February, 2021 Edition - Make Your Multifamily Investments In North Carolina
In my role as a Multifamily Investment Advisor/Broker, I am frequently asked by investors, who are considering purchasing multifamily properties, why they should invest their money in North Carolina properties versus properties in other states. I love the question, but the answer could take hours. There is so much to be considered before making your purchase decisions. The simple answer is that it all comes down to jobs and population. If there are not enough jobs, people will move away. If there are plenty of jobs then people will move in to take them. But which comes first, the jobs or the people and where do the jobs come from? We are very fortunate in North Carolina to have a growing employment market and a growing population. We can thank our North Carolina Department of Commerce and our economic development community for much of our success. Let me explain.
North Carolina’s biggest advantage may be its diversity of landscapes, culture and industries. No two regions of the state are quite the same, yet each region provides benefits that help make it a diversified and thriving state for business. Prominent industries in North Carolina include aerospace and defense, agriculture, biotechnology, energy, finance, furniture, manufacturing, textiles and tourism.
The Charlotte region is a hot spot for attracting corporate headquarters and financial and technology industries, and has been one of the nation’s fastest growing cities for years. The counties surrounding Charlotte attract manufactures and a diverse pool of companies. Eastern North Carolina is luring industries across the spectrum looking to locate and expand in the cities and towns in the coastal plain and on the coast. The Triangle (Raleigh, Durham, Chapel Hill and surrounding counties) is a global hub for software-development, life-science companies, some of the state’s top universities and a highly skilled labor force and advanced manufacturing center. In the middle of the state, the Triad (Greensboro, High Point, Winston-Salem and surrounding counties) stands out for its transportation infrastructure and the Carolina Core initiative, which is promoting the region’s industrial megasites, urban research parks and mixed-use developments. The Carolina Core is North Carolina Economic Development’s newest economic engine. Bridging the urban crescent between Charlotte and the Research Triangle in central North Carolina, the Carolina Core initiative is defined by diverse assets connected along a 120+ mile stretch of future interstate 685 (currently designated as Hwy 421) from west of Winston-Salem to Fayetteville. The Core is defined by the assets that make the region a globally competitive market. A smart and growing talent pool of more than 2 million people, access to 30+ colleges and universities, multiple airports, four megasites totaling 7,200 acres of certified land, industrial and urban research parks and more. With public and private leadership highly engaged on a vision for the future, a spark has caught and strong, innovative companies are investing and growing in the Carolina Core. Combined, each of these regions with their areas of specialization make up a highly progressive state that, despite the economic challenges posed by the global Covid-19 pandemic managed to bring in more than a billion dollars in major corporate investments in 2020 and is well positioned for 2021 and beyond.
So how does the North Carolina Department of Commerce and our economic development community attract the business and industries we want and need to grow North Carolina? Here are 10 of the top reasons why North Carolina has been able to thrive and continue to grow even during the pandemic:
1. A Business-Friendly Tax Environment: North Carolina is committed to making it easy for companies to do business. That’s why our state fosters a pro-business environment. North Carolina’s pro-business environment is fueled by the lowest corporate income tax rate (2.5%) in the U.S. along with a favorable legal and regulatory climate, low business cost and qualified talent. Overall, North Carolina has the third-lowest business tax burden in the U.S. according to a comprehensive 2018 Anderson Economic Group study which considered 11 taxes that businesses pay. North Carolina’s legal climate ranks #7 nationally and is #5 for overall treatment of tort and contract litigation (U.S. Chamber Institute for Legal Reform).
2. Nationally Recognized Business Climate: North Carolina consistently finishes among the top three states in well-regarded national business rankings. In Site Selections magazine’s 2020 survey, North Carolina tied with one other sate as the Number One Best State Business Climate in the country. In 2019, Forbes magazine chose North Carolina as the nations Number One Best State for Business for the third year in a row. Additionally, CNBC placed North Carolina as Number Three in its 2019 ranking of America’s Top States for Business.
3. Fast-Growing Population and Talent Pool: North Carolina is the 9th most-populated state in the U.S. and growing. A key indicator of talent availability is a growing population. The latest data from the U.S. Census Bureau shows North Carolina to be the fourth most rapidly growing state in terms of new residents added between 2019 and 2020 trailing only Texas, Florida and Arizona. North Carolina’s population grew to an estimated 10.6 million, an increase of 100,000 in the period from July 1, 2019 to July 1, 2020. In 2010, North Carolina’s population was 9.5 million, meaning it increased more than 11% over the decade. In addition to the large number of people flocking to the state who continue to deepen our pool of high-quality talent, our world-renowned education system graduates thousands of students into the state’s workforce each year. Various training programs by an array of organizations prepare even more workers for skilled positions to fit specific companies’ needs. North Caroling boasts 53 colleges and universities, including 17 public universities and is home to top-tier research universities like Duke University, the University of North Carolina at Chapel Hill, North Carolina State University and North Carolina A&T University. Additional workforce training is provided by the state’s 58 community colleges where 800,000+ students enroll each year. North Carolina has the fourth-largest active-duty military population in the U.S. More than 82 percent of those exiting the military in the next three years will be 30 or younger and will have experience in engineering, IT, healthcare, communications, research and other in-demand fields.
4. Affordable Business Operating Costs: North Carolina’s cost-effective business environment is clear across several measures, including construction costs (16% below the national average in metropolitan areas) and industrial electricity costs (about 10% below the U.S. average). In fact, North Carolina’s labor, energy and tax costs are all well below the national average, according to Forbes, and rank as the nation’s fourth-lowest overall.
5. Location and Logistics to Reach Millions: According to Wikipedia, 58.28% of the U.S. population lives east of the Mississippi River. North Carolina’s central East Coast location and excellent highway transportation network with 90,000+ miles of road, the second-largest state-owned highway system in the U.S., provide access to more than 178 million customers within a day’s drive. The state’s two deepwater seaports and two Class 1 rail carriers enable companies to reach millions more domestic and international customers. North Carolina boasts several regional airports and four international airports including the nation’s seventh busiest in Charlotte, the very well- connected Raleigh-Durham International Airport, The Wilmington International Airport and The Piedmont Triad International Airport in Greensboro which supports 200 aerospace companies, 1,000 acres of ready-to-build available land and is accessed by five interstate highways.
6. Leadership in Research and Innovation: North Carolina’s public and private universities excel in research and development. Duke University, University of North Carolina and North Carolina State University ranked among the top 100 universities worldwide with granted U.S. patents in 2019. The state is also home to several research parks, including the nation’s largest at Research Triangle Park, home to more than 250 of the world’s most innovative companies employing more than 50,000 people.
7. Quality of Life: North Carolina offers an unparalleled quality of life. North Carolina’s low cost of living and family-friendly reputation make it an ideal place to call home. North Carolina enjoys a cost of living that’s lower than the national average. Residents enjoy a moderate climate year-round and unique access to a variety of natural landscapes from the Great Smoky and Blue Ridge Mountains to over 300 miles of Atlantic beaches. Residents also have access to some of the top medical facilities in the U.S. and health care costs below the national average. Four of the leading medical schools in the state are Duke University School of Medicine, Brody School of Medicine at East Carolina University, The University of North Carolina School of Medicine and Wake Forest University School of Medicine.
8. Strong Manufacturing and Growing Technical Workforce: With more than 475,000 employees, North Carolina has the largest manufacturing workforce in the Southeast and the ninth-largest in the U.S. The state’s technology industry jobs increased 20.8% from 2013 to 2018, the third-highest growth rate in the country and well above the national average of 8.3%.
9. Performance-Based, Targeted Incentives: North Carolina offers eligible companies state and local programs that lower their costs and increase their global competitiveness, including performance-based grants tied to job creation. In recent years, legislators have significantly expanded possible grants for projects that create large-scale employment and investment in North Carolina.
10. Economic Development Assistance: The Economic Development Partnership of North Carolina helps companies of all sizes identify sites, navigate economic-development incentives, find workforce solutions and more.
The combination of these factors has produced our success to date. The jobs and population growth resulting from these efforts have also resulted in increased demand for housing. There is little debate that a primary indicator of the economic vitality of a community is its housing market and the housing market in North Carolina is red hot.
All things housing considered, the state of the economy in North Carolina is healthy. From the east to the west, new single-family and multifamily residential construction is booming even with the rising cost of construction materials. New subdivision and new apartment projects are being announced on an almost weekly basis. Widely regarded as a safe commercial property investment, North Carolina is drawing developers and investors from across the county in anticipation of continued economic growth.
Multifamily developers and investors see opportunities to capture job seekers who either lack the ability or the interest in purchasing a private residence. The apartment dwelling demographic extends from young adults with new families to the baby boomers on the other end of the spectrum who are ready to sell the family home and enjoy the more carefree life of apartment living. According to the 2019 American Community Survey, currently more than one-million North Carolinians live in apartments. This is about 10% of the population and it’s growing.
So, there you have the short answer as to why you want to invest in multifamily properties in North Carolina (jobs and population growth) and you have the long answer (an ongoing economic development program that is keeping the pipeline loaded with new businesses and industries moving to North Carolina with jobs for the growing population).
“Just-In-Case You Missed It” is a monthly letter prepared for multifamily owners and prospective owners. It is a compilation of multiple articles from multiple sources or a reprint of an article from a specific source (source credit given). Its purpose is to present both facts and opinions that may influence our multifamily business in the Southeastern U.S. If you have any questions and/or would like to discuss any of the comments above, my conclusions or your multifamily business, please contact me at your convenience. I can be a valuable resource to you without adding expense to your budget. I look forward to speaking with you and having an opportunity to meet with you. I am always at your disposal to assist you with your multifamily business. If you would like to review previous editions of my monthly “Just-In-Case You Missed It” letter they are posted on my website, www.rickbakermultifamily.com.
Respectfully
Rick
G.F. Rick Baker, CCIM
Multifamily Specialist/Investment Advisor
www.RickBakerMultifamily.com
2504 Tinderbox Ln.
Greensboro, NC 27455
Cell: 336.549.6083
Email: rickbakermultifamily@gmail.com
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