Writer: Joshua Andino
2 min read July 2023 — As economic forecasts begin to shift in favor of a potential soft landing, Charlotte leaders have held a cautiously optimistic approach throughout much of the recent market turmoil.
Several trends have buffered and even boosted the Southeast over the last year. Population growth, business relocations and continued federal investments as part of the Infrastructure Investment and Jobs Act, Inflation Reduction Act and the CHIPS and Science Act have unlocked trillions of dollars that has some making the argument that the country’s economic pole has shifted toward the Sun Belt. In a sign of the changing sentiment around the country’s economic outlook, Morgan Stanley revised its projections for U.S. GDP growth for the first half of the year to 1.9%, up from its earlier expectation of 0.5%. Analysts raised GDP projections for the fourth quarter of the year to 1.3% from 0.6%, and up a 10th of a percent to 1.4% for next year.
“The economy in the first half of the year is growing much stronger than we had anticipated, putting a more comfortable cushion under our long-held soft landing view,” Ellen Zentner, the firm’s chief economist, wrote in note, citing large scale investments in infrastructure and manufacturing construction as key drivers.
In Charlotte and across North Carolina, Electric Vehicle and chip plants are breaking ground, headquarters have steadily relocated and Charlotte’s population continues to grow. New development, housing and healthcare needs continue to expand. Per the in-house Capital Analytics Business Sentiment Survey, which recorded the responses of over 200 business leaders across the Sun Belt, 65% felt the economy was in a better position than six months ago. While challenges remain across a number of sectors, particularly finding qualified labor, others such as supply chain disruptions are slowly resolving as vendors and suppliers have adapted in the face of global instability. Invest: spoke to leaders across the Charlotte region and inquired about their economic outlook and where they see opportunities to capitalize on, potential challenges and what the future may hold moving forward.
Tim McClellan, President, Miles-McClellan Construction Company, Inc.
We keep hearing about a recession but consumer confidence is still high. Overall, we are seeing a longer pre-construction life cycle and the sales cycle is longer than usual, primarily because financing sources are tightening up. There have been issues with banks, including regional banks and the failure of Silicon Valley Bank, and SBA loans are taking forever to get approved and closed. That has been our biggest challenge. We’ve seen our customers go to different financing sources, such as private financing, which offer a little more flexibility and a quicker loan process. Other than that, we haven’t seen much negative change.
Randy Rushakoff, Senior Area General Manager, Midas Hospitality
The economy is great and there has been a lot of demand in Uptown for the last 15 years. We are excited to keep developing our hotels and taking over third-party management of hotels. We are picking up a few properties in Arizona, Arkansas, Texas and California and we are building in St. Louis and Charlotte. These are all good opportunities for our employees, associates and stakeholders. Charlotte is doing great and there is a lot of demand. We are developing an Element by Westin hotel across from the Nascar Hall of Fame. It will come online in October. The new soccer team fills hotels on weekends and we have a couple of tournaments this year. It is great to see everyone back out at live performances and concerts after COVID because it is wonderful for our business. We are close to Downtown and restaurants but there are a lot of Airbnbs as well. Many people want free breakfast and knowledge from the front desk, rather than just checking into a place with a bed.
Ryan Richard, CEO, Shred America
In the next three to five years, our focus is to approach the $50 million mark while maintaining our commitment to employee satisfaction and flexibility. Additionally, we are expanding our presence in the document storage industry, acquiring another warehouse and investing in scanning and imaging capabilities. Our vision extends to the hard drive and media destruction sector, where we anticipate growing demand. By dedicating resources to specialized trucks and equipment, we aim to meet the needs of clients who require secure disposal of sensitive information. Our success is attributed to our dedicated team and we continue to prioritize the recruitment of quality individuals who align with our culture. Despite the rising cost of hiring, we are willing to take risks to ensure the growth and success of our organization, as we strive to become the leading information security company in the country.
Brian Hirsch, President, SunCap Property Group
As supply chains continue to reinvent and modernize, we see continued demand in Charlotte and the region. This progression puts Charlotte among the top of its peers nationally in terms of growth opportunities. This region is relatively large from an industrial perspective, including fifteen highly engaged counties that are involved in the growth of the broader market. Each of those counties works collaboratively as demand shifts. Charlotte is large enough to allow sharply tailored investment into several parts of the market. Continually improving infrastructure connects growth markets from Richmond to Atlanta. That entire corridor works in unison to provide efficient regional distribution to a growing Southeastern population. We’re seeing a significant rise in development of larger industrial spaces – buildings half a million square feet and larger – in areas that tend to be on the Interstate at the perimeter of urban markets. There are also a lot of more localized industrial opportunities in submarkets like State Line, where there is high population density and need for quick distribution times or larger pools of labor supply.
