ULI Charlotte
November 2, 2012
Real Estate Trends 

Speakers:
Dean Schwanke, Senior Vice President and Executive Director, ULI
Thomas “Skeet” Harris, Jr., Owner, T.B. Harris Jr. & Associates, Inc.
David Swindell, Associate Professor of Political Science and Director Ph.D. Public Policy, University of North Carolina at Charlotte
Charles Teal, Chief Executive Officer, Saussy Burbank

On November 2, 2012, ULI Charlotte hosted its annual Real Estate Trends event. Dean Schwanke, Senior Vice President and Executive Director of ULI began the program with an overview of the 2013 Emerging Trends in Real Estate® report, a partnership between the Urban Land Institute and Pricewaterhouse Coopers. Specifically, Mr. Schwanke discussed that while we have begun to see a recovery in the real estate market, the recovery is still very much anchored in uncertainty. He discussed various areas that continue to drive this uncertainty, with the top concern being job growth. Other uncertainties include potential changes in interest rates, changes in tax legislature tied to the outcome of the presidential election, and the ongoing issues in the European economy. The key drivers for 2013 which are considered to be the most important trends and issues that will affect U.S. real estate markets are as follows:

• Chasing Yield – Not Enough Product For Prudent Investment
• Localization and the Move into Secondary Markets
• Transaction Volume Will Tick Up
• Perplexing Interest Rates: “The Biggest Risk”
• Overbuilding Multi-family?
• Housing Resuscitation: Lifting Other Sectors
• Playing It Safe
• Getting a Grip on Return Expectations: Debt Beats Equity
• Operating in a Slow-Growth Environment: Decent Profitability

These key drivers are anticipated to be the most important trends however they will be accompanied by other trends that continue to evolve such as demand, technology, and the continued focus on suburban America.

Thomas “Skeet” Harris, Jr. spoke on emerging real estate trends as they relate specifically to the Charlotte market. Charlotte is said to be 17th in the top 51 US secondary real estate markets to watch. Charlotte improved previous years in the investment and development categories, while homebuilding only improved modestly. One of Charlotte’s biggest strengths from a secondary market investor perspective is potential employment growth. Charlotte has had success in companies relocating to the area during 2012 which has, and will continue to add jobs to the Charlotte market. Mr. Harris’ comments were cautiously optimistic as he encourages real estate investors to continue to be patient as more transactions are beginning to close. From a real estate acquisition perspective, he spoke about having optimism that capital will be available and that there should be less of a concern on interest rates and inflation for 2013. Specifically, Mr. Harris spoke about how the local market is not unlike the national market as it relates to trends and ‘where we are going.’ He indicated that more and more investors have their eyes on Charlotte as it continues to set itself apart as a secondary market to watch. Finally, Mr. Harris reiterated the importance of a thriving economy and its impact on thriving places.

David Swindell spoke about the potential election outcomes and the impact that these political uncertainties would have on the construction, real estate, and hospitality industries. He provided the audience with current statistics in the political polls and the potential impact of election results on the real estate market.

Charles Teal was the last speaker before the presentation was opened up to the audience for questions. Mr. Teal compared trends in real estate markets in Charlotte, Raleigh, and Charleston. He gave trends related to new building permits in all three markets with building permits obtained in Charlotte down 8% from the prior year. It was evident that Raleigh is on the rise in comparison to Charlotte and the projection is that Raleigh will eventually surpass Charlotte as a ‘better’ market due to its proximity to so many excellent universities, local government, as well as nearness to the Research Triangle. Mr. Teal discussed the importance of technology by stating “technology will lead us forward.” Mr. Teal reiterated the importance that universities and education have on growing a local economy.

The program ended with Mr. Schwanke asking a few additional questions of the panelists including pros and cons relating to the Charlotte Market. Mr. Harris indicated that Charlotte as a secondary market has the potential for a strong long-term economy with growth potential, however there is potential for concern that the market will overbuild and be thin as far as the amount of trades that could take place. Investors want to be sure that there are buyers in the future.

By Lauren Spegal, an audit manager with Grant Thornton.  She has been with GT since her start in public accounting eight years ago. Spegal’s focus is in the Construction, Real Estate, and Hospitality industry group.

To view all pictures from our Emerging Trends event, please go to our Facebook Page by clicking here.