City of Charlotte EtiEstima tdDted Deve lopmen t Potential For Transit Corridors & Activity Centers 2008 – 2035 April 2009 CITY OF CHARLOTTE—ESTIMATED DEVELOPMENT POTENTIAL FOR TRANSIT CORRIDORS & ACTIVITY CENTERS Background and Objectives In January of 2009 the City of Charlotte retained Noell Consulting Group to analyze long-term growth trends in Mecklenburg County and to identify the amount of development that can be expected to occur in transit corridors and key activity centers in the coming 27 years. Understanding the potential amounts of growth that can be reasonably expected to occur in this area will assist the City’s long-term planning efforts not only in these areas, but throughout the county as a whole. Included in the areas examined are: 41 existing and planned transit stations along the South, North, Northeast and Southeast transit corridors; Nine activity centers (Center City, Northlake, University Research Park, Cotswold, Southpark, Ballantyne, Coliseum, Whitehall, and Steele Creek); and Three planned streetcar corridors (Central, Beatties Ford, and Wilkinson Boulevard). To this, our objective in this effort is to understand macro (national, regional) and local (county and sub- county) trends and conditions occurring today and in the coming years and, placing these key areas in the context of these trends, and identify the level of growth that is likely to occur in each of these areas as well as in the remaining portions of the county. Land uses examined include higher-intensity residential uses (attached for-sale and rental product, as well as higher-intensity detached for-sale development), office, and retail uses. As with previous efforts, growth will be allocated to each station area and activity center, noting the growth in population, households, and employees likely to occur from these land uses in each area in 10-year increments through 2035. As noted, similar efforts have been conducted for each of the transit corridors in the past five to six years. It is important to note, however, that in each case growth was allocated only to the corridors studied and not to the other activity centers and wedge areas of the county. As such, this analysis represents a more comprehensive and detailed examination and allocation of growth than those previous studies were able to provide. Approach and Key Assumptions The approach to this analysis was both top-down and bottom-up; bracketed by key assumptions and constraints relative to the total amount of population, household, and employment growth occurring in the county over time, but incorporating trends, conditions, development projects, and location considerations affecting development potential within individual station areas and activity centers. CITY OF CHARLOTTE ESTIMATED DEVELOPMENT POTENTIAL FOR TRANSIT CORRIDORS & ACTIVITY CENTERS A number of key assumptions were incorporated into this analysis and are described below. The U.S. economy will rebound in the coming two to three years and will again gain forward momentum, both experiencing peaks and recessions cyclically in the coming decades. To this, the current recession will not become a depression and will not have a long-term paralyzing effect on the development of real estate in the country. Growth and development of real estate are not assumed to continue at the torrid and unsupportable pace which occurred throughout the mid 2000s and a more tempered level of growth is assumed to occur; one in which demand and supply operate in equilibrium over time. Total estimated household growth (202,141) and employment growth (450,827 jobs) for Mecklenburg County between 2005 and 2035 are based on estimates provided by the City and are matched by 10- year increment through the time period studied (2005, 2015, 2025, 2035). These levels of growth are indeed below those seen in the first 8 years of this decade. Employment growth estimates by job type are based on previous studies conducted by the Lee Institute for the City of Charlotte; Transit system development that provided for the creation of the North and Northeast lines between 2014 and 2017, and the Southeast line after 2020; Proactive policies to encourage development of higher-intensity residential and commercial uses in centers and corridors and away from the wedges (areas outside of both); In increasing share of lower-density (conventional) single-family development will shift out of Mecklenburg County as the county continues to approach “build-out” and development of such product becomes less and less feasible; Similarly, preferences for both attached for-product (condos and townhouses) and higher-intensity detached product (aka TND development) will increase as those that value more square feet and lot size for the money increasingly opt to purchase outside of the county; and Charlotte’s economy will rebound and the impacts of the banking fallout will not be crippling long- term. To this, the overall health of the banking industry will return over time with both Bank of America and Wells Fargo maintaining a substantial commitment to the Charlotte area over time. Finally, it should be noted that this analysis differs from previous efforts in several key ways. First, it focuses solely on those higher-intensity land use desired in station areas and activity centers and does not include uses such as conventional single-family detached residential, flex office (business park space), or industrial land uses. Second, the station area allocations apply to an approximate ¼-mile radius around each station; smaller than the ½-mile radii looked at previously. And finally—perhaps most importantly—this represents the most comprehensive analysis conducted to date, not only analyzing station areas in all four corridors, but analyzing the nine activity centers and measuring impacts to the wedge areas as well. 04.06.09 Page | 2 CITY OF CHARLOTTE ESTIMATED DEVELOPMENT POTENTIAL FOR TRANSIT CORRIDORS & ACTIVITY CENTERS Executive Summary Over the next 27 years Mecklenburg County will become an increasingly urban county, with demographic and economic growth trends favoring intensification of residential and commercial uses in key activity centers and in the four major transit corridors in the county. Trends supporting this intensification include: A growing demand for attached product (townhouses, condos, and apartments) resulting both from market preferences and issues of affordability; Land economics and demographic trends resulting in a greater share of single-family detached homes being built at higher-intensities relative to conventional single-family product that has dominated the county historically; A greater preference for areas that are highly walkable, diverse in land use and people, and convenient; and Office users increasingly favoring areas with a higher-quality environment for their employees, including areas with residential components and that, again, are walkable and convenient. Given these larger trends and others more immediate to the Charlotte area, the four transit corridors and the activity centers studied (nine in total) are expected to gain market share in the coming years, capturing more than 40% of all new residential growth, 78% of new office growth, and more than half of the new retail growth. Capture Shifts by Area and Product, 2000 - 2035 Area 2000 – 2007 2008 – 2035 Activity Centers Residential 14.2% 18.1% Office 66.2% 59.7% Retail* 26.6% 24.6% Transit Corridors Residential 11.8% 23.0% Office 7.2% 18.5% Retail 17.8% 28.5% Wedges Residential 74.1% 58.9% Office 26.6% 21.8% Retail 55.6% 46.9% *NOTE: Activity Centers Historic Captures of Retail include Northlake Mall The City of Charlotte and the four towns traversed by transit corridors should seek to focus infrastructure and policy efforts to bolster the corridors and station areas. The large-scale transit investments being made represent a significant commitment to a centers and corridors growth policy and effectively shifting growth patterns will require other, smaller investments as well. Such investments include streetscaping, parks and open spaces, increasing walkability, and other placemaking efforts. 04.06.09 Page | 3 CITY OF CHARLOTTE ESTIMATED DEVELOPMENT POTENTIAL FOR TRANSIT CORRIDORS & ACTIVITY CENTERS Growth in the transit corridors will be strongest inside of Route 4 and in greenfield areas, as well as in the small towns along the North Corridor. More challenging will be an aging suburban area just beyond Route 4 where redevelopment and intensification are often infeasible given the high costs of redevelopment and the limited upside premiums these areas can generate. The City should focus on value creation in these areas through the use of the tools noted in the preceding paragraph as well as other potential policies including razing of failing retail space that limits the perception and attractiveness of some areas. When factoring for station areas not previously examined, growth estimates for the station areas along the four corridors overall are generally in line with those of previous studies, with a few key exceptions: South Corridor: Office and retail growth are lower due to challenges of redeveloping those uses from Woodlawn South, while residential is higher due to its strong reception in the corridor; North Corridor: Relative to the Glatting/RCLCO Allocations, captures are higher across all land uses, although these captures are somewhat lower than those provided in a study for Cherokee Fund in 2008 (see below); Northeast Corridor: Greater retail allocations