United States -  Charlotte

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The Charlotte market continued to benefit from diversification and revitalization efforts in 2018. The city, which is home to the University of North Carolina Charlotte (UNCC) and six Fortune 500 company headquarters, enjoys robust financial, healthcare, and retail sectors, as well as strengthening manufacturing, energy, and technology industries. In November 2018, Honeywell officials announced plans to relocate company headquarters to Charlotte. In February 2019, SunTrust announced its acquisition of BB&T, with the new headquarters office to be located in Charlotte. Despite the recent increase in real estate values, the Charlotte market still offers a considerably affordable cost of living, which, coupled with relatively low unemployment figures and a diverse economy, makes the area attractive for companies, business professionals, and families. Mixed-use development projects boasting office, retail, and residential components continue to be prevalent throughout the city in an effort to create convenient live-work-play communities to accommodate the commercial and population growth. The live-work-play focus in Uptown upscale developments; the redevelopment of communities such as South End, Optimist Park, and Plaza Midwood; and the increased beautification efforts in University City are anticipated to help spur growth within the entire Charlotte market. In 2018, the Charlotte hotel market realized slight average rate (ADR) gains, while market-wide occupancy remained relatively stable, increasing by almost 0.5% to nearly 70%, as the continued influx of new supply affected market-wide performance.

According to the Charlotte Regional Visitors Authority, the enactment of House Bill 142 on March 30, 2017, which repealed HB2 (House Bill 2, aka the "Bathroom Bill"), had immediate positive impact on all market segments. Companies, organizations, and associations have returned to Charlotte for corporate travel, as well as for meeting and group events. Professional sporting events such as the ACC National Football Championship returned to the city, as did the All-Star championship game in February 2019. Although the NBA All-Star Games for 2020–2022 will be held outside of North Carolina, Charlotte officials will continue to aggressively seek to attract future games. The commercial segment remains a vital demand driver. Class-A office towers and build-to-suit office buildings are being erected throughout the city, most notably in Uptown. The Lincoln Harris and Goldman Sachs mixed-use development on the former Charlotte Observer site in Uptown will feature an 845,000-square-foot office tower, of which 500,000 square feet has been leased to Bank of America; this project is slated for completion in late 2019. Crescent Communities' 26-story, 742,000-square-foot Ally Charlotte Center is currently under construction and is slated for completion in 2021. The anchor tenant, Ally Financial, will consolidate all of its Charlotte-area offices to this prime Uptown location. It is important to note that the extension of Charlotte's light-rail service, the LYNX Blue Line spanning from Uptown to the University of North Carolina at Charlotte (UNCC), was completed in March 2018 and will help increase connectivity between submarkets and ease traffic congestion.

Supply growth has remained moderate in recent years, increasing inventory in each of the submarkets. Approximately 55 hotel projects (roughly 10,000 rooms) are proposed for the Charlotte market, with nearly half currently under construction or in the active planning phases; the more speculative projects may take several years to come to fruition. It is important to note that further discussions have not taken place regarding the proposed hotel to be situated at Charlotte Douglas International Airport. Additionally, discussions regarding the proposed 800- to 1,000-key convention center hotel are on hold for at least another one to two years, as city and county officials shift focus toward the Charlotte Convention Center expansion and renovation project (completion anticipated for Q4 2020/Q1 2021), the Carolina Panthers, and a potential Major League Soccer team. Seven new hotels opened in 2018, adding nearly 850 guestrooms to the market, of which roughly 35% are concentrated in the Uptown submarket. In November 2018, White Lodging announced the development of a 381-key JW Marriott as the hotel component of the Ally Charlotte Center. This hotel will join the Grand Bohemian Hotel and the InterContinental Hotel as luxury lodging offerings in Uptown Charlotte. Much of the new hotel supply in the pipeline will enter the Southwest Charlotte, Uptown, South End, SouthPark, and Ballantyne submarkets, which are also experiencing an increase in office and multi-family residential developments. As such, the anticipated demand growth should allow the market to absorb a portion of the additional guestroom inventory in the near term.

Transaction activity in the Charlotte market continued in 2018 at a less robust pace than that of the 2017 calendar year. Nationally branded limited- and select-service assets traded in 2018, of which a majority are located in the airport and the University City neighborhoods, two submarkets that continue to experience gradual growth and undergo beautification efforts. The most notable transaction was the Fairfield Inn & Suites by Marriott Charlotte Airport, which traded at a per-key value of over $150,000.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

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