On Oct. 29, 2020, ULI Carolinas hosted a webinar panel to discuss trends in real estate in the Carolinas as we look to 2021. Andy Warren, Director of Real Estate Research for PricewaterhouseCoopers who has co-authored ULI’s Emerging Trends in Real Estate for the past three years, led the session with an overview of the 2021 report. To view the full report, click here.

To provide a regional perspective, the panelists included:

Office

• Erin Shaw, Beacon Partners
• Alex Powell, Johnson Development Associates
• Kimarie Ankenbrand, JLL

Industrial

• Alan Lewis, The Keith Corporation
• Stephanie Few, Womble Bond Dickinson
• Jessica Brock, Longfellow

Residential

• Liz Ward, Give Impact
• Chris Randolph, South Street Partners
• Amanda Hoyle, Metrostudy

Hospitality

• B. McKibbon, McKibbon Family Investment Fund
• Ken Crockett, Codds Creek Capital

Here are some key takeaways from the panel commentary:

• The Carolinas continues to be one of the strongest areas in the nation with the Emerging Trends in Real Estate 2021 ranking the Triangle #1, Charlotte #5, Charleston #23 and Greenville #26 and putting Charlotte’s Romare Bearden Park and Uptown skyline on the cover.
• The ongoing trend of moving toward the Sunbelt has accelerated during the pandemic, as people look for less density and more affordability, and the Carolinas is a top destination.
• Hospitality has suffered significantly during the pandemic, particularly for business travel, although drive-to leisure destinations like Asheville, Wilmington and Charleston are only slightly down, with some properties even performing better than last year. Business and group travel likely won’t recover until we have a COVID vaccine. Budget travel is not as significantly affected as luxury travel.
• Downtown restaurants and venues that serve primarily office workers are suffering and closures will continue until those workers return.
• After working from home, most office workers prefer a hybrid model of going into the office 2-3 days/week, which will affect the amount of office space employers need. At the same time, some employers may need more space in order to provide adequate social distancing between employees.
• Downtown office tenants are often choosing to move out of the CBD into more suburban areas with low-rise buildings. Landlords aren’t willing to lower rates but are adding concessions, helping some businesses move up to a bigger/nicer office space with more amenities.
• Enhanced health safety may become the norm as employers enhance cleaning protocols and track employee health and movement.
• The industrial sector has performed well during the pandemic, particularly in life sciences with a race for the vaccine as well as increased interest in science and lab space in general.
• The explosion of e-commerce has increased demand for manufacturing and warehouse space, particularly in the Charleston port market. This segment has performed extremely well and has struggled to keep up with the demand.
• Residential real estate has been strong not in spite of the pandemic but because of it, as people are rethinking where they live and how homes should improve their lifestyle. Inventory is significantly down from last year and at historic lows in many areas.
• Residential builders are facing labor and supply shortages, along with drastically increased lumber costs, creating volatility in home prices.
• Affordable housing is a priority for many municipalities, but revenues are down, and some projects have been put on hold.
• For those facing unemployment, the end of the CARES act and moratorium on evictions will affect hundreds of thousands of households in the Carolinas, creating an even stronger need for affordable housing.
• The second-home market has surged during the pandemic, as people seek a place to escape, especially at the coast and the mountains. Many second-home buyers are coming from traditional drive feeder markets but also from larger cities like New York and Chicago who want to avoid the density and higher tax rates.
• Home design is starting to be tailored to the new normal with a flex room/Zoom roof as a separate spot for working from home, as well as enhanced outdoor areas and improved air flow.

We’ve seen how the pandemic has impacted different sectors of real estate in drastically different ways. In the Emerging Trends in Real Estate 2021® report, 80% of survey respondents felt that 2021 profitability will be fair or good compared to 2020. In spite of the challenges with COVID, the Carolinas is expected to outperform the national average.

Thank to you to all of the panelists and TJ Barringer with Kane Realty, who served as moderator. Summary notes provided by Angela Vogel Daley, Director of Strategy for Yellow Duck Marketing.