Head planners from the city of Wilmington and Brunswick County and UNCW’s chief economist shared their insights on the past year and future of development in the Cape Fear region at a lunch held Thursday by Cape Fear CREW, an organization that promotes women's careers in commercial real estate.
There were no major surprises at the "state of the market" commercial real estate luncheon. Still, the experts tackled common post-pandemic questions floating around: Is this the end of office and retail space as we know it? Is inflation here to stay?
The panel discussion kicked off with seeing what the local planners are noticing come down the pipeline. “What we’re hearing around the city of Wilmington is multi-family, multi-family, and multi-family,” said Wilmington interim planning director Ron Satterfield.
Adam Jones, UNCW’s regional economist, reflected on the recent shift in sentiment toward the proliferation of multi-family projects in the region. The reversal was prompted by ongoing conversations in the region surrounding affordable housing.
“It wasn't that long ago that one of the big questions we had [was], ‘Why are we building so many apartments? Where all these people going to work?’” he said. “And now the question is the opposite: ‘Where do we find workers? Can't we build more apartments to get more people in?’”
Last month, the city’s new land development code (LDC) went into effect, allowing duplex developments in R-7 residential areas. It also eased up regulations to make accessory dwelling units more buildable. Part of the city's reasoning was the lack of available land and recognizing the utility of infill projects that can prop up lower- to moderate-income units.
“I see us taking it even further in the next couple of years,” Satterfield said of the city’s code, referencing regulations in Charlotte and Raleigh that allow multi-family units in all residential zoning districts.
In October 2020, the city introduced its first incentive for workforce housing, giving developers a density bonus if they commit to setting aside 10% of units at a discounted rate for 15 years in commercial district mixed-use zoning; the new LDC expanded this offering to apply to multiple-dwelling zoning districts as well.
Both Satterfield and Brunswick County planning director Kirstie Dixon said affordable housing isn’t a government or developer problem. “It’s a community problem,” Dixon said.
Jones reflected on the difficulties with public transit – “the most expensive way for you to travel” – and the complications that will arise from a low-income workforce being pushed further outside of town to find affordable housing. The dilemma could impact prospective employers’ interest in the region from the perspective of finding a dependable workforce, he said.
Aside from affordability, there may be other social factors at play driving the multi-family boom, according to Jones. Millennials are less interested in ownership – “they have a tendency to [subscribe] rather than own a lot of items” – and tighter units can lead to more social interaction, which leads to greater life satisfaction, he said.
Residents often complain about the number of car washes and storage units, with the latter propped up to service the influx of apartments. Asked how much is too much, both planners said the market will decide.
In Brunswick County, “the apartment complexes are overrun with vehicles,” Dixon said, citing the majority retiree population. In the ongoing Blueprint Brunswick 2040 plan, officials are revisiting the county’s parking standards, Dixon said.
This fiscal year alone, Dixon said the county has approved 14,000 residential units. Growth projects put on hold (like the Highway 211 widening) by the previously cash-strapped North Carolina Department of Transportation are back on, a temporary strain for a needed improvement, she said.
Despite the interruptions to retail the pandemic introduced, the planners said they’re still seeing projects come through, though with likely a smaller footprint than before.
Eliminating commercial parking minimums in Wilmington from most non-residential zones through the LDC could improve the future retail scene and cut costs for developers, Satterfield said. Most retail parking space was underutilized when the city conducted a study prior to implementing the new code, he said.
Jones said retailers will continue to feel pressure to compete with e-commerce through experiences: “What can they offer that online can’t offer?”
“Just think of all of the craft breweries that are popping up. What do they sell? They sell something you can buy in cans in a cardboard box at a gas station,” he said. “We want the experience of being there, the atmosphere.”
Satterfield said in the upcoming years, the city will see some of its unsightly vacant properties redeveloped.
As companies and employees grow accustomed to remote work and its now-permanent stake in work life, there’s speculation surrounding the utility of office space. Dixon said she wouldn’t rule out offices, but also added she’d personally like to see a model where more employees could share a common space on a rotating basis by incorporating in flex workers.
Jones reflected on the perks of both in-person and remote work, noting university researchers sometimes need a day or more to "hide" to be productive while in the midst of a project.
As for inflation, Jones said he personally doesn’t think it will remain at 7%, but that it will linger around 3-3.5% over the next couple of years.
“My concern is that the longer it goes on, and the more we start to expect it, and that gets baked into our pricing and our expectations, but then it becomes more permanent,” he said. “Then that’s going to require the federal reserve to stomp on the interest rate brake much harder.”
Author’s note: Greater Wilmington Business Journal assistant editor Cece Nunn moderated the panel discussion.
Cece Nunn - Nov 29, 2022
Cece Nunn - Nov 30, 2022
Staff Reports - Nov 29, 2022
Miriah Hamrick - Nov 30, 2022
Miriah Hamrick - Nov 30, 2022
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