Article Credit: Charlotte Regional Business Alliance
In the first half of 2023, the Charlotte Region's economy exhibited uncertainty and caution, mirroring the national trend. The region faced challenges such as the housing crisis, changing workforce dynamics including hybrid/remote work, and the rapid growth of artificial intelligence (AI).
What’s next: The region's economy has demonstrated resilience and steadiness, suggesting the potential for a soft landing without a recession in the second half of the year. To ensure success, the focus should shift towards solutions addressing labor force shifts, AI adaptation, and affordable housing concerns.
Employment & Future of Work: In May, the region experienced a slight rise in unemployment to 3.2% from April's 2.9%, though this remains lower than the national rate of 3.4%.
The region's low unemployment can be attributed to its advantageous location spanning North and South Carolina, historically appealing for business. Both states boast record employment levels.
With unemployment so low, workers prioritize work-life balance and flexibility in choosing where to spend their work hours.
Data for the week of July 31st indicates average office occupancy at 49.2%, peaking at 58.3% on Tuesday and dipping to 32.1% on Friday, suggesting a preference for hybrid setups.
Remote and hybrid work is also prominent in the region, as depicted in the chart displaying the distribution of remote, office, and hybrid workers across counties.
Why it matters: The Wall Street Journal captured sentiment among bosses across the country that want their employees showing up in the office. Citing culture, collaboration, and team engagement, many managers feel there is something missing when workers are out of the office.
While workers are being employed at record high rates, their companies are beginning to desire a return to pre-pandemic standards of work. Going forward, both sides of the relationship will need to consider current economic conditions, team needs, and personal needs when determining the best path for compromise.
Housing Affordability/Homeownership: The regional population is projected to be more than 3.2 million by 2030. The region will need an additional 120,000 housing units, for a total of 1.3 million housing units by that period.
The housing market remains tight due to low inventory and supply, and high borrowing costs. While median sales decreased slightly, prospective homeowners are still waiting for rates to improve, thus showing evidence of fewer home closings.
What to expect: Office-to-residential conversions are touted as a solution for housing shortages due to remote work trends.
The U.S. Department of Housing and Urban Devlopment (HUD) proposed funding to study these conversions, acknowledging their partial efficacy.
In this region, where over 60% of vacancies are concentrated in 10% of buildings, these factors limit conversions.
The big picture: In the first half of 2023, the region's economy mirrored national trends of uncertainty and caution due to challenges like housing crisis, shifting workforce dynamics, and rapid AI growth. The region has shown resilience with potential for economic recovery in the latter part of the year.