The Bad News Report

[SouthEndCLT811]

+60% here.  Though I am confused about my "finished square feet" and "total square feet".  They have the Total of our home at about 900 square feet more than what we actually have.  I looked at a few neighbors homes and don't see that great of a variance so we'll be asking about that once we're able.

[KJHburg]

38 minutes ago, SouthEndCLT811 said:

+60% here.  Though I am confused about my "finished square feet" and "total square feet".  They have the Total of our home at about 900 square feet more than what we actually have.  I looked at a few neighbors homes and don't see that great of a variance so we'll be asking about that once we're able.

finished square feet is heated/cooled space and total square feet could include garages, unfinished basements etc.  

[tozmervo]

My square feet also appears to include my front door stoop and outdoor, uncovered wood deck. I couldn't find any clear definition on the assessor's website so I filed an appeal based on that. 

[SouthEndCLT811]

15 minutes ago, tozmervo said:

My square feet also appears to include my front door stoop and outdoor, uncovered wood deck. I couldn't find any clear definition on the assessor's website so I filed an appeal based on that. 

I appealed my 1,444 finished square feet but 2,300 total square feet and found the same.  They are including my deck and stamped concrete patio

[rancenc]

Bad news in the world of matrimony attire!!

https://wraltechwire.com/2023/04/18/davids-bridal-lays-off-employees-at-10-nc-locations-files-for-bankruptcy/

[CLT2014]

48 minutes ago, rancenc said:

Bad news in the world of matrimony attire!!

https://wraltechwire.com/2023/04/18/davids-bridal-lays-off-employees-at-10-nc-locations-files-for-bankruptcy/

Bridesmaids everywhere rejoice

[go_vertical]

2 hours ago, rancenc said:

Bad news in the world of matrimony attire!!

https://wraltechwire.com/2023/04/18/davids-bridal-lays-off-employees-at-10-nc-locations-files-for-bankruptcy/

No doubt the current times with inflation and everything hastened this development, but it feels like this was a trend that has been growing over the last several years.  Of course I'm speaking anecdotally here, but it seems like the last few weddings I've been to have been more low-key and much less extravagant affairs.  Still very nice just not the over the top, money pits that everyone felt like they just had to have ten to twenty years ago.  Many people are finally starting to wise up to the fact that they just don't need all that crap to still have a beautiful and memorable day.

[rancenc]

Another retailer will soon be disappearing from the shopping landscape!

https://www.reuters.com/business/retail-consumer/bed-bath-beyond-files-bankruptcy-protection-after-long-struggle-2023-04-23/

[QCxpat]

Today's CBJ  -  "Real Estate firm Dilweg hands First Citizens Bank Plaza back to lender after WeWork defaults on lease" by Elise Franco

Excerpt:  "Anthony Dilweg,  CEO and founder, told the Charlotte Business Journal that the Durham-based firm handed First Citizens Bank Plaza, at 128 S. Tryon St., over to the lender on April 14.  The company tried to restructure its financing tied to the property but couldn't come to terms with the lender, Dornin Investment Group, he said."  "We were looking to infuse about $30 million back into that (property), but we had to restructure the debt and the value and build it back up," he said.  "We didn’t come to terms.  It wasn’t something that was of strong interest to (the lender)."  "Dilweg purchased the 23-story, 476,393 sq. ft. building in 2017 for $79 million, according to previous CBJ reporting.  About $120 million is owed on the loan, Dilweg said."

"The tower took a hit to its occupancy earlier this year, after New York-based co-working and flex workspace company WeWork defaulted on its lease.  Dilweg said negotiations between his firm and WeWork were unsuccessful and that the tenant vacated its space in March."  "WeWork moved into seven floors at First Citizens in 2019.  It has two other Charlotte locations in the Regions 615 building, at 615 College St., and The RailYard South End, at 1422 S. Tryon St.  The company announced in November that it would be closing at least 40 underperforming locations across the country."  "The tower is now about 42% occupied, according to CoStar data.  Other tenants include First Citizens Bank, architecture and design firm Perkins + Will, logistics company Spot and MOA Korean BBQ."  "Dilweg said he expects this to become a common theme across the commercial real estate industry as the office market continues to struggle."

Link:  https://www.bizjournals.com/charlotte/news/2023/04/24/dilweg-first-citizens-bank-plaza-wework-office.html?

 

N.B.:  Today 1:54 p.m.   The WeWork sign is gone.

Edited April 25, 2023 by QCxpat

[KJHburg]

I am afraid this is the first of many in the next few years as commercial property owners find their financing come due and they have to refinance.  Higher rates and lower occupancy will cause many key handbacks.   2 large prominent highrises in downtown LA have already had this happen.    (  https://www.costar.com/article/104362755/brookfields-downtown-los-angeles-office-reit-defaults-on-office-tower-loans )     This coming commercial real estate storm is going to be big and bad and probably last for a couple of years.  When you raise interest rates the fastest at any time in the last 40 to 50 years you will get some shock.  However this time it will be mostly on commercial properties not residential. 

As for Wework I was lied to as I was told they were something that needed to be upfitted inside and the building owner had to do it.  No it was Wework was not paying and Dillweg wanted them out.  They went "dark" at that location about a year ago and moved all the people to the other 2 locations.  

[atlrvr]

The article omitted some key facts.

1)  There was a cash-out refi for Dilweg in 2020 (and additional upsizing of mortgage in 2021).  They bought the building for $79mm, but loaded it up with $113mm in debt by 2021.  Debt was floating rate, and maturity was last month.  They had extension options, but would require buying interest rate protection which would have cost several million dollars.

2)  The debt originator's (H.I.G. Realty) first line on their website tells you that if you are borrowing from them, you are swimming with sharks.  "H.I.G. Realty Partners makes opportunistic investment"

3)  H.I.G. sold the debt to Dornin.  Dornin buys distressed debt because they want to foreclose on the asset.  They had little interest in negotiating because their business model is to take over properties in distressed situations.

We will definitely see more defaults.  It would help though if journalists would present a clearer narrative though, in that this was a greedy(?) / overly optimistic (?) investor, and a set of lenders looking for these types of situations.

[RANYC]

3 hours ago, atlrvr said:

The article omitted some key facts.

1)  There was a cash-out refi for Dilweg in 2020 (and additional upsizing of mortgage in 2021).  They bought the building for $79mm, but loaded it up with $113mm in debt by 2021.  Debt was floating rate, and maturity was last month.  They had extension options, but would require buying interest rate protection which would have cost several million dollars.

2)  The debt originator's (H.I.G. Realty) first line on their website tells you that if you are borrowing from them, you are swimming with sharks.  "H.I.G. Realty Partners makes opportunistic investment"

3)  H.I.G. sold the debt to Dornin.  Dornin buys distressed debt because they want to foreclose on the asset.  They had little interest in negotiating because their business model is to take over properties in distressed situations.

We will definitely see more defaults.  It would help though if journalists would present a clearer narrative though, in that this was a greedy(?) / overly optimistic (?) investor, and a set of lenders looking for these types of situations.

If we want the kind of analysis you laid out in the bizjournals, we’d best be prepared to pay $50/month for subscription. 
 

And by the way, to all those banks (or other institutions whose value rests on trust and confidence), mind your naming rights.  Having your name attached to a building in a default or distressed scenario, not the best look.

Edited April 24, 2023 by RANYC

[KJHburg]

This is the good the bad the ugly from the office market here in Charlotte and compared to our peers.  From JLL 1Q 2023 report:

     YTD to absorption sq ft.        % of office space absorbed    Total vacancy rate including subleases    Under construction space sq ft

Charlotte   -831,xxx sq ft                   -1.3%                                                                20.6%                                                            2.6 M sq ft

Atlanta    -462,xxx sq ft                           -.3%                                                                21.6%                                                              3.1 M sq ft

Nashville     -269,xxx sq ft                     -.6%                                                                  18.9%                                                                  2.96 M sq ft

RaleighDurham  -520,xxx sq ft           -.9%                                                                   15.2%                                                             1.8 M sq ft

Austin                    -562,xxx sq ft                -.8%                                                               18.9%                                                                 6.7 M sq ft

other notable vacancies rates which are way up in key markets

San Francisco   26.4% now higher than perennial leader in this Houston 25.6%      Dallas 25%    NYC has more vacancy than than the entire Charlotte market but vacancy rate is 16.1%

National averages 

-.4% absorption percentage given the market size 

20.2% national vacancy rate

So for the first quarter Charlotte is performing less than the national averages and worst than its peer cities.   Charlotte had move outs from Wells Fargo into their own buildings which explains the greatest part of the negative absorption but this will be hard to overcome as the year progresses but it should improve from this quarter.    This is the big stressor on the office buildings right now and I keep saying we are going to have to come up with new uses for some of older buildings uptown.   Charlotte is a bigger office market than Raleigh Durham or Nashville and slightly smaller than Austin's market.   

from the detailed JLL report on Charlotte this:

 ""More immediately, last quarter experienced planned
givebacks from Wells Fargo and Bank of America, constituting roughly 730k
s.f. of the 1 million s.f. of negative absorption in Uptown.
Vacancy in the market eclipsed 20% for the first time on record last quarter,
with vacancies highly concentrated in a subset of buildings that have fallen
out of favor with prospective tenants. ""

 

Edited April 24, 2023 by KJHburg

[Bikeguy]

https://www.nytimes.com/2023/04/25/nyregion/office-landlords-nyc.html

 

"

Large banks like JPMorgan Chase and Wells Fargo have increasingly warned that a heap of commercial loans are coming due by the end of 2025 — estimated to amount to $1.5 trillion nationwide — and that the companies may struggle to repay or refinance them.

Shares of SL Green and two other publicly traded office landlords in the city, Vornado Realty Trust and Empire State Realty Trust, are all trading near their lowest level since the pandemic started.

SL Green’s stock has fallen 76 percent since early 2020. Vornado is trading at its lowest territory since 1996. Empire State Realty, which owns the Empire State Building, is near its record low. Collectively, $17 billion of their market value has been erased since the pandemic started.

“All three of them are office-centric, all three of them New York City-centric,” Mr. Van Nieuwerburgh said. “Those are the stocks, the office stocks, that have been clobbered. It’s staggering.”"

[rancenc]

Always disappointing to see closures and job losses in the area!!

[CLTdev18]

Since Foamex is shutting their doors, who else uses the rail line that runs along that route? I could be totally wrong, but I was under the impression that they were one of the last regular users of that rail line. 

[kermit]

4 hours ago, CLTdev18 said:

Since Foamex is shutting their doors, who else uses the rail line that runs along that route? I could be totally wrong, but I was under the impression that they were one of the last regular users of that rail line. 

I don’t have an answer to your specific question but I can say that loosing every freight customer on the line will do nothing to change NS’s unaccommodating stance about sharing the line with commuter rail.  NS does not keep the line because of its freight revenue, it keeps it because it will allow it to keep its lease rate on the NCRR low since this line can be presented as a substitute for the NCRR.

tldr: The Foamex news does not bring us any closer to the Red Line.

Edited April 28, 2023 by kermit

[KJHburg]

4 hours ago, CLTdev18 said:

Since Foamex is shutting their doors, who else uses the rail line that runs along that route? I could be totally wrong, but I was under the impression that they were one of the last regular users of that rail line. 

Gerdau steel recycling plant still uses that line up to their facility from Charlotte which is  at 6610 Lakeview Road off Statesville Rd inside 485 loop. 

[rancenc]

Looks like there are going to be less places to get a BK whopper meal deal throughout the country by the end of the year.

https://www.nbclosangeles.com/news/national-international/burger-king-will-close-up-to-400-stores-by-the-end-of-the-year/3148533/?_osource=SocialFlowFB_LABrand&fbclid=IwAR2a2vE2TQKgZDj7XXd86dm2h-4M2sOxQ0hTnw8jR3S0dk6paI6WnDzyuT0

[nicholas]

12 hours ago, rancenc said:

Looks like there are going to be less places to get a BK whopper meal deal throughout the country by the end of the year.

https://www.nbclosangeles.com/news/national-international/burger-king-will-close-up-to-400-stores-by-the-end-of-the-year/3148533/?_osource=SocialFlowFB_LABrand&fbclid=IwAR2a2vE2TQKgZDj7XXd86dm2h-4M2sOxQ0hTnw8jR3S0dk6paI6WnDzyuT0

I feel like a lot of fast food chains have become so watered-down and boring from decades past that it's not really fun to get fast food anymore.  Look at how bland modern McDonald's stores are compared to the ones in the '90s.  Not to mention food costs continuing to rise...last time I stopped by Cookout it was like $10 for a lone tray without a milkshake, and I love Cookout but at that point I'd rather spend another dollar or two and get something relatively healthy at Chipotle. 

Wonder if this means the Southpark store could be redeveloped soon....

[KJHburg]

with the recent reval the average tax bill will go up 19% according to this slide from Meck County and Charlotte Ledger 

 

 Estimate your property taxes: You can estimate your next property tax bill. Take your new property value. Multiply it by 0.007175 (probably using the calculator app on your phone). The result is what you would pay under revenue neutral rates.

Edited May 10, 2023 by KJHburg

[CLT2014]

It is looking like the county is definitely going to raise taxes during the re-evaluation so the median increase will definitely be a penny more, resulting in a $484 median increase instead of $445. This $38 extra per year will help pay for the new library, new parks, and a new HVAC for the courthouse. Additional tax increases will be proposed for schools and operating expenses. 

This doesn't include tax hikes possibly proposed by the city. 

[videtur quam contuor]

I would have a 57$ increase using the factor KJ provided. Condos are less volatile in assessment changes than single family houses has been my experience as an owner of several of both over the years. YMMV

[ArchiCLT]

18 hours ago, nicholas said:

Wonder if this means the Southpark store could be redeveloped soon....

Redeveloped into what is the question. Another US Bank Branch? Unless it's a pocket park, the 0.745 acre site is near its highest possible use. There's not much you can do with that site at all, given the massive power lines and its easement consuming half the site.

[KJHburg]

1 hour ago, ArchiCLT said:

Redeveloped into what is the question. Another US Bank Branch? Unless it's a pocket park, the 0.745 acre site is near its highest possible use. There's not much you can do with that site at all, given the massive power lines and its easement consuming half the site.

 

no US Bank has their flagship branch office right up the street on Sharon across from the mall.  It is their largest local branch.    IF that Burger King closes I could see another restaurant in that spot or a small mixed used building 2 levels but as you said the power lines are limiting.