Feature

November/December 2007

Banking on Charlotte

Charlotte is a city on the move with billions in new construction anchored by one of the country’s most important financial centers

By Debra Wood

Davis broke ground in 2007 on the NASCAR Hall of Fame and NASCAR Plaza, a mixed-use complex that will connect to the Charlotte Convention Center.

A duo of financial powerhouses is fueling the revival of the central business district in Charlotte, N.C. Bank of America and Wachovia are building new corporate towers that will have a big impact on the city’s core. In addition to Wachovia and Bank of America, 18 other banks have set up shop in Charlotte, as did the Federal Reserve Bank in 1927. Charlotte now ranks as the second-largest financial center in the nation, behind New York, with more than $2 trillion of assets, according to a March 2007 report from the Charlotte Chamber of Commerce.

From 2000 to 2006, Charlotte’s population increased by 14.6%, making it the seventh-fastest-growing area in the country with more than 1 million people, the Charlotte Chamber of Commerce reports. “It’s a hot market,” says Steve Gennett, Carolinas AGC president and CEO. “This market is growing. Condos are still going up, despite the real-estate situation. I haven’t seen it slow down.”

A shortage of office space has triggered office starts, Gennett adds. CB Richard Ellis Group Inc., New York City, reported in July that Charlotte had the nation’s lowest downtown office-vacancy rate in the second quarter of 2007, at 3.1%.

And there’s much more going on in the city. City Center Partners reports that in 2006 and 2007, more than 50 projects were announced or had begun construction, representing about $4.8 billion in development activity. This includes 1.2 million sq ft of retail space and more than 4 million sq ft of office space.

“Some people would say, ‘It’s a city in the right place at the right time.’ But that’s not always the whole story,” says Patricia A. Rodgers, president and CEO of Rodgers Builders Inc., Charlotte, and the incoming 2008 Carolinas AGC chairman of the board. “We’re fortunate to have had visionary leadership through the years. Hugh McColl, Jr. and Ken Lewis of Bank of America took a local hometown bank and grew it into one of the largest banks in the nation and chose to keep the headquarters in Charlotte. Wachovia is a similar story, and when it merged with First Union, [the bank] moved the headquarters to Charlotte.”

McColl retired from Bank of America in 2001 when Lewis assumed the role of chairman and chief executive officer. Wachovia merged with First Union in 2001. The two financial institutions now have projects rising at opposite ends of uptown Charlotte.

Building Green

The Charlotte office of Balfour Beatty Construction is building the 32-story, 750,000-sq-ft Bank of America tower. The project, designed by the local office of Perkins & Will, includes a 700-car parking garage and a 150-room Ritz-Carlton hotel adjacent to the new office building. A glass-enclosed pedestrian walkway will allow employees housed in the LEED-registered building to walk to the bank’s corporate headquarters across the street. Bank of America is aiming for gold-level certification.

Charlotte Center City Partners, a municipal service district-supported organization that promotes the economic and cultural development of the urban core, pegs the project at $390 million, with construction to wrap up on the hotel in 2009 and the office building in 2010.

Wachovia has embarked on the $1-billion Wachovia First Street Project, which includes 1.5 million sq ft of retail and office space; 300 residential condominiums; a 2,200-car, eight-level, below-grade parking garage; a theater; two museums; the Afro-American Cultural Center and central energy plant. Spanning two city blocks, the complex is scheduled to open in summer 2009.

“This project drops our anchor deeper into the roots of Charlotte,” says Bob Bertges, director of corporate real estate for Wachovia. He says that the need for more trading space sparked the project. Wachovia’s corporate and investment bank will use the space to buy and sell stock or other financial products and to monitor the markets.

“Compelling business reasons drive you to Charlotte,” says Bertges, explaining that adding 1,800 new employee positions in Charlotte costs the bank $24 million a year less than it would in New York City.

In addition, the project offered an opportunity to help the city build cultural facilities, something that Bertges says enhances the city and makes it easier to recruit and retain financial talent.

“New property taxes generated from the office tower and condominiums pay for about 50% of the cost of the four cultural facilities we’re building,” he says. “Ultimately, the city will own and operate them in conjunction with the various cultural groups. The other half of them is paid for with a car-rental tax increase approved at the state level.”

Avenue, being built by R.J. Griffin & Co., was one of Charlotte’s first condo projects.

The design team includes Mancini Duffy, New York City, and Little Diversified Architects, Charlotte, for the Wachovia office space and infrastructure; TVS Architects, Atlanta, for the executive office space; Rule Joy Trammell + Rubio, Atlanta, for the condominiums; The Freelon Group, Durham, for the Afro-American Cultural Center; Mario Botta Architetto of Switzerland and Wagner Murray Architects, Charlotte, for the Bechtler Museum; Machado and Silvetti, Boston, and Clark Patterson Associates, Charlotte, for the Mint Museum; and Thompson, Ventulett, Stainback & Associates, Atlanta, for the Knight Theater.

Batson-Cook Co., West Point, Ga., is serving as lead contractor, handling the infrastructure work, associated tunnels and the garage. It also is building the 42-story, LEED-registered condominium tower, aiming for certification.

A joint venture of Batson-Cook and J. Russell & Co. of Atlanta is responsible for constructing the 48-story, LEED-registered office building, including three levels of trading floors. Wachovia is striving for gold-level certification and will require tenants to obtain interior certification. R.T. Dooley, Charlotte, will provide the trading floor-infrastructure, data-center and outfit work.

The $1-billion Wachovia First Street Campus combines office space and a trading floor for the bank with museums and a theater.

Batson-Cook and Russell, in partnership with Leeper Construction Co., Charlotte, will build the Afro-American Cultural Center, a 45,940-sq-ft structure, which will include art galleries, classroom space and a lecture hall.

Wachovia has not yet let the contract for the exterior portion of the 145,000-sq-ft Mint Museum, which will house collections from the Mint Museum of Craft + Design, other art and traveling exhibits.

Wachovia has committed to spending 20% of the cost of the entire project with minority vendors, and Bertges says he expects that number to end up between 24% and 27% by the time the project wraps up. “In the process, I think we will see a lot of small companies become medium-size companies, and medium-size companies get bigger,” he says.

Rodgers broke ground in September on its portion of the Wachovia project. In partnership with Walter B. Davis Co., Charlotte, a minority contractor, Rodgers will build the Bechtler Museum and the 1,200-seat Knight Theater. The Bechtler Museum will contain 20th-century artwork, including works by Pablo Picasso and Edgar Degas.

The Knight Theater will serve as a venue for live performances and as the home of the North Carolina Dance Theatre. The theater design calls for a two-tiered lobby with a grand staircase and two levels of seating.

Racy

Construction manager Turner/BE&K/ Davis, a joint venture of the Charlotte offices of Turner Construction, BE&K Building Group and Walter B. Davis, broke ground in May on the mixed-use NASCAR Hall of Fame. The project includes a 20-story, 390,000-sq-ft office tower, called NASCAR Plaza; restaurants and retail space; a media center; 1,000-car parking garage, and convention center ballroom. An over-street walkway will connect the NASCAR building with the Charlotte Convention Center.

“We feel it will be a tremendous boon to the economy,” says William Haas, project manager for the city of Charlotte Engineering and Property Management Group.

The city will own the $157-million, 40,000-sq-ft NASCAR Hall of Fame and ballroom facilities and the Charlotte Regional Visitors Authority will operate them. The city is primarily funding the project through room taxes. It also will receive land from the state after it removes a cloverleaf and reconfigures the on-ramp to Interstate 277. The city plans to sell the former cloverleaf site for redevelopment and use that money to help finance the Hall of Fame.

Lauth Property Group, Indianapolis, will own and operate the $100-million, LEED-registered NASCAR Plaza. NASCAR Images and NASCAR Licensing will lease a portion of the steel-frame building. The city and Lauth will share the parking deck.

“Charlotte is a tremendous economic market with a strong need for class-A office space,” says Marc Lotter, spokesperson for Lauth. “It’s a wonderful opportunity to be associated with NASCAR, and it’s adjacent to the convention center.”

Pei Cobb Freed & Partners, New York City, designed the NASCAR complex. A twisting, oval-shaped exterior architectural feature gives the appearance of a speedway. The project is scheduled for completion in 2010.

St. Louis-based Clayco broke ground in October 2005 on the EpiCentre for The Ghazi Co., Charlotte, and Noble Investment Group, Atlanta. DMR Architecture of Charlotte designed the garage and five lower buildings.

The mixed-use development on the site of the city’s former convention center includes two structural-steel and three concrete buildings housing entertainment, restaurants and retail outlets.

A 10-story hotel, being built by Winter Construction, Atlanta, sits on top of one of the concrete buildings, and a 44-story residential condominium, 210 Trade, above the five-level parking deck and shops.

R.J. Griffin & Co., is building the $123-million 210 Trade condominium tower for Flaherty & Collins Properties. The building will have a geothermal heat-pump HVAC system with cooling towers on the roof and a window wall and aluminum-composite panel exterior. Completion of the building, designed by Gromatzky Dupree and Associates, Dallas, is expected in December 2009.

A mix of offices and residences, 300 South Tyron broke ground late in 2007

R.J. Griffin broke ground this fall on 300 South Tryon, a 33-story, mixed-use development by Spectrum Properties of Charlotte and Cornerstone Real Estate Advisors, Hartford, Conn. It features 367,000 sq ft of office space, 49,000 sq ft of retail and health club, 257,000 sq ft of residential condominiums and 224,000 sq ft of below-grade parking. Center City Partners estimates the cost at $200 million. Hughes expects to complete construction in August 2010. Excavating 50 ft underground on a site surrounded by other structures and the complicated exterior glass systems will be some of the project’s greatest challenges, says Mike Hughes, senior estimator for R.J. Griffin.

The new post-tensioned concrete building, designed by LS3P Associates, Charlotte, will sit on spread footings and caissons. The developer already has begun planning a second, solely residential tower, Hughes says.

University construction is also growing. The Wake Forest University Babcock Graduate School of Management will locate at the new Wachovia project. The University of North Carolina, Charlotte, has announced plans for a 150,000-sq-ft academic building in the city center.

Rodgers credits Charlotte’s growth to the area’s affordable cost of living with proximity to mountains and the coast and to a well-trained labor force that attracts businesses to the region. “This is an amazing community. We continue to work together,” she says.

Light Rail Arrives in Charlotte Light rail will begin operating in Charlotte this fall. The 9.6-mile system, owned and operated by the Charlotte Area Transit System, runs from the central business district south to the city’s outer beltway, Interstate 485. Each light-rail car will travel up to 55 mph and have a capacity of 236 people. A half-cent sales-tax referendum, passed in 1998, helped fund the $462.7-million project, which includes 15 stations; a 92,000-sq-ft vehicle maintenance facility and $50 million of South Corridor road, intersection and drainage improvements. The tax generates between $75 million and $80 million annually. The light-rail project is an outcome of the city’s plan to enhance Interstate corridors with public transit, says David Leard, CATS senior project manager. Archer Western Contractors, Atlanta, received the roadbed and station contracts, now totaling $170 million, $120 million and $50 million. The tracks were built along 4.5 miles of Norfolk Southern rail right-of-way and 4.5 miles of abandoned rail right-of-way closest to downtown. The light rail runs through the convention center on floating slabs to decrease vibration. Mass Electric, Boston, a division of Kiewit, installed the signaling, communication, train control and power in $50 million worth of contracts. Edifice of Charlotte built a $30-million vehicle maintenance, customer service and bus operations control facility, located 3.5 miles from downtown. The work included installing approximately 2 miles of track with 5,000 ties. Designed to resemble a cotton mill, the building’s saw-tooth roof allows indirect light into the floor shop, and the vehicle wash system uses recycled water. Two of the stations feature interesting components. At Scaleybark Road, the project entailed moving a 1-mile section of road, which opened a dilapidated industrial area to redevelopment. At the I-485/South Boulevard station, CATS has leased for $1 a ravine behind an elementary school for 99 years. In that space, Crowder Construction, Charlotte, built a $22-million 1,100-car, cast-in-place parking deck with a grass playground on top for the school. The structure sits on 105 piers drilled up to 50 ft deep. CATS had expected the piers would need to be drilled only 15 ft before reaching bedrock. After the work began, CATS took more geotechnical borings and modified the design to eliminate some of the deeper piers. CATS plans to add commuter rail north of the city, more light rail to the northeast, a bus transit line and two streetcar rail lines. “The reason for [the different types of rapid transit] is we are responding to the characteristics of each corridor,” Leard says. “Part of it is driven by a desire to have the transit and lane use work hand in hand.”