When talking about retirement destinations, Florida has always topped the list. But a number of issues are conspiring to make the state less attractive. Hurricane fatigue, sky-high housing prices and lack of insurance are just some of the issues driving retirees — a group that's exploding as Baby Boomers leave the workforce — to new venues.
One of the prime beneficiaries of this trend has been North Carolina, which is drawing in affluent new residents and providing a lure for upscale national retailers for the first time. A 2005 study by retirement community developer Del Webb found that 14 percent of the nation's 78 million Boomers plan to move out-of-state to retire. Nine percent of all movers plan to head for the Carolinas, however, 14 percent of the age 41 to 49 group prefer the Carolinas.
Attracted by a mild climate and natural resources, including the Smoky Mountains to the west and pristine beaches to the east, retirees and affluent Baby Boomers on the verge of retirement are relocating to North Carolina communities, making the state their primary residence or buying second and third homes, says Kenny Jackson, senior advisor in Asheville for Irvine, Calif.-based broker Sperry Van Ness.
According to a survey of 7,500 people requesting relocation information from the Carolina Center for Living (CCL), a private research and marketing firm, 37 percent of an estimated 300,000 North Carolina transplants annually are over 50 years of age. Pointing out that the first Boomers won't hit traditional retirement age for a few years, Patrick Mason, co-director of CCL, predicts that the percentage of older adults will escalate. The U.S. Census predicts that the state's 65-plus population will grow by more than 124 percent between 2000 and 2030 — greater than the national projection of 111 percent.
Overall, CCL predicts 470,000 relocations to the Carolinas in 2007. Based on the CCL these newcomers have a median household income of $119,000 yearly and average net worth of $800,000, expect to spend on average $350,000 for a home, and 77 percent of them are college educated. In contrast, the average median household for the state is currently $41,820, according to the U.S. Census Bureau.
“People are coming in from California, New York, Ohio, Chicago, and lots of ‘halfbacks,’” referring to retirees from Florida who moving halfway north, says Edna Chirico, senior advisor in Charlotte for the Irvine, CA-basedSperry Van Ness. He says halfback traffic really kicked in after the 2005 hurricane season.
Take Charlotte, the largest city in North Carolina with a population of 800,000 and an equal number of residents residing in the metropolitan area, which is at the center of state's economic expansion. Charlotte's population has more than doubled since 1990, when its population was 396,000.
“Arguably, the Charlotte region is among the top three or four destinations nationally for companies and individuals relocating,” says Robert Percival, principal at Percival McGuire Commercial Real Estate, a full-service real estate development, brokerage and management firm based in Charlotte.
The second-largest banking center in the nation, Charlotte is currently home to national headquarters for Bank of America and Wachovia and six other Fortune 500 companies. And the region's relatively low cost of housing and corporate-friendly environment continues to attract new businesses into the area, which is keeping the job growth steady and the housing market strong.
Despite a housing slowdown nationally, single-family permits in Charlotte totaled 15,570 through November 2006, a 22.5 percent increase over the same period the previous year and a 33.7 percent hike over 2004, according to a market report from CB Richard Ellis (CBRE). The broker also noted the region is expected to grow its job base by 2.2 percent this year
With rising rooftops, retail development is booming throughout the region. About 2.6 million square feet of retail space was brought to market last year and 2.7 million square feet more is coming online in 2007, according to the CBRE report.
“Over the last 18 months — as the rest of the country slowed — we've been seeing national retail developers competing with locals, and retailers new to the market coming in,” says Chirico.
She notes that the city's affluent South Park submarket, where the median household income is about $200,000 annually, is ground zero for upscale retail tenants. Simon Property Group recently spent $33 million to renovate and expand the 1.6-million-square-foot SouthPark Mall.
Residential development downtown, where six luxury high-rise towers are sprouting, is creating strong demand for retail services in and around the city center. Chirico says that the downtown market will have an estimated 1.1 million square feet of retail space at buildout and notes that 250,000 square feet of retail is under. Two proposed mixed-used projects Metropolitan, by Colonial Properties Trust, and EpiCentre, by local developer Afshin Ghazi, will add 465,000 square feet to the market.
Additionally, Taubman last year opened Northlake Mall, one of only two new enclosed malls built nationally, in an affluent fast-growing community about 10 miles north of downtown with an annual median income of nearly $80,000.
“Those coming in early are attracting others,” adds Percival, suggesting that there's the sense that those who don't come early, won't get in.
Concord, Raleigh-Durham take off
Another regional hot spot is the Concord-Kannapolis area, where Dole Foods/Castle & Cooke CEO David Murdoch, in partnership with Duke University and University of North Carolina system, plans to build a $1-billion bio-medical research complex.
In anticipation of the growth this project will bring to the market, local developer Kellswater Bridge Development is underway on a 221-acre mixed-use community with nearly 1,000 homes and town center project. The project's $90-million retail component, Kellswater Commons is a joint venture with local developers Merrifield Partners and Crosland that will add 476,000 square feet of shops, restaurants and entertainment to the Concord/Kannapolis marketplace.
The Raleigh/Durham/Chapel Hill region's tremendous intellectual capital continues to drive growth. The region, with a population of 1.2 million, is home to Duke University and the University of North Carolina Chapel Hill, both of which have major academic medical research centers, and the Raleigh-Durham Research Triangle Park, which has various high-tech and biomedical research facilities.
Consequently, the area is a magnet for the small entrepreneurial businesses. “The high quality of life provided by the university/research connection, climate, and location has retained the region's highly educated population and now is attracting Boomers to the area too,” asserts John Kane, CEO of Raleigh-based Kane Realty Corp.
Kane's company has repositioned the old enclosed North Hills Mall in the Midtown area to an urban mixed-use village that includes retail, restaurants, entertainment, a hotel and four residential projects. The company invested $250 million in the mall conversion and is planning a $700-million project on 45 acres next door, adding more retail, office space and housing.
All three cities are under way on downtown redevelopment initiatives, though Raleigh and Durham programs are further along than Chapel Hill. Raleigh has about 40 high-density, mixed-use projects completed, in the works or on the drawing board. Downtown Raleigh currently has an estimated 2,300 downtown residents, but that number is expected to reach 7,500 by 2010.
Two $200-million adaptive reuse projects have set the stage for the downtown redevelopment in Durham, which is expected to generate housing stock of 10,000 to 15,000 units by 2015.
Average rent: $20.29
Retail under construction: 1.2 million sq. ft.
Total retail inventory: 36.8 million sq. ft.,
Net absorption: 775,000 sq. ft.
Population: 1.6 million
Mean family income: $82,500
Total retail inventory: 25.6 million sf
Average rent: $20.91
RALEIGH-DURHAM-CHAPEL HILL REGION
Population: 1.2 million
Mean family income: Raleigh, $80,900, Durham, $71,600
Average retail rent: $20.29
Total retail inventory: 36.8 million sq. ft.
GREENSBORO-WINSTON SALEM-HIGH POINT TRIAD
Mean family income: Greensboro, $67,900; Winston-Salem, $66,000; High Point, $65,500
Total retail inventory: 21.9 million sq. ft.
Average rent: $13.34
Sources: Karnes Report, CB Richard Ellis, US Census Bureau,
Carolinas Real Data