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Commercial Department: Spotlight: North Carolina: February 2016


Spotlight: North Carolina

The Tar Heel State is research-rich and packs a financial punch.

North Carolina ranks as one of the nation’s top economic powerhouses, boasting the ninth-largest current-dollar gross domestic product (GDP) among all states in the nation. The Tar Heel State is home to 13 Fortune 500 companies, including Bank of America, Lowe’s and Duke Energy.

The state has long been known as a tobacco-production center. Although the size of the U.S. tobacco industry has been halved since the early 1990s — with employment declining from 81,000 in 1992 to about 42,000 by 2012 — North Carolina remains the nation’s largest player, with more than 25 percent of the leafy industry’s U.S. employment, a Duke University study shows.

North Carolina also is home to the Research Triangle Park, a leading high-tech hub anchored by three major universities. The contributions of the Research Triangle have earned the state a reputation for being a center of innovation.

Manufacturing, however, represents the largest share of the state’s economy, followed closely by financial services, according to a Federal Reserve Bank of Richmond report. Together, the two sectors account for some 40 percent of the state’s GDP, although financial activities have been the real engine of growth. Output in the financial sector increased 24 percent between 2007 and 2014, the Fed reports. By contrast, manufacturing output declined by 7.5 percent in the same period.

The bulk of North Carolina’s manufactured goods are exported, so as the dollar strengthened in 2014, exports fell off, which stalled the value of output in the state’s factories, according to a report produced by North Carolina State University. That dynamic was a major factor in North Carolina’s anemic 2014 GDP growth of 1.4 percent, compared with the national rate of 2.2 percent.

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Charlotte Office Market

Charlotte Office Vacancy and Asking Rents. Source: JLL

The greater Charlotte area ranks as the nation’s second-largest banking center, behind New York City, employing some 60,000 financial and insurance employees at more than 4,300 companies, according to the Charlotte Regional Partnership. The Queen City (Charlotte’s nickname) added 40,000 jobs during the 12 months ending this past third quarter, according to a report from Cushman & Wakefield. Charlotte boasted a net in-migration of about 16,000 people annually from 2009 to 2013, the report says.

The vitality of Charlotte’s financial sector and its impressive job growth are helping to drive the expansion of the city’s office market, particularly in the urban core, which is home to the bulk of the 2.3 million square feet of office space that was under construction as of third-quarter 2015, Cushman & Wakefield reports. The office-vacancy rate of the city’s central business district stood at 8.3 percent as of third-quarter 2015, down from a recession-era high of 15.7 percent, a JLL analysis shows.

Focus: Research Triangle Park

The communities of Raleigh, Durham, Cary and Chapel Hill sprawl across an area that has been dubbed North Carolina’s Research Triangle. It draws that name from a major technology and science research park located in the heart of the region that is anchored by three major universities: Duke University in Durham, the University of North Carolina at Chapel Hill and North Carolina State University in Raleigh.

The 7,000-acre Research Triangle Park was developed in 1959 and currently includes more than 170 companies and some 49,000 full-time and contract workers, according to the city of Durham’s website. The productivity of the Research Triangle helped to earn North Carolina a nod in 2015 from the U.S. Chamber of Commerce Foundation, which ranked the state as one of the nation’s leading tech states in performance, innovation and entrepreneurship.


North Carolina Unemployment Rates. Source: U.S. Department of Labor

Recent Department of Labor data show that unemployment in the Tar Heel State generally has tracked slightly higher than the national rate since at least 2005 — jumping about a full percentage point above the national rate in the tail end of the recession. As of this past October, North Carolina’s unemployment rate stood at 5.7 percent, compared with the national mark of 5 percent.

As a banking center, North Carolina’s unemployment surged with the rash of layoffs in the finance and insurance sector during the recession and ensuing years. On a brighter note, between September 2014 and November 2015, employment in North Carolina expanded by 2.6 percent, with companies adding some 108,000 jobs, according to the Federal Reserve Bank of Richmond.

Sources: Charlotte Chamber of Commerce, Charlotte USA, City of Greensboro, City of Raleigh, Colliers International, Cushman & Wakefield, Duke University, Durham Convention & Visitors Bureau, Fast Company, Fayetteville Area Convention and Visitors Bureau, Federal Reserve Bank of Richmond, Forbes, Greensboro Partnership, J.P. Morgan Chase & Co., JLL, North Carolina Central University, North Carolina State University, University of North Carolina, U.S. Census Bureau, U.S. Chamber of Commerce Foundation, U.S. Department of Labor


3 Communities to Watch


North Carolina’s capital is one of the anchor cities in the Research Triangle and ranks as the second largest city in the state, with a population of some 440,000. The publication Fast Company describes the city as the “primary tech hub” of the Southeast. Midyear 2015 reports by Colliers International say that Raleigh’s office, industrial and multifamily property sectors all have experienced robust demand and rent growth.


Greensboro, North Carolina

One of three major communities comprising North Carolina’s Triad Region, the city ranks as the third largest in the state, with a population of 281,000. Greensboro historically has been rooted in the now-declining textile, tobacco and furniture-making industries, but in recent years has repositioned itself as a regional distribution hub. A third-quarter 2015 report by JLL describes the city’s industrial-property market as “becoming increasingly landlord favorable” with surging rental rates.


As home to a major military installation — Fort Bragg and Pope Field — Fayetteville’s largest employer is the government. The military facilities contribute about $4.5 billion annually to the region’s economy and fuel Fayetteville’s robust retail market, which includes more than 1,500 shops and some 400 restaurants. Other major employers include a Goodyear Tire Co. plant, a Walmart distribution center and a Purolator Filters plant.


What the locals say

“What’s really happened [in Charlotte] since the Great Recession is there’s been a great pent-up demand for office space, but not until recently have we been able to achieve rental rates that can justify new construction. … We now have rental rates at very high levels in the downtown market, and in the adjacent [markets] — rates over $30 a square foot. We’ve never seen that before. It’s really a fun time to be here and watch. We are sitting front row to major development.”

Charlie Leavitt, JLL Carolinas
Charlie Leavitt,
executive vice president,
JLL Carolinas


Bill Conroy is editor in chief of Scotsman Guide Media. Reach him at (800) 297-6061 or

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