New development and adaptive-reuse renovations are reshaping the area as opportunity zone designations promise more change
In 2011, Insite Properties purchased and moved its offices to the Grinnell Water Works building, a historic warehouse off West Morehead Street that was redeveloped into office space.
The Charlotte-based firm saw it as an opportunity to gain a foothold in an emerging submarket.
“There were always people calling, wanting space,” said Bart Murr, principal at Insite. “We would always say, ‘If this building was twice as big, it’d be full.’”
Three years after selling the Grinnell Water Works building to a Washington, D.C.-based asset manager, Insite has delivered on an even bigger investment in the neighborhood — a 107,000-square-foot office building, The Refinery, at 1213 W. Morehead St.
The building, developed with Northridge Capital, is already 65% leased just weeks after opening.
It’s the first new office building started without an anchor tenant on the west side in years. The Refinery is part of a surge in development in the area around West Morehead Street and Freedom Drive.
The bulk of the commercial space in the corridor had long been dominated by warehouses, many of them abandoned or occupied by small industrial groups. Those warehouses are being acquired and redeveloped into unique office spaces that appeal to companies targeting younger workers who want an urban environment. Shops and restaurants are also filling the renovated spaces, quickly remaking an area that for years has grappled with blight.
As rental rates and land prices rise in areas like South End, just a few miles from the intersection of Freedom Drive and West Morehead Street, companies are looking to west Charlotte for a cheaper alternative. And additional incentive is also suddenly developing: much of west Charlotte is in an opportunity zone, a federal tax incentive that applies to low-income census tracts certified by the U.S. government. The program was introduced as part of the 2017 federal tax law overhaul.
Browder Group Real Estate was buying property in the area long before opportunity zones were in play or anyone used the term “FreeMoreWest” to describe the corridor. For Matt Browder, owner of Browder Group, it made sense that investment would flow there eventually.
“If you put a 1 mile or 1.5-mile ring around uptown, it’s got to go there,” Browder said.
The firm’s strategy was to purchase properties while they were still affordable, then find tenants who were looking to make a move. The goal initially was to bring in businesses that would be a magnet for more traffic.
“We were getting a lot of tenants from over in the South End area who were seeing rents go from $15 to $35 a foot,” said Brandon Brown of Browder Group.
What started out with Rhino Market & Deli and a small development where Dunkin’ Donuts operates has evolved into 250,000 square feet of owned space across 10 buildings on West Morehead Street, Freedom Drive and Thrift Road. About 200,000 square feet of that space is leased.
Hygge Coworking, in partnership with Not Just Coffee, took the entire building at 1026 Jay Street, its largest location to date. Browder’s adaptive-reuse properties on the west side also include the area’s first breweries, like Town Brewing, which opened a year ago, and the upcoming Traust Brewing, expected to open this fall on Thrift Road. Browder is also landlord to Jim Noble’s newly opened barbecue restaurant, Noble Smoke.
Browder said Thrift Road rents have seen more significant increases because of its potential to become a walkable, urban street versus an auto-centric corridor like Freedom Drive.
Charlotte-based White Point Partners, known for its adaptive-reuse portfolio throughout the city, is preparing its latest project, Salt + Vinegar, which will bring 74,000 square feet of office and retail space to West Morehead Street. Already, Legion Brewing has signed on as the anchor tenant, expected to occupy 20,000 square feet at the former Mitchum Quality Snacks building by next fall.
Erik Johnson, co-founder at White Point, said previously that having a converted building with complementary day and nighttime uses — office space and a brewery, for example — and ample parking have been some of the key criteria for the firm’s acquisition and redevelopment strategy. The firm has seen success with other deals in emerging submarkets, such as Optimist Hall in Optimist Park and Bowers, a former fiber-processing operation in lower South End.
A notable office lease deal for the west side came this spring, when Wray Ward, Charlotte’s largest advertising agency, said it would occupy 38,000 square feet for its headquarters at a partial adaptive-reuse, partial new construction project on Thrift Road. And at The Refinery, national coworking group Serendipity Labs signed on to take the entire top floor of the building for its first Charlotte office, complete with building signage facing Interstate 77.
Trey Scott, owner of Charlotte’s Serendipity Labs, said the coworking group ultimately landed on The Refinery because of the neighborhood it’s within, particularly its proximity to local retail.
“We’ve tried to get ingrained in (the) area, which seems to have more of an identity and growth curve pattern to it versus just trying to pick a location in a hotspot,” Scott said.
Wray Ward, which will bring 105 employees to west Charlotte when it moves from midtown to 2317 Thrift Road next summer, was another big bet on the area.
John Christenbury, managing director of tenant representation at Cushman & Wakefield who worked with Wray Ward on its headquarters search, said the building’s location relative to new breweries and restaurants was attractive to Wray Ward. It also, like many companies, sought to find unique real estate for its office buildout.
“There are good bones over there for office space,” Christenbury said. “It’s starting to turn into this pocket of office user and retail ... if a tenant is looking for adaptive reuse in Charlotte and they don’t want to spend the South End prices and want the amenities, that’s the place to go.”
With the adaptive-reuse trend not going away anytime soon in Charlotte, it seems likely the area will continue to see investment.
Other lease and acquisition deals are reportedly still in the works, with properties like the Custom Polymers building on Tuckaseegee Road being eyed by investment groups.
“There are so many big players snooping around on stuff,” Brown said. “We’re going to start to see multifamily come in and continued growth until you hit a recession.”