The VUE Is The 500 lb Gorilla In The Room

There it sits on the corner of West Fifth and North Pine, a majestic structure rising 51 floors.  It dwarfs the Fifth & Poplar complex significantly, even though they share almost the same amount of units. 

I remember when the developer first came to town in late 2004 and met with the board of The Friends of Fourth Ward and shared pictures and descriptions of the amenities and views that would be available, it was quite something.  The early media splash garnered a lot of attention, then they opened their sales office on Trade and Tryon, can't get any better than that.

As sales started to take place, zoning issues arose, then funding issues, then site prep work issues, they were all resolved.  Things looked great for this building, until the market fell apart!  The developer had contracts in hand, enough to begin construction and went forward with the excavation.  Slowly, it began to come out of the ground. 

The finished product is pretty much as advertised.  The amenities deck is marvelous, the views are stunning, and closings are taking place, just slower than the developer would like to see.

  Loans have become issues for some as the appraisals are coming in below the contracted price.  The biggest problem for appraisers is what do you compare it to?   There is nothing like it, the TradeMark, and The Avenue are no where near the standards for The VUE.  The problem with the loans is that the lenders are telling contract holders that they will need to put more money down to secure a loan.  Something that many are uncomfortable with. 

Some have tried to back out of their contracts, but the developer is holding them to the terms of the contract, which may include financial restitution above the initial deposit.  Lawsuits (4) have been filed from both sides. 

While that takes place, closings are continuing to occur.  It seems like every day there are more lights on in the building.  Residents that have moved in seem to be pleased with their purchase and the urban lifestyle that it brings. 

My belief is that closings will continue, and new sales will be made.  It will probably take significantly longer than the developer planned, but within a year we will see many more lights on in The VUE

Don't Look Now, But Things ARE Getting Better!

A funny thing happened on the way to a showing of properties for a client I am working with yesterday, 2 of the 8 properties we were looking at had just gone under contract!  The listing agents were in the process of taking competitive bids for those properties.

These properties have all been on the market for some time, and yet, they are now looked at as being of great value.

There are several things that contribute to this type of behaviour.  First, the prices are very competitive in this market, and have either amenities or location that are desirable.  Second, they are in good condition and show well, allowing a potential buyer to feel how that property will work for them.  Third, interest rates are in the process of rising, a usual sign that the bottom has passed.  And fourth, the banks are awarding their bonuses for 2010.

All of these trends bode well for the continued strong recovery of the market.

THEN We'll Be Cool!

My wife and I used to play a little game called "And THEN we'll be cool!", the joke being that any one thing would be enough to make a game changing difference.  Truth of the matter is that when things happen or change, it is usually due to a series of things.

I bring this up because of a recent meeting I was involved in with the Charlotte Region Visitors Association, (CRVA).  We were talking about the successful effort to secure the Democratic National Convention in 2012.  Tim Newman pointed out 5 main reasons that had a significant contribution to this success:

1. A Headquarters Hotel within 5 minutes of the Convention Center
2. A workforce flexible enough to handle ad hoc needs
3. Destination Activities
4. Urban Appeal
5. Convenient Infrastructure

No one of these reasons by itself would have been enough to convince the DNC that Charlotte was the right place, but having them all in addition to many other amenities, tipped the scale in our direction.  An off-shoot of this convention is that the CRVA is now getting calls from convention planners who had always considered Charlotte to be unable to be a host city in the past. 

Becasue of the nature of the convention business, the CRVA has an 8 year plan, and they are currently running 108% ahead of that plan.  All this will translate into Tax Revenue for the county and city governments. 

Another benefit of holding this convention will be the WorldWide attention that will be paid to our city.  The cost of going out to purchase this type of exposure would be significantly greater and not have the same impact as this convention will.

Hats off to all that made this effort a success.

The Democrats Are Coming!

It is not often that I get a chance to comment on breaking news, but here I go. The local media is flooding the airwaves and print with stories of how this will affect Charlotte, what the economic impact will be, what kind of security will be in force, etc. All important stuff, but what I want to discuss is how this will affect property values in the downtown area.

In my January 2011 Report, I mentioned the likelihood of the announcement comin

g in the 1st Quarter, and here it is. I also commented on other topics that would be in the news during 2011, including; The Knights Stadium; The Park; Two Ten Trade; The VUE; and Amtrak.

With 19 months separating us from the start of the convention, I believe the following things will happen. Knight Stadium and the accompanying Romaine Bearden Park will be started, and completed. That whole section of the Third Ward will be filled in to make room for outdoor events during the convention. Both the Park and the Stadium will have long lasting benefits for the city, but to have them available for the convention will be amazing.

Almost coupled with the Stadium and Park is the Amtrak Station and Greyhound Bus Terminal. With the renewed emphasis on HSR (High Speed Rail), a new station in the heart of the city will help punctuate the message that Obama delivered in his State of the Union speech. That terminal will also be home to the Commuter Rail project running up to Mooresville. And, having recently taken a Greyhound Bus trip, I can tell you that the bus terminal needs improvement/replacement. I would also expect to see the extension of the LYNX to the University area to be in full swing.

These three projects connect a swath from Trade and Graham to Tryon and Third Streets and they all represent infrastructure improvements.

It has already been announced that The Park will begin its reconstruction early this year. The new configuration of The Park will create over 100 hotel rooms in addition to over 80 condos. Its location between the convention center and the arena almost guarantees its success. I would also expect to see the Two Ten Trade site be reconfigured into a major hotel. Situated in the heart of the city and across from the arena, this site is begging to be completed. It will be a shame that the residential market will not be in a position to take it, but a hotel there makes sense.

The VUE will continue to have closings at a pace slower than the developer would like, but as the climate for residential changes, and little new inventory is added, this property will begin to take on new contracts.

The question is how will all this affect property values in the downtown market? I often speak of trends that are taking place in society. Northern cities will continue to shrink as infrastructure costs will force taxes to rise, making it difficult for both individuals as well as companies to remain there. That trickle will increase.

Efforts by the Chamber of Commerce supported by the banks and Duke will continue to encourage related companies to move here citing lower costs of doing business, progressive governments, mild weather, an airport with direct flights both nationally and internationally, close to the mountains and the beach.

So, as this inevitable growth takes place, and there are no, or few, new residential projects available, the laws of supply and demand will lead to higher property values, and that can't be any too soon!

Housing Trends - Mortgage Rate Increases

December 2010 saw a sharp jump in the Distressed Property Index as reported by Campbell Surveys. The index was at 47.5% of all sales on a national level. These properties were not distributed equally around the country, with 66% of all transactions in California being distressed. Arizona and Nevada were next with 62%. My research into the downtown Charlotte market put our number at just under 35%, significantly smaller, but still a good share of the market.


Distress properties need to be sold off the market in order for a more traditional appreciation of property values to take place. I recognize the need for this to take place, and have partnered with USHUD.COM to represent foreclosure activity in the NW Mecklenburg County area. Please follow this LINK to see this.

Concerning mortgage interest rates, Freddie MAc says a 30 year Fixed-rate mortgage averaged 4.8% on Jan 28th , up from 4.7% the previous week. These rates are volatile, and will vary, but the trend line is up. That appears to be a clear sign that the bottom of the market has been hit, and a return to appreciation has begun though remains modest.

The availability of distressed property, plus still favorable but increasing interest rates, should continue to fuel the regrowth of the real estate market.

Downtown Property Valuation

In the February 1 edition of the Charlotte Observer, there is a story about the county doing a revaluation of properties, the first one since 2003. The article goes on to explain that property is selling from 6 – 8% above tax valuation. This prompted me to focus specifically on downtown Charlotte for calendar year 2010.

The source of my data is through MLS. Certainly there were other sales not recorded in MLS, but these are the only stable statistics I can use. I have made 2 exceptions from the 142 properties that were reported as being sold, 5 sales in Metro 10 West showed no tax value, and the unit that Michael Jordan purchased in The Trust for over $3.4 million was also removed.

The remaining 136 properties sold for an average price of $246,232 for an average of 1145 sq ft, or $215 per square foot. The average tax value of those properties is $268,765. So, in the case of downtown Charlotte, properties sold at 8.4% below the tax value!

If you wish to have a copy of this spreadsheet, please eMail me and I will forward it to you. I have sorted it by complex in an effort to help define specific buildings.

Public Market And Farm To Fork Foods

It was almost a year ago that Reid’s announced that they were closing Reid’s Fine Foods at Seventh Street Station. The building has been vacant since the middle of June. Charlotte Center City Partners announced an ambitious plan to create a “Public Market” based on the models of Pike’s Market in Seattle, and The West Side Market in Cleveland. Part of their announcement included a plan to ask the local governments to contribute $1 million dollars for the upfit.


Well, judging from the lack of enthusiastic support, that request was quickly pulled back. What has happened since is a number of workshops from local groups, both from the community as well as the farmers and craftspeople to try to gauge the likelihood of this actually happening. Private donors have been secured to fund the project without governmental help, and the plans are moving forward very fast. I would expect a major announcement before the end of March, and a targeted opening in early summer.

This bodes well for people like me who do food shopping every day. I by fresh, cook fresh and throw nothing away! I let the markets be my refrigerator. But more than just that, the ability to buy foods that are not processed offer a chance to better control my diet.

In  view of that, Executive Chef Cassie Parsons is preparing to launch a local food program to make it more convenient for the people of Charlotte to obtain the same high quality products we serve at the Harvest Moon Grille as well as support our local farm economy. This online local store will feature Carolina raised proteins and produce, artisan cheeses, preserves, and many other wonderful items made right here in our community. More information will be forthcoming over the next several weeks, but it promises to add to our urban lifestyle.