always be a place for a community bank. However, there has been a lot of consolidation in the last few years across the Carolinas and across the country. There’s a lot of regulatory pressure that is very layered, causing banks to shut down operations. For us, the communities that we are in continue to grow and we believe our best days are ahead of us. We have a lot of capital to invest and that continues to grow. In general, the banking industry in Charlotte is solid.”

Smaller financial services companies can also offer a human touch that consumers may find lacking at larger counterparts, said Eric Teal, chief investment officer and managing partner at Queens Oak Advisors. “As a boutique firm, we can deliver high-touch relationship-based

services to clients, while also specializing in financial planning, asset allocation and investment management for our clients’ portfolios. When you are operating as a boutique, and not managing a large number of accounts, you are able to really specialize in the investment management and delivery of your strategies.”

Those are precisely the kind of businesses that will be in most need of access to credit and loans after the mandatory closures decreed by the local government between March and April of 2020, which have sent tens of thousands of people home and have seen scores of small-scale businesses, from bars to restaurants, close their doors, albeit temporarily.

Another segment that is heightening competition and consolidation in the sector are credit unions, which operate as nonprofit businesses unlike their community bank counterparts. Judy Wishnek, commercial market executive of Truliant Federal Credit Union, says there is enough room for both. “Charlotte’s banking and credit unions have all had a great deal of growth, with a lot of people moving to the city. In the banking sector, a lot of new names have entered the market, and credit unions specifically have ( ) www.capitalanalyticsassociates.com

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BANKING & FINANCE INTERVIEW

Opportunity Ease of doing business, net population growth among the factors bolstering company decisions to set up in Charlotte

Charles Bowman Charlotte Market President – Bank of America

What are the decisive factors companies look at when setting up shop in Charlotte?

Companies are driven by the ease of doing business, always looking for new markets. Much of the country’s net population growth occurred in the southern region: Florida, Texas, Georgia and North Carolina.

Those four states had the most net in-migration of any state in the country. That screams opportunity due to the availability of people. All the banks want to be here, even those not headquartered in Charlotte.

How are you solidifying your innovation and talent retention fronts?

We push ourselves to be on the leading edge of change.

Traditional banking takes deposits and provides loans.

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changes from our clients, change in banking translates into providing the ability to transact whenever, wherever, however. Ten years ago, cybersecurity was not something to think at the level we think about it today. Today, it is mission-critical to everything we do. We are proud of our efforts in the mobility space.

Transformation in this company does not solely revolve around raising capital levels and meeting stress tests. It is about serving, both on the client and employee fronts. On the talent side, our mission is to get the best and brightest people for every job, at every level. We have innovated on that front as well. For U.S. employees earning less than $50,000 a year, we reduced annual family premiums by 50% in 2011 – these have remained flat since 2012. We also tackled our workplace design to the benefit of our employees’ daily tasks. In Charlotte, the new Bank of America Tower that opened in 2019 is equipped with the latest technology and tools, such as dual screens, ergonomically proficient desks, space-sharing environments, access to external light, to name a few. The name of the game is maintaining a lively dynamism where we work: happy, productive employees fostering teamwork, with flexible working options.

How is Bank of America helping small companies and startups to get a solid footing?

We have an initiative to help individuals in the low to moderate income space, crafting attractive mortgages.

On the small business side, we have expanded the amount of lending we do. We have about $250 million of loans for this region. The amount may seem modest but bear in mind that most small businesses need between $25,000 and $100,000 loans. It is the space where we have added the most additional bankers to our ranks, parallel to providing our clients capabilities to do business with us.

BANKING & FINANCE OVERVIEW

Technology and consumer preferences are driving the evolution of personal and business banking, reducing the need for bank branches.

( ) had impressive growth. All credit unions combined now have about 115 million members nationwide. Truliant, specifically, has over 250,000 members. A recent article in the Wall Street Journal said that credit unions are now going toe to toe with other financial institutions, adding that credit unions’ asset growth is outpacing that of banks, and our industry is very well-capitalized. In Charlotte, Truliant has added nine locations in the last five years, to a total of 12 in the city. In the last year, we also added a commercial lending office.”

Talent The increased business allure of the city, which is in the middle of a real estate boom but where it is still relatively affordable to house employees, especially as compared to New York City, has set the city in the middle of a talent development and acquisition war between employers.

Real estate broker website Zillow set the median value of a Charlotte home at $251,193, as of January 2020, less than half of the $653,506 of a New York City residence, while rents in Charlotte average $1,538 a month, versus $2,387 in the Big Apple. A strong academic presence and a growing live,work, play mentality are also playing into talent attraction, especially among millennials. “It is a competitive market. The Charlotte Metro Area is attracting great talent across industries, which is supported by a

robust academic framework and workforce training.

There is a great pool of talent available. When considering a new market, we assemble a team that knows the firm and how we do business. Charlotte has a deep talent pool and it is an exciting time for us to develop our franchise,” said Matthew Moore, managing director-head of J.P. Morgan Private Bank in the Carolinas.

Millennials have been flocking to the city, which ranked first in the country in migration of that demographic in a report by Business Insider, surpassing even traditional youth magnets such as Seattle and the San Francisco-Oakland area in California. “The millennial population of Charlotte, the biggest city in North Carolina, grew by nearly 11,000 in 2015, the latest year for which there is data,” the report said.

Despite that highly prepared workforce, the influx of new companies, not just in banking and fintech but also areas such as technology manufacturing and energy, has made it increasingly difficult for employers to hire qualified people, according to a 2018 study by the North Carolina Department of Commerce, which said that half of employers had difficulties hiring in the state, a higher number than the 40% reflected on a previous, 2016 review.

When looking at STEM-related jobs, which are precisely the kind of jobs offered in fintech-related fields, that difficulty rose to 60%, the study showed. www.capitalanalyticsassociates.com

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Charlotte’s robust banking and financial services sector is attracting talent from all over the nation. College grads to industry veterans are flocking to the Queen City to further their career goals.

“Half of all companies surveyed reported difficulty in hiring new staff, a substantial increase over previous years. In key growth industries like Manufacturing and Science, Technology, Engineering, and Mathematics (STEM) industries, the number approaches two-thirds.

Among the reasons employers encountered difficulties, two-thirds cited inadequate employability skills and half also reported that candidates had inadequate experience or technical skills – or that there simply weren’t enough candidates in the applicant pool to fill their roles,” the report said.

Schools and associations have partnered to raise the workforce profile, from UNC Charlotte launching its 24week Fin Tech Boot Camp, to Wake Forest University announcing the creation of its new Financial Services and and Fintech Hub, in a partnership with education giant Kaplan.

Tech workers have increased by 68% in the city since 2010, according to data from the Charlotte Regional Business Alliance, against a backdrop of 15.2% population increase in the same period.

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At the end of the day, it’s up to banks and other financial institutions to capture and retain talent. In a competitive landscape that could come down to the environment employees find themselves in. “We like to provide a big, family atmosphere for our employees.

We support one another and want to see each other succeed. The bank has a plan in place to attract young professionals to Union County. Our goal is to hire energized people and teach them to be community bankers. Big banks tend to silo their employees into particular jobs, whereas community bankers have to learn all aspects of running a bank. We want our employees to be well-versed in all aspects of banking,” said Randy Adcock, CEO of American Bank.

Regulations and taxes One of the main reasons that the city has become the second-largest financial hub in the country comes from its friendly regulatory framework. Early in the 20th century, when most states’ regulations made it difficult for banks to operate across state’s borders

BANKING & FINANCE OVERVIEW

and even to open several branches in the same state, North Carolina’s more permissive regulations allowed for local financial institutions to operate closer to their customers both in urban and rural areas. That, in turn, allowed local banks to thrive.

Then in the 1980s, North Carolina lifted its rules against interstate banking after the North Carolina National Bank (now Bank of America) purchased several banking branches in Florida in a controversial move that was upheld by federal courts. After that, the acquisition spree started and created financial household names such as Bank of America and Wachovia (later acquired by Wells Fargo), among others. “Having such an overwhelming concentration of financial interests in Charlotte has been a gift to the city itself, through the urban redevelopment efforts in the city’s uptown four wards,” even as back as the first decade of the century, according to the 2007 book “A geography of the Carolinas.”

More recently, the implementation of the 2017 Tax Cuts and Jobs Act reshaped the financial landscape for

Charlotte and the country. The full impetus of the Act came into play in 2019 but the signature line from the reform is the decrease in the corporate tax rate from 35% to 21%. The tax reform’s detractors say it hasn’t accomplished what it promised, with a Bloomberg analysis saying it did little to boost economic growth.

“There are two sides of the same coin from which to look at this reform,” Edward Doughty, managing director at Epic Capital Wealth Management told Invest:. “From a stock market standpoint, it may have been one of the best things to ever happen to it. The president is highly pro-business. Given what was done with the Tax Cuts and Jobs Act, the benefit for every average household in America was equivalent to a median $1,200 tax cut.

Our clients benefited on the side of corporations that trade publicly, which had their taxes cut from close to 35% down to 21%, propelling their wealth. This was in parallel to overseas dollar repatriation operations, deregulation, and other pro-stock market measures.

Our concern is that those short-term stimuli are starting to wane, with some deceleration in certain areas of the marketplace.” Added Queens Oak Advisors’ Teal: “The tax reform has allowed us to work more holistically with clients to help in tax planning, manage more wealth, and help with capital preservation. Many of our clients have benefited from individual tax reforms and it’s allowed our services to resonate more clearly with our clients in this environment. On the business front, it has been beneficial to our growth.”

Aside from taxes, regulations related to the internet have also played into the financial sector’s growth.

At the state level, the government has led sustained efforts over decades to move its housing market toward faster and easier digital paperwork related to loans and mortgages, called electronic closings or “eClosings,” by facilitating a move toward electronic signatures, notarization and records.

Even in the middle of the coronavirus pandemic, the state’s business mentality pushed through, as Gov. Roy Cooper decreed that publicly traded companies, of which Charlotte has no shortage, could hold their annual shareholders’ meetings virtually to avoid the risk of contagion, a measure quickly taken up by Truist.

Technology Technology, in fact, is becoming an increasingly important peg for the banking and finance industry as more people want the capacity to do their banking virtually, and securely, well aware of the threat of hackers and information exposure. “Technology investment is a major priority for J.P. Morgan,” said Moore. “When it comes to customers, we need to www.capitalanalyticsassociates.com

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make sure we can meet our clients when, where and how they want to meet us. We invest in making mobile banking more accessible to our clients. We also invest in cybersecurity to ensure the financial safety and privacy of our clients. Last year, we invested $11 billion in technology, with almost $1 billion going toward cybersecurity. We find that our clients are more satisfied and engaged when they use multiple channels to connect with us.”

But that doesn’t mean that bricks and mortar branches are going away. In Charlotte, it’s just opposite, in fact. Banks in the city are bucking the national trend of closing branches in the face of online and mobile banking, in an effort to gain name recognition, especially by national giants but also Charlotte newcomers such as J.P. Morgan Chase and U.S. Bank. J.P. Morgan Chase said in March of 2019 that it planned to open 90 new branches across the country, some of those in North Carolina, while U.S. Bank committed to at least 10 new branches in Charlotte by the end of 2020.

Looking ahead The banking and financial sector in Charlotte remains on a growth path, solidified by its ranking as the second-largest financial hub in the United States. As growth in the sector expands faster than the national industry, the number of jobs in the sector is also increasing. Consolidation continues to be the name of the game and that is a trend that will likely carry forward.

The impact from the COVID-19 pandemic remains uncertain, however, although it certainly will usher

A mixture of large, regional and community banks and credit unions provides residents and business owners with a variety of banking opportunities.

Timothy Monte Charlotte Market Executive – Regions Bank

The career opportunities that Charlotte has to offer for professionals at any stage in their careers are exceptional. The industries and job market are more diverse now than ever. Years ago, finance professionals worked primarily for one of the two large banking institutions in the region. Now, there are numerous options – not only with traditional banks, but with institutional investors, private equity and hedge funds. And that is just in the finance sector. The same is happening in other sectors of the economy, especially healthcare and technology. Recruiting talent to Charlotte is not difficult. Whether recruiting senior personnel or junior talent, all you have to do is get them to the city, and the city will sell itself.

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BANKING CONSTRUCTION & FINANCE OVERVIEW

Kendall Alley Region Bank President Wells Fargo

How is Wells Fargo approaching technology and its implications?

Without a doubt technology is the biggest driver in banking. Specifically, mobile banking solutions are growing at exponential rates. We call it simple now but five years ago, no one had really heard about mobile depositing of checks. We started doing it in the ATMs and now you can take a picture on your phone to make the deposit. It is changing the way we are engaging our customers and with ourselves. Technology allows us to morph and become more active and agile as a company. If you think about the core of our products— loans, deposits, investments—these have not changed dramatically as to what they are. The way you access them, however, can have tremendous impact. We must be relevant as that space continues to change rapidly.

in changes, according to Tom Finke, CEO of Barings.

“Asset management, like the rest of the financial sector, is dealing with the ongoing economic and market crisis stemming from the COVID-19 pandemic.

It is hard to predict the long-term effects and trends.

At Barings, we are primarily focused on the shortterm situation, managing risk appropriately for our clients through this crisis. It is likely that the financial markets will change after the crisis subsides, much like they did after the 2008 financial crisis, which ushered in an unprecedented decade of lower rates. The macroeconomic picture remains uncertain in terms of the downturn’s length, albeit clearly severe. Looking ahead, investment decisions will be impacted not only by macroeconomic factors but also by understanding which businesses will survive, grow and thrive; which among them will need restructuring, with inherent opportunities to invest on a distress basis and how it affects different asset classes.”

What challenges come from technological disruptions to banking?

If the space is relevant, we play in it. Because of our size and capabilities, being one of the largest fintech companies in the world, we are constantly working toward improving our technology offering, paying close attention to and investing heavily in fintech activities.

Charlotte has been a winner in the fintech process. We have our own innovation center relentlessly working to monitor for and respond to points of disruption as they come along. Our customers are looking for innovative ways to conduct their banking so we continue to explore and develop new tools that will provide and enhance those opportunities.

How is Wells Fargo ensuring customer safety in the digital era?

Wells Fargo is committed to providing the highest level of cybersecurity and protections to safeguard the data, privacy and financial assets of our customers. We are experiencing growth in the number of people involved in our risk management and cybersecurity divisions, ensuring we have the best of the best at all times in that space. www.capitalanalyticsassociates.com

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Health: The health industry across Mecklenburg County remained on solid footing as the new decade got underway. Healthcare is a leading employer in the region and access is broadening, meaning more people can get the care they need. How it emerges from the unprecedented crisis of the COVID-19 virus that rose to a full-blown health emergency in March, remains uncertain.

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Uncertainty: The region’s healthcare system was on a solid growth path when COVID-19 turned everything upside down Healthcare in Charlotte and the surrounding region remained on a growth path throughout 2019 and into early 2020. It is the second-leading employer, more people than ever have access and larger hospitals are turning to Charlotte to take advantage of its emerging opportunities.

But it also faces hurdles, and none more important than the COVID-19 pandemic. Like other regions across the country and the world, the healthcare industry was at the forefront of the battle in April 2020, adapting emergency measures to flatten the curve of contagion. In Mecklenburg County, efforts to stem the tide appeared to be working, with the number of new cases each day starting to trend downward by mid-April, according to Mecklenburg County Public Health (MCPH).

But the end of the crisis remains months away, according to MCHP projections, if not more. While stating that the data, compiled with Atrium Health and Novant Health System, remained “volatile,” MCPH said the number of cases could start to “overwhelm our healthcare system in mid-to late-June. This means we would not have enough beds, staffing, supplies, and life-saving ventilators to care for everyone in our community and region.”

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While it is impossible to know what the landscape will look like post-COVID-19, a look at the pre-virus period provides a reliable portrait of the strengths and weaknesses that will continue to paint the overall picture.

Landscape Charlotte’s healthcare system was growing in 2019, both in terms of employment and access.

Unemployment in the state remained at sub-4% levels prior to the COVID-19 outbreak, with healthcare one of the key drivers in registering net employment gains, with 13,800 new jobs created in education and health services. Both Charlotte and Raleigh were among the fastest-growing job markets in not only the state but also the country.

Healthcare is Charlotte’s second-largest employer, with over 50,000 people working in healthcare and social assistance. In 2020, pharmaceuticals were North Carolina’s second-largest export, with a value of $41.2 billion, and predicted to overtake mixed freight as the No. 1 export by 2040 with a value of $75.8 billion.

Against this backdrop, large hospitals see opportunities in the Charlotte market. Two major health systems – Atrium and Novant – both announced ( )

HEALTH INTERVIEW

Pivotal year $1.5 billion investment and adaptation of virtual technologies set the stage for future care

Eugene Woods President & CEO – Atrium Health How did Atrium Health finish 2019?

To me, it’s fair to say that 2019 marked one of the most pivotal years for Atrium Health in our recent history.

We announced a more than $1.5 billion investment in the Charlotte metropolitan area to help build new infrastructure, including new hospitals and medical facilities – all of which will be completed over the next few years. This is about more than just adding brick and mortar, it’s about investing in this community because this is the place our friends, our neighbors and our loved ones call home, and we want to see it continue to thrive.

And as the major healthcare system in the state of North Carolina, we know we can play a key role in helping our economy flourish as well.

How are the medical needs of residents changing?

Just as we are making significant investments in brick and mortar locations as this community continues to grow, we are also fully embracing virtual and digital technologies to make sure we are extending healthcare to residents where they live, work and play. For example, we have one of the largest virtual healthcare platforms in the county, which averages around 14,000 virtual patient visits per day, and serves people in both urban and rural areas. This kind of technological capability particularly resonates with millennials and residents who want to receive healthcare close to home. Through this platform, we’re able to ‘beam’ into their homes or serve people closer to where they live – both offering convenient, connected care, wherever and whenever our patients need us. We’ve doubled-down our commitment to this digital infrastructure and continue to invest in enhancing the capabilities.

In addition, we’re also one of the few healthcare systems in the nation today to use Amazon’s Alexa to help bring care closer to home for more people. All patients have to do is say “Alexa, open Atrium Health”

and she’ll connect them to the nearest one of our 40 urgent-care locations or emergency departments – another area in which we continue to invest. She can also reserve their place in line – they really like that part!

What are some challenges facing the medical sector in Charlotte?

Healthcare is rapidly evolving, and as the field continues to change, that affects local and regional care. Right now, one of the biggest challenges is the national shortage of nurses, physicians and key medical personnel, which is expected to become even more of a challenge over time.

How this affects us at Atrium Health is the challenge of training these professionals quickly, while also working with other businesses to figure out how to match workforce needs with the training capabilities in the community. www.capitalanalyticsassociates.com

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( ) major expansions in 2018 that they began working on last year. Atrium announced plans to spend over $1 billion over seven years across its Charlotte facilities, including investment in technology and upgrades that would position the healthcare provider for the next 50 years. In August, Atrium opened its new $115.2 million heart and vascular tower, a 163,000-squarefoot building in Cabarrus containing cardiac catheterization labs, electrophysiology labs, pre-andpost op care services, and a cardiovascular intensive care unit.

Atrium is a major employer in Charlotte. Previously known as Carolinas HealthCare System, it is the largest vertically integrated healthcare system in the Carolinas and has more than 900 care locations, 40 hospitals and 60,000 full and part-time staff. A longawaited merger with Navicent Health was finalized in January 2019, expanding the Atrium network into central and South Georgia.

Atrium is building another completely new $116 million, 150,000-square-foot hospital just outside of Mecklenburg County in neighboring Union County, the hospital announced in January. It will have 40 acute care beds, two operating rooms and 10 ER bays. When the state announced it would approve a maximum of 76 acute care beds and six operating rooms for Mecklenburg County in 2019, Atrium requested the entire allocation, while rival Novant requested one of the operating rooms and 20 of the acute care beds. The new hospital – to be named Atrium Health Union West – was approved by the state in February 2019.

And Novant, with a little help from a $7 million donation from Michael Jordan, began construction on two new clinics in 2019, scheduled to open later this year. The clinics will provide preventative healthcare to those who have little access to healthcare. The first opened in late 2019 on Freedom Drive and has 12 exam rooms and an X-ray room, is staffed with two doctors and one physician’s assistant and provides services such as physical therapy, behavioral health and social support.

But despite Atrium’s investment in the Charlotte market, in mid-2019 the hospital system threatened to pull its operations from North Carolina after a dispute over a $300 million bond refinancing effort.

The transaction was related to outstanding debt from Navicent after it was acquired. The Local Government Commission turned down Atrium’s request to refinance the debt because it did not want to jeopardize the state’s AAA bond rating. Ultimately, Atrium reaffirmed its commitment to the North Carolina market despite its request being denied.

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As the largest employer in Mecklenburg County, Atrium Health’s commitment to the region is a testament to the impact of the healthcare sector in the Charlotte metro region.

the market, bigger is not always better and now more and more small, independent facilities are emerging to meet the growing demand in Charlotte. In January 2019, more than 40 doctors announced plans to break away from Novant Health to join Holston Medical Group. The development came less than a year after 88 physicians left Atrium to form Tryon Medical Partners, which now serves 100,000 patients. One benefit of working for a larger healthcare system is the increased bargaining power they have with insurance companies, but a drawback is that they have less control over their own compensation and the way they practice medicine.

The forming of smaller practices generates more competition on the market and avoids consolidation, which is inevitably a good way to avoid monopolies.

But according to the Physicians Advocacy Institute, it is much rarer for physicians to break away and form an independent practice than it is for hospitals to buy out small practices. In fact, the percentage of physicians employed by hospitals nationwide increased from 25.8% in 2012 to 44% in 2018.

CONSTRUCTION HEALTH OVERVIEW

Bruce Cohen CEO OrthoCarolina

What are the drivers of OrthoCarolina’s success?

OrthoCarolina is a large, independent musculoskeletal group. What makes us different is that we are on the cutting edge, embracing value-based care, seeking to lower care costs for our patients, getting them to the right facilities and providers. Our No. 1 goal is to increase access. Historically, healthcare has lacked transparency, leading to poor access and communication and resulting in high costs.

Access and disparities Charlotte’s population is 872,506 as of 2018, with a median age of 34.7. Only about 190,000 people fall into the age category of 55 and over. Charlotte has a large foreign-born population and 15.8% of Charlotte residents were born outside the United States in 2017, higher than the proportion for Mecklenburg County, North Carolina and the U.S. average. Most of the foreign-born residents are from Mexico, India and China, which is why the most common languages after English are Spanish and Hindi. Charlotte’s poverty rate is 14.9%, with the largest demographics living in poverty being black females aged 25-34, despite the fact that there are 1.17 times more white residents in Charlotte than any other race or ethnicity.

According to reports by The Commonwealth Fund and the Healthy North Carolina 2030 report, North Carolina is lagging in cutting health disparities based on race. It was found that, although infant mortality is at its lowest level ever, black babies die at a much higher rate than white babies. In North Carolina, since 2013, uninsured rates between black and white ( )

How is OrthoCarolina bolstering accessibility from a business standpoint?

The transition from the traditional fee-for-service environment into an innovative, outside-the-box, value-based care program is complex. Physicians are resistant to change so empowering and engaging them, promoting the fact that this transition comes out of a true necessity and obligation is a lengthy process. We are on the forefront at the national level in that regard.

The first step is to educate people that this new option translates into better care and better access, providing different choices for our patients. We have to look at our patients as consumers, inject transparency over treatment costs and inform them what their options are. Wait times at doctors’ offices or hospitals that go for hours on end, for instance, are no longer acceptable.

How could your success translate to larger systems?

North Carolina is a Certificate of Need (CON) state, which has attracted powerful healthcare organizations that we work with closely. It is difficult from a regulatory standpoint because they oftentimes have much more control over the healthcare dollar than the rest of us do.

That is all changing, however, with much more ongoing collaboration than there used to be. The systems are open to it and Charlotte is a great example. Healthcare systems are starting to embrace and acknowledge the fact they have to look at costs and stress quality and state-of-the art facilities and offer all services. www.capitalanalyticsassociates.com

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Overall appeal Demographic changes are underpinning health sector growth, and creating both opportunities and challenges

Saad Ehtisham President – Novant Health Greater Charlotte & Novant Health Presbyterian Medical Center of educational institutions. We have relationships with many of these institutions.

What factors are shaping the growth of the healthcare sector in Charlotte?

Charlotte is an attractive city to live, learn, work, play and raise a family. We see it when we’re trying to recruit top talent from across the country in their desire to move here. Novant Health has been working diligently to build programs, which attract top talent and we’re proud of that. Take our Cancer Institute, for example, where we’re launching Phase 1 Clinical Trials this year and where, last year, we completed our first stem cell transplant. When we have Charlotte as an added draw, it helps us compete with institutes in larger markets for top talent. So I would say that Charlotte’s overall appeal, to industry and to people, has helped accelerate growth of the healthcare sector. North Carolina and Charlotte are also blessed with access to a multitude 114 | Invest: Charlotte 2020 | HEALTH

How have the medical needs of residents evolved in the last few years?

Charlotte is experiencing a bifurcation of age groups.

There are the millennials and younger generations, which have a high projected growth rate in the next 10 years.

The same is projected for the above-65 population, which is growing at a rate of 25 percent. Both segments want to access healthcare differently. The challenge, but also an opportunity, is to break the paradigm of how we deliver care to both; to be able to connect with the consumer from a digital space and to expand the access to services in our community. We have two different models for our population: digital and distributed service for those patients who do not want to travel a long distance to access healthcare. So, we’re investing heavily in our digital engagement and virtual visit capabilities and platforms.

We’re also focusing on bringing advanced care outside of city center – to communities from Huntersville to Matthews. Now, close to 80 percent of healthcare can be delivered through our community hospitals. If a consumer needs higher-level care, we can bring them to Center City and care for them at Presbyterian Medical Center. Since Novant Health is committed to ensuring our communities have access to care when and where they need it, we’ve had to align our growth strategy with Charlotte’s growth. That means we continue to keep a forward-looking focus on acquiring land in areas we see as fast-growing. Last year, we opened 45 clinics throughout the greater Charlotte market. It means we’re change ready. Take our joint-venture with GoHealth Urgent Care, for instance. It’s a new urgent care model we rolled out across the market to better meet not just the volume of patients we’re seeing, but who we’re seeing and how they prefer care to be delivered.

HEALTH OVERVIEW

The healthcare sector’s impact includes addressing food insecurity and sponsoring community programs through strong community ties.

( ) residents have remained the same, while the gap between Hispanics and whites has actually increased, despite a narrowing in the national numbers.

In a mapping effort by UNC Charlotte, the results showed that only 18% of Mecklenburg County’s housing units are within a half-mile of a Medicaid provider or free clinic and that the locations of the clinics do not match up with the least affluent areas. Medlink was set up in the early 2000s as a safety-net provider for the disadvantaged, providing a network of resources.

Member agencies include the Shifa Free Health Clinic, NC MedAssist, RAIN for those living with HIV, Project 658, with medical and dental clinic for the uninsured, and Charlotte Center for Legal Advocacy.

Mecklenburg County is third in terms of HIV diagnoses in the state, with 632 diagnoses per 100,000 people. Sexually transmitted infections were also high in 2018 in Mecklenburg County, at 916 cases per 100,000 people. In Mecklenburg County, again it is the African American community that is disproportionately affected, with 70% of new infections found among this demographic. Males account for 80% of new infections.

The risk of adult obesity and diabetes in Mecklenburg

County is relatively low compared to other counties in the state and the adult smoking rate is low.

However, racial disparities apply. Low income adults in Mecklenburg County are 1.6 times more likely to smoke than higher income adults and adults with lower education levels were 2.1 times as likely to smoke as college graduates. Similarly, African Americans in Mecklenburg were 3.4 times more likely to die of diabetes than white people.

Surprisingly, Charlotte’s metro area has greater access to outdoor, public recreation areas compared with a much lower proportion on the outskirts of the county. This suggests an increased risk of a sedentary lifestyle in some parts of Mecklenburg. This is compounded by the fact the main mode of transport is car alone, with most households owning two cars.

In 2018, 75.2% of Charlotte residents drove alone, 9.5% carpooled and 8.3% worked from home. Only 2.2% walked to work, 0.1% cycled and 3.2% used public transport. Additionally, less educated residents are 2.5 times more likely to report being physically inactive compared to those with a college degree.

In 2019, Charlotte’s homicide rate was at its highest in more than 10 years, leading Mecklenburg County www.capitalanalyticsassociates.com

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Stacy Nicholson President Levine Children’s Hospital

What new developments mark the past year for Levine Children’s Hospital?

We’ve had several new developments. The main way hospitals are compared to each other is via the US News’ rankings. US News ranks children’s hospitals in 10 areas and this year, we received seven shields for the first time. We use that mainly as a way to compare ourselves to the best places in the country so we can get better. Our children’s heart program and our neurology program are the highest ranked in the state of North Carolina. Our heart program is ranked No. 19 in the nation.

Public Health Director Gibbie Harris to declare a public health crisis. Just a small area, measuring fewer than 2 miles squared, see 8% of all violent crime. And males are five times more likely to die of homicide in Mecklenburg County than females.

Her recommendations included a neighborhood pilot program and seeking involvement of churches to create faith-based hubs. The proposals drew criticism from detractors who said the plan was not an appropriate response to a crisis. Another proposal was a $2 million violence interrupter pilot program, which would identify high-risk individuals through community engagement.

Policy updates Perhaps the most important policy decision in the last five years nationwide has centered around the Affordable Care Act, and the Charlotte MSA is no less affected by the outcome. In late 2019, a federal appeals court ruled that the requirement to purchase healthcare mandated by the ACA was unconstitutional, and now a lower court must decide whether to overturn the entire

What partnerships are helping the hospital to improve the quality of its services?

We are very excited about our new partnership with Wake Forest University. They will gain access to our business acumen from running 50 hospitals as well as our very large patient availability for clinical trials.

Charlotte also does not have a medical school. This will solve that. Within a handful of years, maybe by 2022, we will have a medical school in Charlotte, which will be a second campus for Wake Forest. That will enhance our ability to train more doctors and to conduct research.

How does the hospital and Atrium, its parent, provide community assistance in the area?

In addition to Levine Children’s Hospital, we have about 150 pediatricians in practices scattered across 11 counties in North Carolina and also in York County, South Carolina. They do great primary care pediatric preventive medicine, at the same high level regardless if it is a practice in South Charlotte, which is 98% commercial, where the parents have multiple university degrees and the children go to private schools, or in areas where the public is 85% on Medicaid. Atrium Health’s mission is health, hope and healing for all. As a company, we give away over $2 billion every year in care.

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Technological advancements and shifting consumer preferences are among the factors driving innovation in healthcare.

HEALTH OVERVIEW

ACA. With all appeals considered, the case is expected to reach the Supreme Court by the end of the year and the impacts on North Carolina could be extensive.

Over 500,000 North Carolina residents obtain coverage through the state exchange, and the number of uninsured has declined by 30% in the state due to a number of factors, one of which is that the ACA outlaws denial of coverage for those with pre-existing conditions. Around 1.7 million statewide fall into this category and if the ACA is overruled, it could cause a shift away from value-based care, which is decreasing premiums. The three ACA insurers for North Carolina dropped their premiums by 5.5%, 4.6% and 11.1%, respectively, for 2020 plans compared with 2019.

Charlotte-based hospital giant Atrium came up against tricky legislation in 2018 that threatened its ambitious expansion plans. The Municipal Hospital Act requires that North Carolina public hospitals are required to enter into a partnership with hospitals in another state if they wish to expand into that state due to competition concerns. Although the repeal of this clause was contained in House Bill 382, passed in

May 2018, it was removed prior to passage and Atrium changed tack and instead pursued its expansion into Georgia through an acquisition of five-hospital network Navicent, finalized at the beginning of 2019.

And in August, state employees found themselves on the wrong end of state health insurance policies, as major hospital systems in Charlotte, Raleigh and elsewhere in North Carolina rejected a new proposal to remain in-network providers in the State Health Plan. The dispute revolves around the ability to set prices, and while State Treasurer Dale Folwell wanted to fix costs against Medicare rates, hospitals refused to sign the agreement as it would remove their ability to negotiate prices.

The State Health Plan covers around 39,000 teachers and other state workers in Mecklenburg County.

House Bill 184 moves to create a committee to assess the sustainability of the plan but after passing its first reading in the Senate in April, its second reading stalled. In August, the treasurer agreed to allow Atrium, Novant and Duke to remain on their prior plans until clarifying legislation is passed.

Community & public health In mental healthcare, providers saw on average of 405 patients in 2018, down 6.5% from the year before. But 48.5% of adults with mental health illnesses were able to access mental health services, which is relatively high considering the most successful state in mental health services access is Vermont, with 56.4%. North Carolina is also 14th in the country in prevalence of adults with serious mental health conditions.

The county is targeting mental health in a preventive way, with new mental health priorities targeted at children and teenagers. In Mecklenburg County, it is estimated that 26,000 children are battling mental illness but the county has a “severe shortage� of practicing child and adolescent psychiatrists, according to the American Academy of Child and Adolescent Psychiatry. The number of students screened for suicide risk by the school board jumped to around 3,000 in 2018 from 2,100 in 2017. But this January, after securing $5.6 million in county funding, Charlotte-Mecklenburg Schools (CMS) hired 25 new social workers for the 2019-2020 academic year and is aiming to hire 30 more mental health professionals.

And it is not only young people attracting mental health funding. In addition, the county prioritized mental health in its budget for fiscal year 2020, allocating $6.8 million to mental health screenings, supportive housing, foster care and CMS. North Carolina is one of the states with the lowest www.capitalanalyticsassociates.com

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levels of chronic homelessness, with 994 individuals in 2017 compared with over 35,000 in California. Toward the north of the state, there are high levels of food insecurity, with a cluster of counties in the northeast reporting levels of around 25%. But Mecklenburg County recorded a food insecurity rate of 16.4%, among the lowest rates in the state.

Support for these vulnerable groups ran into a hurdle in 2018 when North Carolina’s Department of Health and Human Services (DHHS) was forced to take over control of Charlotte-based health group Cardinal Innovations.

The company, which is the largest Local Management Entity (LME) or Managed Care Organization (MCO) in North Carolina, is tasked with overseeing treatment for those with mental health issues, developmental disabilities and substance abuse problems. After a 2017 audit the company was found to be misappropriating funds while it had a registered 2.1 million Medicaid recipients. As well as taking over Cardinal’s operations, the DHHS awarded five health insurance organizations contracts totaling $6 billion a year to provide healthcare under a privatized state Medicaid program that is being phased in, a process that started in November.

Insurance Over 87% of the Charlotte population has health insurance coverage, with 52.1% on employee plans, 22.15% on Medicaid and Medicare and 12% on nongroup plans. More than 1 million North Carolinians – just over 10% – did not have any form of health insurance in 2018, giving it the ninth-highest uninsured rate in the United States. Lack of health insurance is a massive barrier to accessing care and the Hispanic/Latino demographic in Mecklenburg County has one of the highest uninsured rates at five times more likely to be uninsured than white people. In 2016, the last year for which data was available, 16.2% of adults reported that they had not seen a doctor in the last 12 months due to cost, giving North Carolina the seventh-most prevalent state where patients made this claim.

North Carolinians spend a greater share of their income on healthcare than the national average according to The Commonwealth Fund, at 14% of the state’s median income compared with the national average of 11.5%. The research showed that premiums and deductibles had grown faster than income.

Average deductibles in North Carolina are $3,325, the report says, or 5.7% of median income, which places most families in the “underinsured” category. The average premium in North Carolina for an employeesponsored family plan was $18,211 in 2018, up from just over $12,000 in 2008.

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The biggest insurer in the state is Blue Cross, which has 3.7 million patients and North Carolina revenues of $9.9 billion in 2018. In 2019, it launched a joint program with five of the state’s largest healthcare systems: Duke Health, UNC Health, WakeMed Health, Cone Health and Wake Forest Baptist Health. It also has multiyear plans with titans Atrium and Novant. For 2020 insurance plans bought on the exchange, Blue Cross reduced premiums by 5.5%, Cigna reduced rates by 4.6%, Ambetter reduced rates by 11.1% and Bright Health was added to ACA health coverage in North Carolina. The average benchmark plan premium in North Carolina’s exchange is 10% lower in 2020 than it was in 2019.

In 2018, in North Carolina, 1,417 patients were seen by primary care physicians – lower than South Carolina

Even before the COVID-19 pandemic, North Carolina was facilitating affordable insurance rates for residents.

HEALTH OVERVIEW

Armando Chardiet President – Atrium Health Foundation

The Atrium Health Foundation is the philanthropic arm of Atrium Health. Our goal is to engage the community and inspire transformational giving for Atrium Health. There are over $300 million of assets associated with the foundation, all of which are focused on supporting Atrium Health’s different needs. Our focus is to raise philanthropic support for capital projects, research endeavors, education and community initiatives. We partner with different corporations and other foundations to provide healthcare services in areas of need in Charlotte or throughout our footprint.

and Georgia but higher than Tennessee and Virginia.

Dentists in the state saw an average of 1,469 patients, which was almost on par with most neighboring states.

Total per capita spending on healthcare in North Carolina was $7,264 in 2014, the latest year for which data was available. Private spending, Medicare and Medicaid spending have all increased exponentially since 1991. In 2014, Medicare spending reached $10,260, Medicaid spending reached $7,225 and private insurance spending reached $3,859 per enrollee.

North Carolina authorities are trying to expand Medicare even further. In 2019, Gov. Cooper refused to sign a state budget that did not include expansion and, even though this was vetoed by House Republicans, House Bill 655 was introduced to expand Medicaid to those who earn too much to qualify but too little to access subsidies on the online marketplace. The Health Care for Working Families Act would cover those earning between 50 and 133 percent of the federal poverty level, allowing them to pay small premiums and copayments in order to receive coverage. In March, as a result of the COVID-19 pandemic, federal waivers were granted for North Carolina’s Medicaid system that will end upon termination of the public health emergency.

Research and education There are 28 colleges and universities and 18 community colleges and technical institutes in the Charlotte region. In 2015, the most common concentration for bachelor’s degree recipients was registered nursing, which recorded 359 graduates.

Among total healthcare concentrations, 553 degrees were awarded, including for respiratory care therapy, general public health, athletic trainers and community health services. One in nine workers in the Charlotte www.capitalanalyticsassociates.com

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area is employed in healthcare or life sciences. With the low unemployment rate, Charlotte hospitals know they need to provide attractive incentives to compete.

One example is Atrium increasing its minimum wage to $13.50 per hour compared with North Carolina’s requirement of $7.25.

Part of the success of Charlotte’s health sector is the private sector’s close allegiance to academia. In 2019, Atrium announced plans to build a second campus for the Wake Forest School of Medicine, the school’s first campus in Charlotte. The medical school will hire new faculty and use healthcare professionals within the Atrium hospital system. This is an extension of an MoU signed in April to combine Atrium with Wake Forest Baptist and expand the associated university’s footprint. And in November, Premier Inc., a healthcare improvement company, announced the addition of Virginia Commonwealth University Health System to its network. VCU will be able to access Premier’s supply chain services, including its group purchasing organization and advanced analytics.

Charlotte is also looking at the gap between education and the private sector as it foments a healthcare startup culture. StartCharlotte lists healthcare as a strategic industry for startup activity.

In June, Atrium, Cleveland Clinic and California-based MemorialCare Innovation Fund invested $3 million in digital prescription service Xealth’s round of Series A financing. Unyq, a company that prints 3D orthotic braces chose Charlotte for its East Coast headquarters and MedChat offers a secure text-based chat system for providers in Boston, San Francisco and Raleigh. This makes Charlotte a hotbed for VC activity – in fact two of the 14 companies listed on the Charlotte Angel Fund site and three of the 40 listed on the Venture South site are in Charlotte.

Technology Premier Inc is a major player in the Charlotte market and is not just setting down roots in education but also is becoming known for its aggressive acquisition strategy.

In early 2020, Premier acquired two New York-based healthcare businesses in a $291.5 million deal. Acurity Inc. and Nexera Inc. were subsidiaries of the Greater New York Hospital Association and provide group purchasing services and hospital financial consulting.

The move comes after Premier acquired Stanson Health in late 2018 for $52.5 million and Medpricer in 2019 for $35 million. Stanson offers solutions that provide near real-time authorizations and Medpricer provides analytical software for hospitals.

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Across Charlotte, educational institutions are expanding their curriculums to train the next generation of healthcare professionals.

institutions all over the world race to implement the latest in health technology, augmented reality and telemedicine to increase accessibility, reliability, accuracy and eliminate human error. Hospitals in Charlotte are even using geo-mapping technologies to pinpoint the social disparities that impact healthcare in a true demonstration of preventive healthcare. Atrium is integrating Social Determinants of Health (SDOH) data to create a Community Health Improvement Study (CHIS). The data can identify neighborhoods with higher obesity rates, higher risk of diabetes and anticipate readmissions, saving considerable time and money for the hospital system.

COVID-19 As COVID-19 concerns swept across the world, Charlotte’s health community was no exception. But with 25 to 35% of healthcare providers expected to be absent from work due to illness, the community

HEALTH OVERVIEW

And faculty members and students at North Carolina universities stepped up to design and print face shields with 3-D printers.

Looking ahead Healthcare in Charlotte and Mecklenburg County has come a long way but it still has a long way to go. Racial disparities, gender-based disparities and disadvantages for low-income families still exist. There are problems for those who have private insurance too. Insurance plans’ yearly out-of-pocket maximums apply only if patients stay in network, which can be almost impossible to comply with if a patient is incapacitated or unconscious during a medical emergency. Hospitals often charge the maximum amount in these scenarios, and pass the buck to the insurance company, which returns the favor. Failure

There are 28 colleges and universities and 18 community colleges in the Charlotte region began pulling together throughout the crisis to help essential workers. Carolina Panthers running back Christian McCaffrey launched the 22 and You campaign to encourage donations to healthcare workers. The Greater Charlotte YMCA offered free childcare services to healthcare workers and provided breakfast and lunch for participants through CMS Child Nutrition Services. And Aria Designs, a furniture maker in Lenoir, reached out through its global supply chain to procure desperately needed N95 masks for health workers.

Not only is the virus sparking philanthropy in Charlotte, but also innovation. Carolina Speech Connections began working with patients whose insurance does not currently cover teletherapy. An alliance between Walgreens and Novant Health in North Carolina formed in October seems to be paying off, as Novant Health patients were able to receive their prescriptions at the acquired Walgreens pharmacy locations or any neighborhood Walgreens stores.

to pay these bills can result in impact to credit scores and even bankruptcy for the patient. North Carolina has made efforts to help people in this situation and offers partial protections but many of the insurance policies are governed by federal law, meaning a federal solution is required.

But Mecklenburg County authorities are taking a proactive approach to healthcare. In 2017, the county laid out public health priorities after carrying out a Community Health Assessment (CHA). It found the highest priorities should be mental health, access to care, chronic disease and violence prevention. And the Healthy North Carolina 2030 plan took around one year to create, and now the focus is on state and local five-year Health Improvement Plans to narrow health disparities. With the Medicaid expansion debate set to rage on after the COVID-19 crisis ends, it remains to be seen whether Gov. Cooper will succeed in his efforts during this term. www.capitalanalyticsassociates.com

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Education: Education in Charlotte is a product of the booming industries around the metro area. Not only is the city a banking and finance hub, but the surrounding counties have flourishing agriculture and manufacturing industries, which all demand a strong pipeline of human capital. The region’s educational institutions are determined to deliver, COVID-19 notwithstanding.

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Course adjustment: COVID-19 is reshaping the educational landscape but the underpinning foundation in Charlotte remains strong Charlotte’s ability to provide the right talent is a major reason so many heavy hitters have set up operations in the greater Charlotte area, including Bank of America, Amazon, Honeywell, Lending Tree and IBM. At all levels, the education system is determined to shape the talent that businesses demand today, and into the future.

Although the COVID-19 pandemic forced a radical transformation on the sector, which alongside healthcare and hospitality were among the hardest-hit from the outbreak, the changes could help support even greater development. Elements of the pivot to online and distance learning are likely to become permanent, having opened the door to greater access for students from all economic strata.

To be sure, there will continue to be hurdles to overcome. By mid-April, Gov. Cooper was preparing to loosen restrictions and open up the North Carolina economy. How that might look for the education system remained uncertain. The stay-at-home measure had been extended into May. In the meantime, students at all levels of education continued to learn online, although those efforts were hampered by the disparity in access to technology. When and how the system comes back to 124 | Invest: Charlotte 2020 | EDUCATION

some semblance of normality are unknown, but most experts agree it will look very different.

But most experts see a strong system in the region that is bolstered by diversity, a key that has helped Charlotte attract businesses. “North Carolina has a really strong higher education system. It has an impressive, globally renowned public education system, as well as great private institutions. It offers a diverse, and rich environment, for students from all over the world. I view the higher education system in North Carolina as a talent draw to the region. As the economy recovered, it diversified, creating more opportunities for drawing talent into the region. Between Charlotte and Research Triangle Park, there are pretty good opportunities,” said Carol Quillen, president of Davidson College, in an interview with Invest:.

Landscape As Charlotte attracts more and more private companies, it is also attracting more migration. One of the reasons for this influx of residents is the Research Triangle, which is the area encompassed by North Carolina State University, Duke University and University of North Carolina at Chapel Hill. But Charlotte’s ( )

EDUCATION INTERVIEW

Visibility Fresh strategy shines a light on ‘ best-kept secret in Charlotte’

Philip Dubois Former Chancellor – University of North Carolina – Charlotte

What strategies have you implemented to increase the school’s visibility in the Charlotte area?

I have always viewed the business community and the nonprofit community as incredible resources for the university because they are a source of employment for our graduates, an opportunity for internships for our students, and they have research challenges that the university can help them with. Our institutional mission states that we are committed to helping the region solve a variety of problems, whether, in the words of our mission statement, they are “cultural, economic, educational, environmental, health or social” in nature. I felt that we weren’t taking full advantage of being in Charlotte. We did seem to be the best-kept secret in Charlotte.

The first thing I did was to create a university relations and community affairs division. The second strategy was for myself to become physically visible in the city’s activities, so I ended up on most of the economic development boards. We also invested a good deal in branding and marketing, which ended up producing the slogan, “Stake Your Claim,” reflecting the fact that the community needed to own the university in the same way that the university was a partner to the city.

That branding was launched over a decade ago and it has recently been updated with the tag, “We Are All Niners.” A fourth strategy was to connect the university physically, and the opportunity arose with the light rail. We decided to bring the light rail to the campus because unless it actually came on the physical campus and not merely adjacent on a city street, the federal government would not provide the matching 50% funds for construction. The construction of the Center City building nine years ago was another large factor.

What has helped the university increase its enrollment alongside the growth of the city?

I have always thought that Charlotte was underresourced in terms of higher education. When I arrived here, we enrolled 20,700 students. You could add Queens University, Davidson College, Johnson C. Smith University, and several others and we probably still would have been serving 30,000 students in terms of total educational horsepower, and we were the only public research university. We completed a couple of enrollment studies and concluded that we could be 35,000 students strong by 2020 without working too hard. But, because of the Great Recession, we had to slow our enrollment growth as we lost $55 million in recurring appropriations during that time. We couldn’t take all the students without the additional resources.

But once we were past the recession, we invested in our enrollment management, established a big, ambitious, gaudy goal, and began to grow rapidly again. www.capitalanalyticsassociates.com

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Charlotte’s robust education sector has grown and diversified to accommodate the educational needs of the growing population.

( ) education system is like many others in that it has to battle for funding. In May 2019, thousands of North Carolina teachers and supporters marched to the state legislature demanding increased funding for public education. At the end of the year, Charlotte voted down a quarter-cent sales tax referendum that would raise $8 million in school funding. But in a mammoth legal battle that has been going on since the 1990s, WestEd, a nonprofit, testified that state funding is inadequate and that it has left performance lagging in North Carolina’s public schools.

The region’s 14 major universities awarded almost 13,000 degrees in 2017, the overwhelming majority coming from University of North Carolina at Charlotte, which awarded 55.1% of degrees, followed by Central Piedmont Community College, awarding 2,997 degrees.

Other significant universities in the city include Queens University of Charlotte, Johnson & Wales University, Brightwood College and the Art Institute of Charlotte.

The city has a range of private and public universities.

According to U.S. News, the average U.S. tuition and fees for in-state students at public institutions in 20192020 was $10,116 compared with $22,577 for out of state students. The average cost at private institutions totaled $36,801.

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colleges and universities are competing with a variety of funding programs and value-added elements. Catawba College, for example, believes that the student’s experience makes the cost worthwhile. “We find that our students are price-sensitive, so we have to ensure that we show our value through all the different experiences Catawba has to offer and how well we prepare our students, so that it’s worth that little bit extra for them,” said former President Brien Lewis. “The opportunities are to be cutting-edge in specific areas, such as data analytics. It’s a matter of capitalizing and investing further in what’s already in Charlotte to create an environment where people know we’re a leader in that area.”

Business goals Given the greater Charlotte area’s attractiveness for advanced manufacturing companies, it is only logical that there is a focus on STEM education. In November, three Charlotte metro schools earned a place in the top 500 STEM schools in America in a Newsweek ranking. Ardrey Kell High School was ranked 404, Lake Norman Charter School was 453 and Providence High School took 473rd position. This February, the Central Intercollegiate Athletic Association (CIAA) held Education Day, inviting NASA’s Minority University Research and Education Project (MUREP) team to host

EDUCATION OVERVIEW

an educational event. Between the middle school and in 2018, Charlotte entrepreneur Abi Olukeye started high-school programs, NASA provided STEM outreach Smart Girls HQ, which exposes girls aged 3 to 12 to to more than 6,000 Charlotte students.

STEM content. The company has partnered with UNC The private sector is also highly motivated to Charlotte’s Computing and Informatics Department promote STEM in schools to feed their talent pipelines. and predicts that Charlotte will only see more and more The annual STEM expo held at the Charlotte Motor companies with money to invest in tech opportunities, Speedway will go ahead on October 9, 2020 if measures for which they will need scientists, tech specialists, targeting the COVID-19 pandemic allow it. The expo engineers and mathematicians. gives students the opportunity to take part in handsThis March, the superintendent of Charlotteon demonstrations. And the Carolina Fintech Hub is Mecklenburg Schools, Earnest Winston, presented a reaching out to Charlotte-Mecklenburg Schools (CMS) $538-million budget from Mecklenburg County for seniors to offer 20 people the chance of a lifetime to 2020-21, a $37 million increase on the year. The budget be trained in STEM through an includes plans to allocate $11.7 apprenticeship designed to help million for employee raises, them create gaming content. increasing the minimum wage Multinational Honeywell also to $14.11 per hour. Around $12 opened the Explore More Future million is to be allocated to Lab at the end of 2019, encouraging student growth and extra space, $9 experiments for STEM learning. million to enrollment growth in And in a time when online charter schools and $2.1 million education is more important than for maintenance and operating ever, Businessolver is teaming up costs. The funding decision will with EVERFI to provide an online be made by the Mecklenburg STEM education program for Board of County Commissioners Brien Lewis, Catawba College middle schools across a handful this June. of key markets, one of which is This comes after some funding Charlotte. setbacks for CMS. In 2017, $922 million in school bonds Home improvement giant Lowe’s seems confident were approved for the construction of three new high that Charlotte can provide the human capital it needs for schools but this February, CMS drastically scaled 2,000 new tech jobs. The global technology center will back these plans without explanation. The original initially hire 400 software and infrastructure engineers, plan calledfor two new 125-classroom schools to be data scientists, analysts, architects, user experience built as well as a replacement for the West Charlotte (UX) and user interface (UI) professionals, and artificial High campus, also with 125 classrooms and each with intelligence and machine learning engineers. And an investment of $110 million. While capacity is still

The opportunities (for students) are to be cutting-edge in specific areas, like data analytics.

Rhett Brown President Wingate University

What is Wingate University doing to boost student enrollment ?

I have been at Wingate University almost continuously since 1986, either as a student or staff member. I worked closely with my predecessor who had been at the university for 23 years. Coming in as president, I thought we needed to scale and grow our student body. As a result, we have been able to drive more resources to the educational experience without losing the personal nature that characterizes the university. When I first took this position, we were recruiting anywhere from 650 to 725 new first-year students. In 2017, we set a goal to increase recruitment to around 725 to 950 new first-year students. That year, we finished north of 1,100 new first-year students. At the moment, the numbers say that we are one of the fastest-growing colleges in North Carolina, including the public four-year institutions. What we are offering is resonating with prospective students and parents.

Now, it is necessary for the university to scale up our systems to support the growing student population.”

Which programs are attrating the most interest among students?

Anything related to pre-health science is very popular among the student body. We offer physical, occupational therapy and nursing, as well as a physician assistant and pharmacy career tracks. As a result, we have a large number of students who want to do their undergraduate experience at the university and move on to one of our health science graduate schools upon completion.

Our education and business schools have a range of programs, from undergraduate to master’s programs.

Additionally, we have an established relationship with South Piedmont Community College, the local community college, and are mutually aligning our courses so that students can have multiple options and stack credentials, certifications and degrees, no matter where they start.. We plan to become the preeminent provider of healthcare education in the region.

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listed as 2,500 students, two of the buildings have since been described as 100-classroom buildings, which has proven controversial among voters.

Another headache for the school district has been its omission from emergency funds due to the COVID-19 outbreak. Mecklenburg County will be the only one in the state to be excluded from accessing half of a $25-million aid package as it falls outside the “lowwealth” funding bracket. The other half of the funds will be awarded based on enrollment, meaning Mecklenburg County will access $2.4 million – the second-highest allocation. Missing out on half the grant means that Mecklenburg County and CMS were awarded the lowest per-pupil funding in the state, a decision that was met with outrage from the county.

Higher education U.S. universities hold a prominent position in the U.S. News and World Report’s global rankings of best universities in 2020. Of the 1,500 schools evaluated globally on academic research and reputation, 249 schools in the United States made the ranking, with nine from North Carolina. University of North Carolina at Charlotte, Charlotte’s largest higher education institution and the fastest-growing university in the state system, was ranked 185 in the United States and 815 globally. There is a wide variety of higher education institutions in Charlotte. Central Piedmont Community College is the largest community college in North Carolina or South Carolina while Winthrop University Research Park is a large research and corporate park located in the city.

In 2020, Niche ranked the best colleges in the Charlotte area based on academic achievements, admissions, financial data and student lifestyle information, with Davidson College coming first. The cost to attend the college is $26,565 and it has a 19% acceptance rate with a SAT requirement of 1290-1450. Following close behind was UNC Charlotte, with a net price of $14,987 and an acceptance rate of 67%, with Winthrop University rounding out the Top 3, with a net price of $17,903 and acceptance rate of 67%.

Last November at Queens University of Charlotte, Charlotte Talks host Mike Collins hosted a panel discussion on the main challenges facing higher education students, including affordability. The panel agreed that there is a balance to be struck because, although institutions want to offer affordable education, they also need to be competitive in attracting prestigious faculty to provide a quality education, which often comes in the form of a paycheck. About two-thirds of UNC Charlotte students access financial aid and

CONSTRUCTION EDUCATION OVERVIEW

about the same proportion of graduates will have debt averaging $25,000. Even at Central Piedmont where a two-year credential can cost less than $10,000, this is not always affordable to many, the panel recognized.

However, there are innovative ways the universities keep costs low, including government funding, fundraising from private resources, efficiency. In 2020, for example, Queens University launched the Queens Commitment $10,000 scholarship for high-school graduates from Mecklenburg County. “Affordability will remain a challenge that we are all engaged in. The student debt problem nationally needs more granular analysis so that we can try to isolate where specific challenges lie and where students are defaulting. It is one of those problems where talking about it as if it was the same in all circumstances is not helpful,” Davidson College’s Quillen told Invest:. “We want equal opportunity to be made real in the state. We have policies that are designed to make sure our doors are open to talent.

Talented students from all financial backgrounds can come to Davidson, or our state, to receive the education that they want.”

A big part of the problem is that the higher education sector across the United States is chronically underfunded, according to an op-ed piece in the Charlotte Observer by Tom Ross, president of the UNC system, meaning much of the burden for financing quality education lays squarely on the shoulders of students and their families. The United States spends about 30% less per student than it did 25 years ago.

UNC enrols more than 220,000 students, employs 60,000 people – more than any private company in North Carolina – and has 16 campuses, which attract more than $1.2 billion in research grants each year. The university’s budget is $9 billion, with $2.3 billion coming from the state, creating $27.9 billion in added economic value for the state. According to UNC Charlotte’s Dean Philip Dubois, one reason why Amazon did not select Charlotte for its HQ2 warehouse was because of the lack of a large research university with enrollment of 50,000 or more.

In the absence of enough government funding, the private sector is stepping up to feed their pipelines.

In April 2019, hospital giant Atrium announced it was partnering with Wake Forest Baptist Health and Wake Forest University to build Charlotte’s first fouryear medical school. The university’s involvement in the deal would reportedly include granting diplomas for the Charlotte medical school. Major financial services company Barings also announced a threeyear partnership with Davidson College to provide internships and seminars, career recruitment and

Daniel Lugo President Queens University of Charlotte

How are you working to bridge the talent gap for the Charlotte market?

Those with strong technical skills, with an understanding of how to use data in powerful ways, how to visualize data and how to use data to predict outcomes are going to have huge advantages. This is perfect for us, because we actually have the type of education that is going to perpetually be valuable: liberal arts training and the ability to think critically, to work collaboratively and to look at things with an interdisciplinary focus.

Those are the evergreen talents.

There’s an adage that everything that can be done by a robot, and I would add AI, eventually will be done by a robot or an AI. We are actually training folks with hybrid skills. We want to be in a position to have retained that general education of the liberal arts, but to look at pedagogy and curriculum to empower our folks to understand coding and data analytics, to look at this whole 21st century and technology in a more robust way.

How are you tailoring your curricula to the Charlotte job market’s specific needs?

On the business side, we have historically been this banking center, the second-largest banking capital of the United States, but that is broadening, even on the finance side. What is going on with Fintech is really exciting, what is going on with healthcare, what is going on with energy is really exciting here. The most exciting part is the growth of the technology sector. Charlotte is a hotbed for technology right now. The city and area is creating tech jobs at double the national rate and we want to be at the forefront of working with those businesses.

Charlotte is tackling really important challenges and one is related to economic mobility. Unfortunately, in comparison with similar cities, Charlotte finds itself in a position where economic mobility is a challenge for communities that have been here for a really long time.

We need to be a partner in studying and understanding that. Nearly a third of our students are the first in their families to attend college. www.capitalanalyticsassociates.com

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training programs and allow students and faculty to work on Barings research projects. And North Carolina Community College System was instrumental in efforts that made Microsoft choose Mecklenburg County for a $230 million investment that will create 430 new jobs.

K-12 In September, 20 schools in the county were awarded A grades by the state – 17 from the CMS system and three charter schools. But 42 CMS schools and seven charter schools were ranked on the low-performing side by the survey. In a Niche ranking of high schools, CMS recorded the highest-performing schools, with eight in the Top 25 and the Ardrey Kell High School in Charlotte ranked No. 1. The No. 1 public elementary and middle school in the Charlotte area was Metrolina Regional Scholars Academy, a charter school. Only one CMS school was featured on the middle school ranking and none featured in the elementary ranking.

But Charlotte’s public-school system produces some compelling results. In 2019, it was the top urban district in the country for fourth-grade reading and math, as well as in eighth-grade math. It was second in eighth-grade reading, according to the National

Assessment of Educational Progress (NAEP). Despite this, Mecklenburg County is a big advocate of charter schools. In 2018, North Carolina passed House Bill 514, which allows some of Mecklenburg County’s suburban towns to create municipal charter schools. And the application process for chosen schools is intense, with many applying a year in advance for the most prestigious Montessori schools. Other charter and magnet schools operate a lottery system, some of which use diversity allocations, while some private schools require a deposit by January or February. Meanwhile, CMS enrollment has flatlined.

There are already 25 charter schools in the county, more than any other county in the state and 2019 saw enrollment grow even further, straining budget allocations. For 2020, the county’s charter school enrollment grew to 21,028, up by 1,644 on the year and almost 100 students more than the county had budgeted for, resulting in an additional $6.2 million being allocated to charter schools and removed from public school budgets. At the same time, CMS school enrollment slumped to 146,888, down almost 500 students on the year. CMS accounts for 74.6% of all students, charter schools 10.7%, private schools 9.4% and home-schooled students 5.2%. ( )

EDUCATION INTERVIEW

Growth impact Charlotte’s economic expansion has helped spurred Central Peidmont Community College’s growth to six campuses

Kandi Deitemeyer President – Central Piedmont Community College How has the growth of the Charlotte Metro Area impacted the college?

Over the last few years, Central Piedmont Community College’s growth pattern has been based on the fact that Charlotte is a growing and thriving city. The college has expanded to six campuses, providing a lot of coverage in Mecklenburg County. With more than 300 programs available, we want to provide the right kinds of programs and opportunities for citizens to acquire skills or to get re-trained. Charlotte is growing quickly. It is also becoming known as a headquarters city and for its entrepreneurial opportunities. We wanted to be both a centerpiece of the city’s growth and to complement it.

How has the economy’s diversification impacted the programs the college offers?

There are a number of sectors that we have to continue to keep our eyes on. Healthcare is a big one with the growth of Atrium Health and Novant Health in the region. Construction trades have been booming for a number of years. But trying to train enough talent to meet the available construction jobs has been both an opportunity and a challenge. There are probably more jobs than the number of people we can provide, not just in construction, but in complementary trades. We have to keep our finger on the pulse of this industry and try to stay ahead of it. Advanced manufacturing is another area of growth for the college, much of which is due to the increase in apprenticeship programs we have with companies like Siemens,Tesla and Cummins. The college is well-known as a workforce-focused entity.

However, 60 percent of our students transfer to four year institutions, mainly UNC Charlotte. We have to think about programs that are going to put students right into the job market, as well as continue to recognize that our institution is very much a transfer institution.

How is the college recruiting students in such a competitive landscape for higher education?

Our Opportunity Scholarship program has been very successful. The program allows students from the most impact local high schools in the area to come to the college with full tuition paid. It provides a mentor, as well as a bridge program that teaches these students how to navigate the higher education space. It is not just about removing the financial barriers, but also teaching students how to build social capital. Our first two-year cohort graduated in May 2019, with program retention well beyond that of any of our other initiatives. The 49erNext program is our partnership with UNC Charlotte and has been very successful as well. We are able to co-admit students for both the college and university. www.capitalanalyticsassociates.com

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Cheryl Richards Former CEO & Regional Dean – Northeastern University Charlotte

We have seen the growth in micro credentials and noncredit programs aimed at upskilling and reskilling employees. Employers need talent who can fill critical skills gaps, but they need them upskilled or reskilled quickly, and they may not necessarily require a master’s degree. We see this especially in tech fields where employers need people with a combination of tech skills, leadership ability and business acumen. We have been working closely with a number of the top companies in Charlotte and across the U.S. to help them upskill and reskill their existing talent with new skills in leadership, project management, cyber security and data analytics, to name a few.

( ) Arguably the most talked about subject when it comes to K-12 is teacher salaries and 2019 was a year of struggle for educators fighting to secure a raise.

Mecklenburg County commissioners awarded CMS an extra $8 million to boost teacher pay for the 2019-20 school year but by August the increase in salary had not materialized. In a special meeting in November, the Charlotte Mecklenburg Board of Education approved salary increases for school staff as well as the addition of 72 student support positions across the district. It was announced the payments would be retroactive to the start of the budget year in July.

Workforce preparation Higher education, of course, is not the only option for high-school graduates. The construction industry was one of the casualties of the last recession, so the industry took it upon itself to address the shortfall.

From 2006 through 2011, the construction industry lost 2.3 million jobs in the United States. A study by Associated General Contractors of America (AGCA) found that 81% of construction firms across the country are struggling to find skilled workers and this is the biggest concern for 75% of respondents. The recordlow unemployment rate has exacerbated the shortage of skilled workers in Charlotte. In February preCOVID-19, North Carolina’s jobless rate was just 3.6% and Charlotte remained one of the fastest-growing job markets in the country. It is a jobseeker’s market, and this presents a huge problem for employers in finding the right talent for their businesses and retaining it.

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Central Piedmont Community College. Both are twoyear public schools but differ dramatically in size, with the College of Health Sciences enrolling 444 in 2017 and Central Piedmont College enrolling over 19,000. In-state fees for Piedmont are as low as $2,792 while the College of Health Sciences charges $14,616.

But 100% first-year students at the College of Health Sciences receive financial aid compared with just 60% at Piedmont.

Through the NC Works Career Center, the county is addressing the demographic that drops out of education after high school and redirecting them toward vocational training. Gov. Cooper introduced the Finish Line grant program, pulling $7 million from the federal Workforce Innovation and Opportunity Act fund to provide up to $1,000 per student per semester for workforce training programs. As of January, over 3,000 grants were awarded across all 58 of North Carolina’s community colleges. And through the Workforce Innovation & Opportunity Act (WIOA), Charlotte looks to provide support to those who want to obtain training, apprenticeships and certifications.

Through the program, Charlotte Works liaises with businesses to ascertain human capital needs and provides advice on accessing grants that can help people obtain the necessary qualifications for highquality jobs.

Higher education institutions are also collaborating with the private sector to ensure a talent pipeline that remains robust. Universities and colleges recognize both the areas of strength in the Charlotte economy and the emerging trends that will shape the region moving forward. “We are located in the second-largest banking

EDUCATION OVERVIEW

and finance center in the country, and this provides our students with the opportunity to intern with many of the best companies in the world. Our largest major is Business. Finance, Economics, and Accounting are also among our other highly demanded majors, as well as international business. Over ninety percent of our students have jobs within six months of graduating,” William Thierfelder, president of Belmont Abbey College. “We recently added a data analytics major and within the next year we will be adding a Healthcare Informatics major. We are also focusing significantly on health sciences. CaroMont Regional Health System is building a hospital on our campus, scheduled to be completed in 2023. We’re exploring all health science possibilities given the relationship we have formed with CaroMont and the close proximity of the hospital.

In addition, our students have a ninety-five percent acceptance rate into medical school.

Looking ahead While universities may enroll enough students to provide an adequate human capital pipeline, many drop out of their programs before graduating. At four-year colleges, 56.4% of students graduate within six years while another 11.4% transfer to another institution and graduate within six years. But graduation rates are lower among students of color, those from low-income households and students who are the first in their family to attend college. In response, UNC Charlotte is one of six universities nationally that has been selected to participate in the Student Experience Project (SEP) to provide a sense of belonging among students and promote completion of studies. And with students shouldering most of the

burden for funding education, universities need to make sure they get bang for their buck.

There is also the issue of enrollment. Schools are finding it increasingly difficult to predict how many students they will have, which has an impact on budgeting, according to Dan Mahony, former president of Winthrop University. “Students are applying to more and more colleges. Before, if we received 6,000 applicants, we could easily project that we would end up with X number of students, but that’s become very hard to do now, and they are often making their decisions very, very late in the game now. You just don’t know until they arrive if they are really, truly arriving,” he told Invest:. “It creates challenges from a purely financial standpoint. If you are not able to increase your enrollment and you are trying to keep tuition fees low for students, that creates a number of challenges.

The price of a higher education is so high that some people are not able to afford it, and if your price is high you can’t go any higher than you already have and you can’t attract any more students. It becomes really challenging to accomplish everything.”

As the COVID-19 pandemic sweeps the globe, education also is taking a new shape. Educators across the world are adapting to the new reality of social distancing and incorporating more technology into curriculums. Gov. Cooper announced that North Carolina public schools would close in March to help combat the virus spread and may not reopen until after summer. Now more than ever, educators are tasked with reimagining the way they teach. The CMS school district is working closely together to ensure they keep students on track to graduate and continue feeding the talent pipeline.

Scott Bullard President – Pfeiffer University

I do not foresee a scenario in which the COVID-19 pandemic lowers the quality of instruction at our institutions. The first part of our mission after keeping our students safe is providing them with a good education. The most important aspect of our mission – second in importance only to being among the safest places in North Carolina – is to educate and challenge our students so that they serve and live out their vocations in the fields that they aspire to. We will do everything in our power and commandeer all of our resources to make sure our students have a high-quality experience.

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Tourism, Arts & Culture: Pre-COVID-19, Charlotte was basking in the glow of a burgeoning tourism, cultural and arts scene that enjoyed record numbers of visitors in recent years. Although the pandemic will take a toll in the short-term, the industry’s foundations, including professional sports and a diverse entertainment offering, should ensure continued longer-term growth.

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Down, not out: Despite the heavy blow from COVID-19, tourism and the arts in Charlotte are set up for a bright future Charlotte is well-known as a financial hub, but judging by the record number of visitors recorded in recent years, its quaint charm has not been lost on tourists. It boasts a thriving cultural scene, a mix of professional sports teams and a budding movie and television industry. The sector also benefits from enviable connectivity focused on one of the country’s leading airports.

All these factors have come together to create a bustling tourism and cultural sector that was firing on all cylinders before the COVID-19 pandemic hit. As businesses close and unemployment in the segment rises, the immediate future is painted in uncertainty.

But the foundations are strong and that should foster a rapid comeback as the impact from the pandemic recedes. “City officials and hospitality leaders need to make sure that Charlotte remains a competitive city when it comes to attracting meetings and events.

With so much hotel construction happening, we need to make sure that we are filling those rooms. There were a couple of years where there was more demand than there was supply but we need to make sure we do not overbuild. There are many opportunities in the tourism industry. We have so much going with the local 136 | Invest: Charlotte 2020 | TOURISM, ARTS & CULTURE

professionals and amateur sports teams and breweries, for example. We have awesome local resources and the region has a great opportunity to continue to develop its personality,” said Becky Sagaden, general manager of The Duke Mansion, in an interview with Invest:.

Performance The arts, entertainment, recreation, accommodation and food sector was Charlotte’s second-largest employer in 2018, after finance, providing over 50,000 jobs – or almost 11% of the city’s total jobs. The more than $21 billion restaurant industry alone employs more than half a million people statewide. The Charlotte region’s tourism industry also recorded a record-breaking $7.4 billion in income that year, with about $5.7 billion coming from Mecklenburg County, where the city of Charlotte is located. About $544 million was collected in state and local taxes, with Mecklenburg accounting for $406 million of that.

Tourism payroll in the state totaled $2.4 billion, with almost 85% of that coming from Mecklenburg.

This is one reason why Charlotte is particularly susceptible to impacts from the COVID-19 outbreak, which has shuttered businesses worldwide – with ( )

TOURISM, ARTS & CULTURE INTERVIEW

Demand Creating destination demand is high on the list of priorities for the region’s promotional authority

Tom Murray CEO – Charlotte Regional Visitors Authority Given the hospitality industry’s growth in the city, what must developers do to keep the sector’s expansion sustainable?

It is incumbent on us to create more demand, and we continue to see that. We are focused on creating destination demand, particularly for weekends, and that has recently grown quite dramatically. This is a result not only of the economy, which continues to grow rapidly, but also because of the work our team is doing. We have to maintain good economic numbers for our hotels so their underwriting supports building new hotels – and there are a number of hotels under construction. A nice thing that is happening is that there are some higher-end hotels as well. We will be welcoming the JW Marriott, the Intercontinental and the Grand Bohemian. These three properties will add upper-tier strength to our Uptown inventory. We are excited about that.

What could be the impact of the multimillion-dollar expansion of the city’s convention center?

Because the convention industry books so many years in advance, we have already booked space that we haven’t yet built. Our booking pace for the convention center is averaging 140% for the first two years after we finish construction. We are seeing high demand and are able to make investment decisions based on sound research. JLL’s Strategic Advisory Group did an 18-month study on the competitiveness of our convention district and one of the things that came up as a potential for losing competitiveness was that we didn’t have enough breakout space. We are adding that breakout space based on that research.

A big part of our success in Uptown and the region is the light rail, which runs 26 miles north to south, with a broader plan to add footprint to the system. It has been a dramatic success story for economic development.

What opportunities is the industry creating for hospitality workers to earn living wages?

As a way for our region to know the value of the visitor economy, we widely communicate that one in nine people in our community works in the hospitality business. We are a huge employer, and because of the success the city is experiencing, our unemployment rates are extremely low. There is great competition for labor in our marketplace and that has driven wages way above the minimum for entry level jobs.

The beautiful thing about the talent development in the tourism industry is that people can come to us at entry level and move up quickly through what we call “ladder jobs” and eventually enter the middle and upper-middle class, even to upper-class jobs. www.capitalanalyticsassociates.com

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James Meena Artistic Director Opera Carolina

What is Opera Carolina’s main contribution to Charlotte’s cultural landscape?

Great cities are identified by iconic buildings, exceptional entertainment and cultural icons. When one thinks of London, for example, among the cultural assets is the Opera House at Covent Garden; in Sydney, it’s the iconic Opera House; in Milan, La Scala. In 2014, the last reported data, the United States boasted more than 34,000 museums, 1,224 symphony orchestras, but only 150 professional opera companies. Having a resident professional opera company is one of the distinguishing factors of a great city. As a cultural ambassador for Charlotte, Opera Carolina has created partnerships with opera houses in Shanghai, New York, and the Italian cities of Ravenna, Lucca, Pisa, Livorno and Modena, and continues to build business partnerships that elevate artistic standards, and amortize costs for our partners. As a locally based company, Opera Carolina has a responsibility to give back to the community. We do this in many forms but principally through a dynamic education department that annually serves between 25,000 and 35,000 young people and their instructors.

How is technology impacting Opera Carolina?

New technologies have given Opera Carolina tremendous opportunity to reach audiences of all ages through our IStream series, and our expanding library of digital performances, educational programs, online learning opportunities and online rehearsals. In addition, new technology has changed the opera artform itself.

Not that we’re re-writing Madama Butterfly, but digital projection technology has allowed Opera Carolina to create visually compelling productions that meet the expectations of our visually-oriented audiences.

It has also allowed us to create productions that are fast-paced, bringing an opera that was written to be performed in four hours down to under three hours with intermissions – and without cutting a note of music from great composers like Mozart, Verdi and Puccini.

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( ) the hardest hit sectors being tourism, recreation and finance. Nearly 50,000 people filed for unemployment across the state in the second to last week of March and there are predictions unemployment in North Carolina could reach 150,000 because of the toll of the virus. In Charlotte, the hospitality industry has suffered, alongside the city’s tourism sector. More than 20% of business leaders surveyed by the Charlotte Regional Business Alliance said their business could not last more than a month with no new sales.

Hotels A fundamental characteristic of a successful tourism industry is the number of hotels and hotel rooms available to tourists. Those numbers have been rising for a number of years. “The hotel supply in the

The Queen City offers a dynamic mixture of arts, cultural offerings, sporting events, and convention space located within Center City.

TOURISM, ARTS & CULTURE OVERVIEW

Tom Gabbard President & CEO – Blumenthal Performing Arts

We have plunged into working at the intersection of live performance and podcasts. We are hosting a fair amount of podcasts that already have a following and we will do a live performance and record it. But we also are working locally to create content. A few years ago, podcasts were hardly on our radar and now we can find 1,000 people who will pay to attend a live podcast. That is theater reframed. We are definitely testing new ideas without giving up our commitment to Broadway. We are plunging head-on into other experiences that really are resonating and capturing people’s interest.

Charlotte Metro Area has grown tremendously in the last four years. There are many large and small hotels under construction with many more in the pipeline for the near future. If you are in the hospitality industry, Charlotte is the land of opportunity. Tourism, corporate travel and convention space are the main business drivers in the industry. The expansion of the convention center will increase smaller, divisible meeting space. Most of the conventions want more breakout space for attendees to meet in smaller groups.

Though the expansion will take about two years to complete, we are already seeing significant interest for conventions in Charlotte post-expansion. 2022 and beyond will be strong for Charlotte’s tourism industry,” said Bill DeLoache, general manager of Double Tree by Hilton Hotel Charlotte.

According to CBRE, hotel developers focused a great deal on the Charlotte market in 2019, so much so that for 2020, it is expected to display the thirdlargest supply increase in the country with gains greater than 7%. In January 2019, AAA unveiled its Inspections & Diamond Ratings hotel ranking of the more than 27,000 hotels across North America. Only 121 of these were awarded the prestigious Four- and Five-Diamond accreditations. The 217-room Kimpton hotel, which opened in 2017 and the newly renovated 374-room Omni were both awarded four diamonds, joining the ranks of the Charlotte Marriott SouthPark, Renaissance Charlotte SouthPark, The Ballantyne and The Duke Mansion. This brings Charlotte’s total to six – or a 5% share of the most prestigious hotels in the country.

Charlotte’s Center City area that encompasses Uptown and Downtown Charlotte, has 5,600 hotel ( ) www.capitalanalyticsassociates.com

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Market voices: Sports

Tom Glick

President Tepper Sports & Entertainment

Staying up to date with technology is an iterative process. The stadium is 23 years old. It is in great condition and we continue to invest in it. This year, we started installing 5G Wi-Fi coverage throughout parts of the stadium. We have a digital ticketing environment. This season, 96 percent of fans came in via the digital ticketing system. We have great access when it comes to cashless and points of sale transactions, which speed up service. The key to this is staying in touch with what is new and working, and what fans are getting used to and expecting.

We will be in the middle of building the new soccer club, which will begin playing in 2021. 2020 will be an incredible year of firsts, from introducing our name, badge and uniforms, to signing players.

We have had tremendous success in Charlotte since we opened in 2014.

We led the country in minor league attendance four out of the six years we have been here. We are in a vibrant and growing market with a youthful demographic.

Coming into the market from South Carolina, and bringing another 650,000 people into Center City, is creating tourism for different parts of the county. The Charlotte Knights produce an economic impact of close to $50 million a year. The region has NASCAR, NBA, NFL, major golf tournaments, other minor league teams, and now professional soccer. Charlotte has created a great hotbed for professional sports, while amateur sports are also enjoying growth. All this is largely thanks to the initiatives of city and hospitality leaders. They are very aggressive in trying to get sports teams to the region and making sure they stay.

Fred Whitfield

President & Vice Chairman Charlotte Hornets

Dan Rajkowski Chief Operating Officer Charlotte Knights

When you are in the hospitality and entertainment business, there is always competition for a finite amount of dollars: people’s disposable income. The onus is on us to make sure that everybody who comes into Spectrum Center has a great experience, whether it is a basketball game or a concert or family show. We want everybody to have a great time, to enjoy the food and beverage experience. When our team is on the court, we want them to play with a lot of energy and be up-tempo so people have a fun night whether we win or lose. Additionally, we are heavily involved in the community, including outreach efforts, and identifying needs and causes where we would really like to get involved.

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TOURISM, ARTS & CULTURE INTERVIEW

Momentum As Charlotte grows and prospers, it is investing in arts and culture, but more can be done to ensure it continues to flourish

Jeep Bryant President – Arts & Science Council is a community that has grown and prospered in so many ways. It has made some investments in arts and culture, and I believe it has the capacity to do more.

There is this notion of having the wind at our backs, there is momentum in the community, but there is so much more that could be done to make arts and culture even more vibrant and flourish more fully across the region.

How is the Council helping the arts community?

We have seen generous donors stepping up and supporting the different arts and culture facilities and programs across the region. Where we need to progress faster as a community is in supporting those organizations with funding to help with daily operations. A key function of the Arts & Science Council is to be an advocate and a fundraiser to help organizations develop a solid foundation so they can reach into more communities and do more.

How is Charlotte placed in terms of arts and culture?

I grew up in the community and worked in the region throughout the 1980s and ‘90s. Two things stood out when I returned home. On the growth side, you are immediately struck by all of the arts and cultural facilities that have been established in Charlotte over time. There is this great sense, particularly in Uptown, of dynamic new facilities for arts and culture. At the same time, Charlotte, like so many communities, has been grappling with the question of equity across communities, and whether the dollars are being invested in the right way and reaching the maximum number of residents. One of the key things that convinced me to come back to Charlotte was that it 142 | Invest: Charlotte 2020 | TOURISM, ARTS & CULTURE

What is the key goal for the Council going forward?

Our key goal is to grow the funding sources that we have been relying on for a long time. Now that we have gone through the process of identifying the need to invest more, we need to ensure we are working with potential funders to do that. We have a wide range of organizations that rely on us for operating dollars.

We also want to do more to support individual artists and emerging organizations, as well as neighborhood cultural programming.

Charlotte’s strength is the diversity of offerings across cultural organizations. The Arts & Science Council has helped support and foster that through the funding decisions we have made over time.

Another valuable aspect of our work is supporting those organizations that have not yet been discovered and have the opportunity to grow.

TOURISM, ARTS & CULTURE OVERVIEW

( ) rooms in Center City, and an additional 1,274 more rooms scheduled to open in Uptown through 2022. The most recent opening was the 123-room Holiday Inn Express and Suites at the corner of South Tryon and West Kingston Avenue, and in 2020 at least five new properties are expected to open their doors: EVEN Hotel at Stonewall Station, Home2 Suites

by Hilton Charlotte Uptown, SpringHill Suites by Marriott at Carowinds, Grand Bohemian Charlotte and Homewood Suites Charlotte Uptown.

And located right in the heart of Center City is the 550,000-square-foot Charlotte Convention Center.

The space is currently undergoing an extensive $126.9 million expansion that broke ground in 2019 and is slated to be completed in 2021. The expansion will add 50,000 square feet in leasable meeting room and pre-function space and will include an overstreet pedestrian walkway to the adjacent 700-room Westin Charlotte hotel.

As these and other hotels come online, they must keep in mind the changing demands of guests who want everything available now and reflect those in the ammenities offered. “Amenities have changed as far as accessibility. Guests want to have options available at their fingertips. For many hotels, everything is mobile.

Guests can check-in online and bypass the front desk, for example. I think moving in that direction is key to the growth and development of the hospitality industry. Hotels that do not adjust their operations will see a big difference in their bottom lines. Today’s consumers want accessibility options, ease of check-in and check-out — everyone wants their stay to be easy.

Keeping up with technology and these trends will be the main driver for sustainability and growth in the

The Charlotte Convention Center is undergoing a $126.9-million expansion

hospitality industry,” said Tyrekus Williams, General Manager, Springhill Suites Uptown. Finding qualified labor has also been a challenge. A solution, said Vinay Patel, president of SREE Hotels, is to educate people at a younger age about the possibilities in the hospitality sector. Speaking tro Invest: before the pandemic hit the industry, Patel said that, “Between hospitality and restaurants, our industry is short 900,000 people.

It is hard to get bodies into jobs, let alone qualified staff. People now talk about the minimum wage, but it has become essential to pay top dollar because if you don’t pay, you won’t get the people. I have been advocating going to the high-school level for workforce development because not every high-school student will go on to a four-year degree. This is one of the only industries where great upward mobility is possible without a university degree. There are great career progression opportunities available very quickly with the right passion and attitude.”

TOURISM, ARTS & CULTURE OVERVIEW

Charlotte has a thriving professional and amateur sports scene that attracts sports fans from all over the world.

A big part of the hotel industry is conventions and one of the largest events coming up in 2020’s agenda is the Republican National Convention (RNC) scheduled to take place in Charlotte in August, provided the COVID-19 pandemic is under control. Charlotte cemented its position in the national convention circuit after successfully hosting the Democratic National Convention in 2012, which brought 35,000 media and delegates and generated economic benefits estimated at $164 million. RNC organizers expect 1,200 special events around the convention, which the RNC projects will have a $300 million economic impact on Charlotte. This includes 15,000 hotel room bookings as 50,000 delegates descend on the city. Despite COVID-19 concerns, President Trump has insisted the RNC will go ahead as planned.

In September 2019, hotel giant IHG launched franchise sales for its Atwell Suites brand in 10 destinations including Charlotte that will break 144 | Invest: Charlotte 2020 | TOURISM, ARTS & CULTURE

ground in 2020. After the COVID-19 outbreak, it is unclear whether this plan will still be on track, but IHG remains committed to supporting the employees within the industry. In March, it announced the launch of the IHG Hotel Colleague Job Center app that provides resources to IHG employees impacted by the virus resources. These include matching them with new job opportunities in the retail and takeout restaurant sectors.

According to American Hotel & Lodging Association, around 44% of hotel workers in the United States will lose their jobs due to the pandemic, which equates to around 22,000 of the 52,000 direct hotel employees in North Carolina. Hotels in Charlotte are already feeling the pinch, as during the week beginning March 8, the hotel occupancy rate dropped 26.3% on the year, according to data by STR. Charlotte-based hotel group SREE Hotels had lost nearly $2.8 million in canceled reservations for March, April and May.

TOURISM, ARTS CONSTRUCTION & CULTURE OVERVIEW

Douglas Singleton Executive Director Charlotte Ballet

How did the Ballet perform in 2019?

2019 was a year of transition. The Charlotte Ballet is one of the top mid sized ballet companies in the nation. We employ 28 professional dancers, have an academy with close to 1,300 students, and offer different community engagement programs. The Nutcracker show is our highest attended show and represents somewhere between 20 to 25 percent of the organization’s revenue stream. It is a very important show for us. The ballet is transforming. This is our third full season with our new artistic director, Hope Muir. We conducted a worldwide search to find that person who is taking the craft to the next level. Additionally, some of the hottest choreographers across the world are coming to Charlotte. The city is providing a high quality of artistic talent and is quickly turning into a significant player in the industry.

Arts and culture Charlotte has a wide range of arts and cultural offerings and has established itself as a cultural hub. Taking pride of place in the middle of Center City is Levine Avenue of the Arts, named for the colossal Levine Center for the Arts containing Bechtler Museum of Modern Art, Harvey B. Gantt Center for African-American Arts + Culture, John S. and James L. Knight Theater and Mint Museum Uptown. The project, initially known as the Wachovia Cultural Campus, was initiated by Wachovia Bank.

After the bank’s acquisition by Wells Fargo, significant donations from the city of Charlotte, Mecklenburg County, Campaign for Cultural Facilities, The Leon Levine Foundation, the Bank of America Foundation, Wells Fargo Foundation and Duke Energy Foundation made the completion of the complex possible.

Just a few blocks from the Levine Center is North Tryon Street, where two ambitious arts projects are underway. The $52 million Carolina Theatre

What economic impact does the arts and culture segment deliver to Charlotte?

The economic impact of Charlotte’s arts scene is billions of dollars. When people come to see the Nutcracker, they are staying in hotels, visiting restaurants, and enjoying the city after the show. We have visitors coming from all over the region to see the Nutcracker because it is a popular holiday tradition. They make an experience of it and all of that is part of the economic impact. Heads in beds is really important to all of us. Charlotte is a great place because it offers top of the line amenities in a very close area. We are attracting top talent and Charlotte is part of what we have to sell. We are competing with places like New York City, San Francisco, Philadelphia and Chicago.

How much support do you receive from businesses?

Businesses are very supportive of the arts community.

I think it is about activating the individuals in the community. The opportunity for the art organizations is to connect with individuals and make a case for support.

The philanthropic community is out there, organizations need to be able to access them. Philanthropy is the critical component in creating excellence. www.capitalanalyticsassociates.com

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redevelopment will see the vacant theater transformed into a performance center. InterContinental Hotel will build a 34-story, $100 million, 257-room hotel to open in late 2021. Across the street, the Charlotte Mecklenburg Library is in the planning stages for a 115,000-square-foot, five-story new main library.

The arts community in Charlotte is supported by the city’s Arts & Science Council, which last year saw its proposal for a quarter-cent sales tax that would provide it extra funding fail as 57% of voters rejected the idea. “Of course, it was disappointing when taxpayers voted not to raise the sales tax by a quarter-cent, which would have provided $50 million for arts, parks, and education. There were a number of reasons it didn’t pass—for one, the verbiage on the ballot didn’t explain what the tax would benefit—so it wasn’t a complete surprise. However, the push for the referendum did help bring all of the arts organizations together to work in unison and develop solutions to our common problem. In the meantime, we will all be looking at different funding sources, including public and private donations, endowments and foundations, to ensure that we keep moving forward,” said Todd Herman, president and CEO of the Mint Museum.

Charlotte is quickly garnering a reputation as an arts hub in the southeast ready to wow audiences with its robust cultural offerings.

TOURISM, ARTS & CULTURE OVERVIEW

This year, the Arts & Science Council plans to ask the city for $12 million in funding, a 131% increase on last year’s funding. With the COVID-19 pandemic, the arts community has been hit hard and the support of the Arts & Science Council is more important than ever. At the beginning of April, the council created the Mecklenburg Creatives Resiliency Fund to help those who found themselves in financial difficulties. It provides $500 grants to eligible artists, as well as financial relief for medical expenses related to COVID-19 testing or care, which includes mental health counseling or care expenses as a result of social distancing.

Overall, says Michelle Hamilton, president of the Charlotte Symphony, says supporting the arts is not only good for the community, it makes good business sense. “I think to be seen as a progressive city, Charlotte needs to find a way to build a dedicated stream for the arts. It is undeniable that the arts are good for business. Particularly, the Fortune 500 companies that are looking to relocate people from major metropolitan areas are not just looking at what their offices will look like, they are looking at quality of life and the arts are a critical part of that. Charlotte needs to make a statement that the arts are important to the community.” Catherine Horne, president and CEO of Discovery Place, agrees. “Having general operating

support, which is what we receive through the Arts and Science Council, is pivotal. But our funding today is 50% of what it was 10 years ago from the Arts and Sciences Council and those cuts have really hurt,” she said. “What I know from being and working in other cities and lots of national initiatives is that cities that care for the quality of life of their citizens and about creating opportunities for people to learn have a foundational support for arts and culture and science and history at the heartbeat of that.”

Sports Charlotte is known for its sports from which it reaps a substantial economic reward. Last year’s NBA AllStar Weekend, hosted by Charlotte, was estimated to bring in $48.7 million in direct spending – including 30 hotels consisting of about 32,000 rooms at full occupancy. An additional $87.7 million was generated indirectly by increased demand and additional labor.

Not only this, but 22 million television viewers and 1 billion social media impressions created more tourism buzz for the city. And the annual Central Intercollegiate Athletic Association basketball tournament (CIAA) also brings in the crowds. In 2018, the event had an economic impact of $50.5 million and in 2019 this was $43.7 million. www.capitalanalyticsassociates.com

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Matt Allen General Manager – Hyatt House Center City

Sports has become a contributing factor in Charlotte. In February, we hosted the NBA All-Star Game, which was a huge hit for the city. We also host many NCAA basketball, football, and baseball tournaments. Both professional and collegiate sports are taking off in Charlotte. The Spectrum Center, home to the Charlotte Hornets, is also a Live Nation venue and has done a great job at bringing national tours to the Charlotte area. We have had artists such as Elton John and Guns N’ Roses perform. If it is a big show, it is coming to Charlotte. The same with Bank of America Stadium, home of the Carolina Panthers.

The stadium has opened up its premises to more than just sportsrelated events. Those venues generate a large economic impact for the city, which hotels also benefit from. On the corporate side, the relocation of major companies like Honeywell to the Charlotte area will also have a huge impact on the hospitality sector.

Charlotte is home to football’s Carolina Panthers and basketball’s Charlotte Hornets, as well as a variety of amateur teams such as the Charlotte Knights baseball team. In 2019, Major League Soccer (MLS) found a home in Charlotte when a team headquarters was proposed for the vacant 80-acre property that once housed the Eastland Mall. The mayor and city council pledged $110 million to allow the project to happen. And the Panthers’ new Rock Hill headquarters is in the works with an investment of $200 million coupled with $160 million in incentives, scheduled to open in 2022.

One sport Charlotte has deeply embedded in its fabric is NASCAR. The city is home to the 2,000-acre Charlotte Motor Speedway, commonly known as the home track for NASCAR since it was built in 1959. The speedway, zMAX Dragway and The Dirt Track at Charlotte all draw more than 1.1 million people annually, producing an annual economic impact of $451 million.

Now as racing events are canceled amid COVID-19 concerns, NASCAR engineers are focusing on making an even greater impact for the city of Charlotte. The five 3D printers at NASCAR’s Research & Technology center that are typically used for printing car components are now running full time to produce PPE for healthcare workers at local hospitals. The printers are running 18 hours a day with eight engineers volunteering their time to oversee production.

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the Old Mecklenburg Brewery invested $8 million in building a 25,000-square-foot facility in South End, this opened the door for a whole host of craft brewers to follow suit. Yancey Road is now a bustling entertainment district full of bars, restaurants and breweries.

With almost $1 million in incentives, the Carowinds theme park is in the middle of an ambitious expansion project – initially projected to cost $50 million when funding was approved in 2013, but park owner Cedar Fair Entertainment Co. has far exceeded that amount. Originally slated to open in March 2020, the COVID-19 pandemic caused the park to push back its grand opening.

And in 2014, Charlotte held its first Pride event, with an estimated economic impact of $7.75 million for the city, including $2.49 million in labor. The annual event held its latest edition in 2019 and welcomed around 100,000 visitors for its two-day weekend event.

Film industry Charlotte is perhaps not as well-known for its film industry as nearby Atlanta but some Charlotte haunts have featured in a broad range of movies and streaming TV shows. South Mecklenburg High School featured heavily in the 2015 Emma Roberts movie Ashby and Will Ferrell’s smash hit Talladega Nights was set at the Charlotte Motor Speedway. Carrie sequel The Rage was filmed entirely in Charlotte and Hulu miniseries Shots Fired used locations in Kannapolis, ( )

®

oundtable:

Hospitality in the region Tourism and hospitality leaders discuss the industry’s growth in the Charlotte region, expansion plans and the profile the visitors to the area.

Mohammad Jenatian

President Greater Charlotte Hospitality & Tourism Alliance

What is driving tourism growth in Charlotte?

Charlotte’s tourism industry has been growing for a long time. One of the best things that happened to tourism in Charlotte was securing the 2012 Democratic National Convention, which truly put Charlotte on the map for all the event planners around the globe. As an industry, we have done a great job of being proactive and focused on initiatives aimed at growing our business. We have been involved in practically every one of the taxes that have helped us build a lot of infrastructure, such as the Charlotte Convention Center, the Spectrum Center and the NASCAR Hall of Fame. Also, the Charlotte Douglas International Airport has been the No. 1 catalyst for the economy of our whole region and has been instrumental for the growth of our industry. For the past 10 years, our business has grown every year. We want to make sure that our room, food and beverage, and car rental revenues, which paid for most of the infrastructure that has made Charlotte a fantastic destination, continue to grow. We are very focused on identifying and investing in projects that will position us for continued growth.”

How is the convention segment changing?

The convention center is 25 years old and the landscape of the convention industry has changed. Convention planners want smaller meeting and event spaces. A lot of the center’s current construction does not affect the exhibit hall, which is where many of the events related to the 2020 Republican National Convention will take place. While the convention center is being renovated, it has not stopped booking events. The renovations will not interfere with the Republican National Convention.

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Anuj Mittal

Co-Founder & CEO MJM Group

How has your investment philosophy changed in the last couple of years?

We have been increasing our investment in Charlotte. In fact, right now, we are almost 100% invested in Charlotte.

We have a little bit in Raleigh, but Charlotte has been my focus for the last 10 years. With two new hotels opening in the city this year, you can see that I am a believer in Charlotte. The reason has to do with the city’s officials doing a good job developing the infrastructure, such as highways and toll roads, the airport expansion and the intermodal. There are also good demographics, a huge international airport that provides easy access to other regions, good weather, an attractive cost of living and access to a very skilled workforce. Investment is coming from all over the country, with many companies moving into Charlotte. The business investments are part of what attracted us.

What do you think the $6 billion expansion of the airport will do for the hospitality business in the city?

That was part of the decision to continue investing here.

With the airport expansion and the new terminals, this is one city in America that still has much opportunity in and around the airport that many other cities lack because they are fully developed. I see big potential in the continuing growth. Dallas and Chicago, for example, are fully developed around the airport. Here, we still have unique opportunities. The airport expansion is a tremendous enhancement to Charlotte’s core infrastructure, which has also benefited from light rail and highway investment.

The local transportation system is definitely contributing to business and job growth.

TOURISM, ARTS & CULTURE ROUNDTABLE

Randy Rushakoff Area General Manager Midas Hospitality

What can be done to keep hospitality sector growth sustainable without reducing competition?

It is going to be a tough challenge. As more and more hotels are built, the demand keeps up with the supply.

You are probably going to see a lot of development come because of the great results we’ve had over the last three to five years in Charlotte. But it is a concern that if it gets overbuilt, there will be some pressure on rates. That is something that every group has to look at and decide if it makes sense. Ultimately, lenders might also choose to tighten credit.

What do you see as the industry’s main challenges in Charlotte, and how are you mitigating them?

Labor is the top concern, and it’s a tough one. As we have more hotels, there are only so many people who want to clean hotel rooms. The brands are really helping change that dynamic, and everybody is really focused on going green. You don’t change your sheets at home every day. If you are staying in a hotel for two, three days, you might forgo housekeeping services, and at the Marriott we offer bonus points.

The industry might move in that direction.

The airport hotel has 204 rooms. The average room attendant cleans about 16 rooms a day, so we need 12 to 13 room attendants. But if we are not cleaning stay-overs, if we are just cleaning checkouts, we might only need two or three people. I think the room attendant will become more of a highly paid position, and you will see fewer of them. Wages are increasing because we don’t have as big a labor pool as we would like.

Morgan Smith

General Manager Hilton Charlotte Center City

How is Charlotte’s growth impacting the tourism industry?

The hospitality industry has been trying to keep up with the city’s growth. We have had many new hotels open up in the area to accommodate the different businesses that are moving in. And that is at every level. There are many different hotel tiers and I believe we are all satisfying our markets successfully. The city’s growth has been very good for the health of our industry. We have proven that we can accommodate large-scale events.

How has the profile of travelers change in recent years?

The profile of travelers is changing. Our customers are different today than in previous years. With all the technology that we are applying, I feel like we know our customers better than ever, and at the same time, we are making it easier for them to do business with us. Customers can make reservations through our app, check in and have their keys digitally sent to them. They then come right into the hotel and go directly to their rooms. .

What hurdles does the industry face?

Our industry is going through an adjustment period.

Several new hotels have been opening and there is a need for them. Each has its niche and serves a good purpose, but there is a natural spreading out that takes place when more choices exist, and I think that is what we are experiencing. Plus the fact that the convention center is upgrading at the moment so citywide conventions are not nearly as active as normal. This has challenged our hotel to find new business. www.capitalanalyticsassociates.com

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( ) Concord and Mooresville. Hit series Homeland filmed its first three seasons in the Queen City and Jennifer Lawrence’s blockbuster The Hunger Games used Charlotte as its set in 2011.

After a popular incentive program expired in 2014, there was an absence of movie activity but in October, Gov. Cooper signed an executive order for a “Governor’s Advisory Council on Film, Television and Digital Streaming” and efforts have been made to increase the grant program and draw the film industry back. In June, three projects were approved for North Carolina Film and Entertainment Grant funds, with two – Virginia Cold Case Project and The 24th – set to film in various locations across the state, including Mecklenburg County. The three movies are expected to generate a direct in-state spend in excess of $50.6 million.

The 25% rebate offered by the state seems to be working. North Carolina wrapped up 2019 with production companies spending more than $167 million in direct in-state expenses, according to the North Carolina Department of Commerce. Three movies alone – Halloween Kills, The Georgetown Project and The Eyes of Tammy Faye – created more than 3,200 jobs and generated $56 million for the economy. The Eyes of Tammy Faye was filmed in the greater Charlotte area.

Connectivity All this would be a vastly different picture if it weren’t for one key advantage: connectivity. The I-77 interstate that runs all the way north to Lake Eerie cuts directly through the city, making it one of the major cities on the East Coast, among the ranks of New York, Philadelphia and Atlanta. It intersects I-85, which runs from Montgomery, Alabama, to Petersburg, Virginia. The city itself is easy to transit, circled by the I-485 loop. Within the city, officials are working on an ambitious public transit system that connects trams, trains and buses. The Sprinter Enhanced eight-mile bus route began in 2009 and the Lynx Blue Line train was completed in 2007, with an extension recently inaugurated. And last November WSP USA won a $50 million contract to design the Silver Line project, which will be the third of five routes.

The Charlotte Douglas International Airport recorded 50.2 million passengers in 2019, an alltime high and an 8% increase in passenger traffic on the year, the biggest increase of any major U.S. airport, except Puerto Rico. The airport also saw over 550,000 flights in 2018, making it the sixth152 | Invest: Charlotte 2020 | TOURISM, ARTS & CULTURE

busiest airport in the US for the year. Importantly, the airport said in early March that it had yet to see a drop-off in passenger traffic despite the emergence of the COVID-19 pandemic, although that could change sharply as containment measures ramped up.

American Airlines uses Charlotte Douglas as a hub and, as of February, was flying 700 flights daily from the airport. The carrier leased four new gates on Concourse A, taking its total to 93 gates out of the total 114 at the airport. And even amid COVID-19 concerns, Allegiant announced it would invest $50 million to base two Airbus A320 jets at the ConcordPadgett Regional Airport in October 2020, hiring 66 local staff.

Looking ahead The city of Charlotte has worked over many years to build up its arts and culture offering and foment its tourism industry. But these are precisely the industries that are most affected by an economic downturn, and especially a pandemic such as COVID-19 that demands limited social contact. But the measures already being taken by the authorities to protect the industry in the long term demonstrate the commitment the city has to the culture it has built up.

There will be challenges, especially as the industry expands its offering. Among the key considerations will be sustainability and preserving the environment. “We want to continue to have an impact in the region from an environmental and conservation standpoint. We have had significant growth over the last couple of years and we want to continue to buy land, creating more space to expand and provide a greater number of activities.

In that regard, the Whitewater Center is preserving open spaces and allowing visitors to engage and connect with the outdoors. Our goal is to create more opportunities for visitors to connect with nature,” said Jeff Wise, CEO of U.S. National White Water Center.

Ten years ago, Charlotte was one of the biggest sufferers of the recession as many jobs in its dominant banking sector were wiped out. But over the last 10 years, the job growth rate in the county was 25%, and the city’s commitment to diversifying its economy is a demonstration of lessons learned. In the intervening years, Charlotte has attracted huge investors from all over the country and its attractiveness endures.

As the government continues to support the arts and cultural sectors through the bad times, it is sure to be rewarded when the upturn approaches.