Michael Smith, president of the Uptown booster group Charlotte Center City Partners, recently used the "D" word when talking about the Uptown real estate market in an interview with NewsTalk 1110 WBT's Al Gardner.
"D" as in "depression."
Smith was talking about the halt of construction at The Vue. If its owners, who had stopped paying their contractors, don't get "stuff" straightened out with their lender, the partially finished condo tower could add more rust to the Uptown skyline.
"The Vue is a great project and it is one that has kind of defied gravity and continued to climb right into the teeth of this depression," Smith said. When Gardner asked Smith if he'd meant to use the "D" word, Smith quickly self-corrected.
"That's a little bit dramatic," Smith said, relabeling it a recession. What Smith actually meant, I surmise, was that the "D" word was a little bit dramatic for use in public -- because the Uptown crowd doesn't cop to such things.
"We entered this downturn with such momentum," Smith fumbled on, referring to the opening of the Lynx light rail line. "We've got six cultural facilities that are going to open over the next 12 months."
People don't buy condos to go to cultural facilities they might visit once a year. They buy them to live near where they work. Smith didn't mention anything about job announcements in Uptown because there haven't been many.
And that's the problem. Was the term "depression" the right one?
If you bought an Uptown condo, you know that new Uptown condo developments can have a semi-ghostly feel to them at times. Only a third vacant? That's great news.
Unless you read the Charlotte Business Journal, the only local publication to shoot straight about the Uptown condo crisis -- yes, it is a crisis -- this is news to you.
If you had to guess -- and if you read the Charlotte Observer, you do -- how many Uptown condo purchase closings would you estimate occurred between January and July of 2009? Three hundred? One hundred fifty?
Try 63. That's nine a month. Nine. As the Journal reported earlier this month, that leaves a minimum of 900 vacant units to be absorbed into the Uptown market, a nine-year supply at the current rate. And that doesn't count the investors who have given up on selling and are renting, in the process contributing to a spiraling rental crisis that has pushed the residential vacancy rate at more than 20 percent. Given the hundreds of vacant units still coming on the market, I can't imagine how high it will go.
In a more forthcoming journalistic environment, the local news would be filled with stories of condo owners and investors flipping out. Not just those who lost deposits when yet another condo tower project went belly up, but those left holding the bag when they couldn't sell condos in the hippest developments touted by the local media for even half of what they paid for them.
For more than three years, the Charlotte Observer and Emma Littlejohn, president of the Littlejohn Marketing Group, assured us that there was no condo glut, just boom, boom, boom. Other points of view were rarely tolerated, so the paper simply quoted Littlejohn over and over while she profited from the faux boom she, the Observer and others helped to sell.
Then Observer business page editor Doug Smith, the architect of the breathless condo coverage, sailed off into the sunset of his retirement, leaving a trail of real estate wreckage in his wake and deeding his rolodex with Littlejohn's contact info to the next generation of reporters. It's the Uptown way.
No one could have seen the financial crisis coming, or the real estate bubble bursting the way it did. But even if it hadn't, it's now clear that Charlotte, which was building for a banking boom, would still have been way over-built.
Now that the bust is in full swing, the best that Smith of Charlotte Center City Partners can offer is more entertainment facilities. He and the city's present leaders are relics of the 1990s, when endless dominance of the banks in Charlotte was presumed, and the only development needed was the social/cultural/nightlife kind they put on the glossy pages of the bank brochures.
And yet city leaders still plod on, planning to spend $1 billion on a light rail line and debating another half billion on an Uptown street car. Part of the total $1.5 billion tab is supposed to be paid for by -- get this -- property taxes on new development along the streetcar and rail lines. A sales tax hike was also debated, but has been ditched for now.
When Forbes recently named Charlotte to its list of America's most stressful cities -- we're 25th -- the author wrote that "Charlotte residents likely consider the city most stressful for its 12.4 percent unemployment rate."
Charlotte's rate was the third highest of the 40 metro areas Forbes examined. Mecklenburg County has a rate of 11.7. In Wake County, home to Raleigh, the rate hangs at 8.8 percent.
Some of this will fix itself when the economy improves. But as the Raleigh numbers show, some of it won't. And all the additional cultural facilities, streetcars and stadiums in the world won't make a dent.