Mecklenburg County, North CarolinaEconomic Update Presentation

January 2019

Economic Update

#1 - Metro with Highest Growth of Women-Owned Firms -American Express OPEN

#1 - Best State for Business - Forbes Magazine

#1 - Best State to Start a Business - FitSmallBusiness.com

#1 - #1 International Airport with Highest On-time Rate: CLT -U.S. Department of Transportation

#1 - City Craft Beer Real Estate Footprint Growth - Colliers International

#1 - Cheapest City to Base Your Tech Startup - Bloomberg Technology

#1 - Regional Medical Group: Carolinas Medical Center - US News Best Regional Hospitals Rankings

#1 - Top Tech Momentum Market - CBRE Group

#1 - State for Most Incoming Moving Truck Rentals - U-Haul

#1 - State with Fastest Growing Large Economy - Bureau of Economic Analysis

#1 - Millennial Moving Destination City - Smart Asset

Mecklenburg County National Recognition

Economic UpdateSource: Charlotte Chamber Rankings

Economic Update Sustained Population Growth

Economic UpdateSource: 2007 - 2017 US Census Bureau 2018 – 2027 OSBM Estimates

Population

2007 – 865,0752017 – 1,076,837

• 40th largest county in the nation.

• 16.6% population growth since 2010.

• Most populous county in the State.

• Growth largely dependent on migration.

Economic Update 10,981 new migrants moved to Mecklenburg County in 2017 (56% of all new residents)

Economic UpdateSource: U.S. Census Bureau

Dec 18 2018 AvidXchange announced 1,229 new jobs with $41 million in new investment.

Dec 10, 2018 LendingTree, LLC, a leading online lending exchange, is expanding their corporate headquarters in Charlotte. The company will create 436 jobs over five year.

Nov 29, 2018 Honeywell is moving its headquarters to Charlotte, bringing 750 new high paying jobs

Jun 25, 2018 Amazon announces plans to build a $200 million distribution center in the County which will add 1,500 new jobs.

Apr 10,2018 Yokohama Tire Corp. announces plans to build a research and development facility in the County. The investment in the facility is $5.8 million, and will create 56 new jobs.

Apr 10,2018 Kurz, a leader in hot stamping and coating technology announced plans to build a North American headquarters in Mecklenburg County. The headquarters will create 90 new positions with an investment of $18 million.

Apr 03, 2018 Chinese forklift manufacturer Hangcha establishes a new U.S. headquarters in Charlotte.

Feb 27, 2018 Ernst & Young LLP announces development of an EY Wavespace Innovation Center. This development will create 375 new jobs with an investment of $8.2 over the next five years.

Nov 09, 2017 Aflac invests $3 million into new office space creating 30 new jobs.

July 11, 2017 Sitehands, which specializes in IT field services selected Charlotte for its global headquarters. The company will create 200+ new jobs.

Sept 22,2017 NN Inc plans to relocate its headquarters from Tennessee to Charlotte adding 200 new jobs to the County.

Aug 09, 2017 Allstate announced it will create 2,250 new jobs in its second major expansion in the county. The insurance giant will invest more than $22 million to expand its operations center.

Aug 29, 2017 Daumer Corp. invests $21 million to build a flexographic printing facility, creating 40 new jobs.

Economic UpdateRecent Announcements

Source: Charlotte Chamber Economic Update

Economic Update

• Mecklenburg County is home to the headquarters of six of the world’s largest companies.

• In 2018, these six companies generated $200.3 billion in revenue. If these six companies were its own country they would be the 52nd in terms of world GDP.

• A highly skilled labor force, lower than the national cost of living index, and access to major transportation networks are a few factors that make the County a premier location to do business.

Fortune 500 Headquarters Located in Mecklenburg County

Source: Fortune 500 List and International Monetary Fund (IMF) Economic Update

RevenueRank Company Industry ($billions)

24 Bank of America Corp. Banking $100.377 Honeywell Industrials $40.5

125 Duke Energy Utilities $23.2151 Nucor Metals $20.3298 Sonic Automotive Retail $9.9456 Sealed Air Packaging $6.1

200.3$

Mecklenburg County Fortune 500 Headquarters

Economic UpdateMajor Employers – 2018

Economic Update

Atrium Health 35,700

Wells Fargo 24,000

Charlotte-Mecklenburg Schools 18,495

Wal-Mart Stores, Inc. 17,100

Bank of America Corporation 15,000

Novant Health / Presbyterian Hospital 11,698

American Airlines 11,000

Delhaize America, Inc. / Food Lion LLC 9,078

Harris Teeter 8,239

Duke Energy Corp. 7,900

Lowes 7,801

North Carolina State Government 7,600

Daimler Trucks North America LLC 6,800

City of Charlotte 6,800

Mecklenburg County 5,512

Source: Charlotte Chamber of Commerce

Economic UpdatePrincipal Taxpayers - 2018

Economic Update

Taxpayer EnterpriseAssessed Valuation

($)

Percentage of Total Assessed Valuation

(%)

Duke Energy Utilities 2,763,118,686 2.18

Wells Fargo Financial Services 1,515,278,307 1.19

Bank of America Financial Services 1,263,940,945 1.00

American Airlines Transportation 824,920,258 0.65

Spectrum Utilities 392,715,272 0.31

Piedmont Natural Gas Utilities 351,635,636 0.28

AT&T Utilities 342,643,883 0.27

Southpark Mall Retail 328,335,706 0.26

Teachers Insurance Insurance 233,262,239 0.18

Parkway 214 N Tryon Real Estate 210,118,400 0.17

Source: Charlotte Chamber of Commerce

8Source: Charlotte Chamber of Commerce

Economic UpdateForeign Firms

Economic Update

• 2.7% increase in foreign firms.

Count of Foreign Firms Located in Mecklenburg CountyCountry 2017 2018Germany 134 141United Kingdom 79 82Canada 62 62Japan 51 52Switzerland 41 41France 36 37The Netherlands 37 37Italy 34 34China 27 27Sweden 20 20Ireland 15 15Other 132 123Total 668 686

9Source: Charlotte Chamber of Commerce

Economic UpdateNew & Expanding Businesses for Third Quarter 2018

Economic Update

Category Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017Number of FirmsManufacturing 5 4 18 9 23 13 Non-Manufacturing 66 85 225 109 291 194 Total 71 89 243 118 314 207 EmploymentManufacturing 45 211 394 100 439 311 Non-Manufacturing 456 677 2,788 3,117 3,244 3,794 Total 501 888 3,182 3,217 3,683 4,105 Square Footage (k)Manufacturing 11.0 164.0 174.4 1,331.0 185.4 1,495.0 Non-Manufacturing 1,158.2 672.0 4,109.6 319.1 5,267.8 991.1 Total 1,169.2 836.0 4,284.0 1,650.1 5,453.2 2,486.1 Investment ($M)Manufacturing 1.9$ 10.4$ 21.2$ 27.6$ 23.1$ 38.0$ Non-Manufacturing 97.1$ 48.3$ 510.9$ 53.9$ 608.0$ 102.2$ Total 99.0$ 58.7$ 532.1$ 81.5$ 631.1$ 140.2$

TotalExpandedNew

Economic UpdateNew & Expanding Businesses by Calendar Year

• Mecklenburg County created an additional 10,004 jobs, adding 9.1 million square footage with an investment of $1.03 billion

• 2019 should be another positive year based on recent announcements

Economic UpdateSource: Charlotte Chamber of Commerce

Year Firms JobsSq. Ft.

(millions)Investment (millions)

2018 933 10,004 9.1 $1,0312017 785 10,820 6.4 $7302016 755 6,517 7.5 $7602015 722 6,406 4.2 $7122014 1,156 11,105 3.1 $6162013 897 8,403 4.3 $530

Economic UpdateCharlotte International Airport connects the County to the rest of the world

Economic UpdateSource: Charlotte City Partners

758 daily flights to over 150 destinations

Economic Update

Positive Factors

• Record low unemployment

• Increasing wages

• Stable inflation

• Low oil prices

• High consumer confidence / sentiment levels

• Tax Cuts and Job Act effects

Negative Factors

• Tariffs

• Global slowdown

• Government shutdown

• Rising interest rates

• Reduction in vehicle sales

• National housing market slowdown

Positive and Negative Factors in the Economy

Economic UpdateSource: Charlotte Center City / Charlotte Chamber Rankings

Economic UpdateWhere are we in the economic cycle?

Economic Update2018 GDP is expected to top the Trump Administration’s 3.0% target

• The U.S. grew at 3.4% in the 3rd quarter. Expectations for 4th quarter are 2.3%

• Median estimates of GDP growth by year:• 2018 - 3.1%• 2019 – 2.5%• 2020 – 2.0%

Source: Bureau of Economic Analysis

Economic UpdateGDP growth for Mecklenburg County continues to exceed U.S. and North Carolina

Source: Bureau of Economic Analysis and JobsEQ

Economic EmploymentLarge concentration in high growth industries fuels Mecklenburg County GDP growth

Source: Quarterly Census Employment and Wages (QCEW)

Economic UpdateSince 2007 the County has shifted towards a more service based economy

Mecklenburg County Employment Composition Comparisons

NAICS Code Industry 2007 2017 % ppts chg62 Health Care and Social Assistance 9.5% 11.5% 2.0%54 Professional Scientific and Technical Services 7.0% 8.2% 1.3%56 Administrative and Support and Waste Management and Remediation Services 8.2% 9.0% 0.9%71 Arts Entertainment and Recreation 1.6% 2.3% 0.8%72 Accommodation and Food Services 8.4% 9.0% 0.7%55 Management of Companies and Enterprises 4.0% 4.4% 0.3%48 Transportation and Warehousing 5.4% 5.5% 0.2%53 Real Estate and Rental and Leasing 1.9% 1.9% 0.0%51 Information 3.4% 3.4% 0.0%21 Mining 0.0% 0.0% 0.0%92 Public Administration 2.7% 2.6% -0.1%22 Utilities 0.4% 0.3% -0.1%11 Agriculture Forestry Fishing and Hunting 0.2% 0.0% -0.2%61 Educational Services 5.3% 5.0% -0.2%81 Other Services (except Public Administration) 2.9% 2.6% -0.3%52 Finance and Insurance 9.5% 9.1% -0.5%42 Wholesale Trade 6.5% 5.8% -0.8%44 Retail Trade 10.6% 9.5% -1.1%31 Manufacturing 6.1% 4.9% -1.2%23 Construction 6.4% 4.8% -1.6%

Grand Total 100.0% 100.0% 0.0%

Average Employment

Source: Quarterly Census Employment and Wages (QCEW)

Source: North Carolina Chamber of Commerce and US Bureau of Labor Statistics

Economic Update

In October 2018, the unemployment rate was 3.2% in Mecklenburg County compared with 3.5% for North Carolina and 3.4 for the U.S.*

Unemployment Rate, Not Seasonally Adjusted

Economic Update

* Seasonally adjusted rate in the month of December for U.S. was 3.7% and North Carolina in November was 3.5%

Economic Update

22% increase in non-farm employment from October 2012 to October 2018.

Job Growth - Total Nonfarm Employment – Mecklenburg County

19Source: North Carolina Department of Commerce (LAUS numbers) Economic Update

Economic UpdateAverage annual wages for the County increased faster than North Carolina and the Nation

Economic UpdateNational Employment Cost Index for State and Local Government

• Employment costs are rising due to a tight labor market, and increasing healthcare costs.

• As of September, wages and salaries increased 2.3% for the 12 month period ending September 2018 with benefit costs rising 3.1% over the same time.

Source: St Louis Federal Reserve Economic Database (FRED)

Economic UpdateInflation remains stable around the 2.0% Fed target

• Inflation remains stable around the 2.0% target.

• Fed took a hawkish stance against inflation in December, and has stated intentions of moving towards a data dependent outlook for future rate hikes.

Source: St Louis Federal Reserve Economic Database (FRED)

Economic UpdateConsumer Sentiment hits its best year since 2000

• Consumer Sentiment continues to remain at record highs on income and job prospects.

• The only time consumer sentiment was higher was in 1997-2000 and 1964-1965.

Source: University of Michigan

Economic UpdateOutlook looks good in FY19, but signals slowing moving into FY20

• LEI increased in November (up 0.2%), but overall pace of improvement has slowed in past two months.

• This suggests the economy is likely to moderate further in the second half of 2019.

Source: The Conference Board

Economic Update

• Median Household Income has grown 12.9% from 2013 to 2017 in Mecklenburg County.

• Gross Taxable Retail Sales in the County grew 42.6% over the past five years.

Median Household Income and Gross Retail Sales

25

Median Household Income Gross Taxable Retail Sales ($ Billions)

Sources: US Census Bureau and North Carolina Department of Revenue Economic Update

$0

$5

$10

$15

$20

$25

2012 2013 2014 2015 2016 2017 2018$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2012 2013 2014 2015 2016 2017

NC US Mecklenburg

Note: Median household income (left chart) is in calendar year, Gross taxable retail sales (right chart) is in fiscal years

Economic UpdatePermits & Construction

Economic UpdateSource: Mecklenburg County Code Enforcement POSSE Winchester Database

• Building Permit issuance rose by 24% since 2013 and Total Construction Value increased by 104% over the same period.

• The largest increase in construction value was commercial building.

• Since 2013 the total commercial building value is up 75% compared to 121% for residential building value.

Total Building Permits Issued Total Construction Value ($ Millions)

13,047

9,000

9,500

10,000

10,500

11,000

11,500

12,000

12,500

13,000

13,500

2013 2014 2015 2016 2017 2018

$4,070

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2013 2014 2015 2016 2017 2018

Note: Charts above are fiscal year data July 1 – June 30

Economic UpdateHome Sales Show Positive Trends

Economic UpdateSource: Charlotte Regional Realtor Association

• Months Supply of Inventory of homes for sale has declined 47.1% since 2013 from 3.4 months to 1.8 months.

• Days on the market until sold declined from 87 days in 2013 to 33 days.

• Average home sales price is up 31.2% from 2013.

• New Listings for homes is up 10.6% from 2013.Average Sales Price Closed Sales

$320,075

200,000

220,000

240,000

260,000

280,000

300,000

320,000

340,000

2013 2014 2015 2016 2017 2018

19,735

1,000

6,000

11,000

16,000

21,000

26,000

2013 2014 2015 2016 2017 2018

Note: Charts above include data from January through November, 2013 - 2018

Economic UpdateA Seller’s Housing Market

• Data shows that sellers in Mecklenburg County have had to make fewer concessions when placing their homes for sale

• Expect continued growth in the housing market for the county moving into FY19

Source: Charlotte Regional Realtor Association

Economic UpdateStrength in Housing Market

Economic UpdateSource: Charlotte Regional Realtor Association

Mecklenburg County December Year to Date

Key Metrics 2017 2018Percent Change

Thru 12-2017

Thru 12-2018

Percent Change

New Listings 1,020 997 -2.3% 24,938 24,485 -1.8%Pending Sales 1,125 1,114 -1.0% 20,900 19,857 -5.0%Closed Sales 1,579 1,296 -17.9% 20,990 19,735 -6.0%Median Sales Price* $251,955 $248,995 -1.2% $239,900 $252,000 5.0%Average Sales Price* $311,204 $310,996 -0.1% $298,196 $320,075 7.3%Percent of Original List Price Received 97.2% 96.6% -0.6% 98.0% 97.7% -0.3%List to Close 89 95 6.7% 85 83 -2.4%Days on Market Until Sale 37 41 10.8% 32 33 3.1%Cumulative Days on Market Until Sale 44 48 9.1% 39 39 0.0%Inventory of Homes for Sale 2,701 2,975 10.1% -- -- --Months Supply of Inventory 1.6 1.8 12.5% -- -- --* Does not account for sale concessions and /or down payment assistance.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2013 2014 2015 2016 2017 2018

Fiscal Year Assessed Valuation by Component ($ Millions)

Real Property Personal Property State Certification

Economic UpdateSteady Growth in the Tax Base

• Property tax base growth is strong reflecting the growing population and increasing valuations.

• The split between residential and commercial property has averaged 60% residential and 40% commercial in previous years.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2013 2014 2015 2016 2017 2018

Fiscal Year Assessed Valuation by Component ($ Millions)

Residential Commercial

Economic UpdateSource: Mecklenburg Property

Note: Charts above are fiscal year data July 1 – June 30

Economic UpdateConstruction is booming

Economic UpdateSource: Charlotte City Partners

Economic UpdateOffice Market Statistics

• Vacancy is low at 8.9% for the County.

• Currently, 3.8 million square feet of new office space under construction.

• Asking Rates per square foot are up 7.8% in the urban portion of the county, and 9.3% in the suburban areas.

Economic UpdateSource: Cushman Wakefield

Economic UpdateIndustrial / Warehouse Statistics

• The rise of E-Commerce has fueled the demand for warehouse space to facilitate last mile deliveries.

• Mecklenburg County’s industrial vacancy rate is 4.5%

• Currently, there is 2.3 million square feet of warehouse space under construction.

Source: Cushman Wakefield

Economic Update

"Charlotte renters expressed general satisfaction with the city overall," according to Apartment List. "They gave most categories above average scores."

Key findings in Charlotte include the following:

• Charlotte renters gave their city an A- overall.

• The highest-rated categories for Charlotte were social life and jobs and career opportunities, which both received A- grades.

• The area of concern to Charlotte renters is the quality of local schools (C).

• Millennial renters are very satisfied with their city, giving it an overall rating of A-, while renters who are parents are equally satisfied, giving it an A.

• Charlotte did relatively well to other cities in North Carolina, including Durham (C), Winston Salem (B) and Wilmington (C).

• Charlotte earned similar scores to other Southern cities, including Charleston, SC (A-), Nashville, TN (A-), and Virginia Beach, VA (A-).

Apartment List Renter Satisfaction Survey

Economic UpdateSource: Apartment List

Economic Update

• Rents in Charlotte have increased by 2.7% in 2018. Currently, median rents in Charlotte stand at $960 for a one-bedroom apartment and $1,120 for a two-bedroom. This is the second straight month that the city has seen rent increases after a decline in October. Charlotte's year-over-year rent growth leads the state average of 2.0%, as well as the national average of 0.9%.

Rents are rising in 2018, but less than the rate of wage growth

Economic Update

Charlotte North Carolina U.S.A

Source: Apartment List

Economic Update

• Based on the price of a two bedroom apartment, Charlotte ranks 8th in the Nation in terms of highest average rents.

• Charlotte's median two-bedroom rent of $1,120 is below the national average of $1,180. Nationwide, rents have grown by 0.9% over the past year compared to the 2.7% rise in Charlotte.

• While Charlotte's rents rose moderately over the past year, many cities nationwide also saw increases, including Phoenix (3.3%), New York (2.7%), and Denver (2.5%).

Rent of a two bedroom national rankings

Economic UpdateSource: Apartment List

Economic Update

• Based on the price of a two bedroom apartment, Charlotte ranks 3rd in the state in terms of highest average rents.

• High Point, Durham, and Cary have all experienced year-over-year growth above the state average (5.3%, 3.6%, and 2.9%, respectively).

Rent of a two bedroom apartment in the 10 largest NC cities

Economic UpdateSource: Apartment List

Economic Update

• Short Run Effect: Market rents are set by the balance of housing demand with the available stock. Therefore, property taxes have no effect on rent.

• Long Run Effect: Rental stock will adjust up or down dependent on the relation of rents to the total costs of providing the rental. At equilibrium the rents equal the user costs to the owner of providing the rental.

Effects of Tax Increase on Renters

Economic Update

Potential Outcomes

• Higher rents to tenants as owners pass cost of ownership to tenants.

• Reduced amount of affordable housing in gentrifying neighborhoods where tenants of affordable housing are less able to incur the higher rent.

• The degree to which an owner can pass costs to tenants will vary on a variety of factors, but overall, due to current market supply / demand the owners have pricing power.

Questions

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