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HomeMy WebLinkAboutNHC Market Analysis Final 2025New Hanover County, NC Comprehensive Plan Update The conclusions set forth are based upon information provided by public records, municipal officials, business owners, market and demographic data obtained by Rose & Associates Southeast, Inc. While the information included herein is believed to be accurate, no warranty or representation, expressed or implied, is made as to the information contained herein, and is submitted subject to omission, change of market conditions, or other factors outside the scope of this report or the author’s control. This report is the property of Rose & Associates Southeast Inc. and New Hanover County, and shall not be duplicated in whole or in part, without express written permission, all rights reserved, 2025. © Copyright 2025, Rose & Associates Southeast, Inc. Real Estate & Economic Development Goals Understand the current demographic & economic dynamics Overview of the commercial real estate market Review current designated mixed-use development areas Identify potential mixed- use development corridors and Align data + key development areas with vision & goals Introduction Rose Associates joined the Clarion team in assisting New Hanover County to develop studies to inform the development of the comprehensive land use plan update. Destination NHC 2050 is not intended to be rigid and inflexible. However, it must have foundational guiding principals that align with the County’s vision and goals. Markets evolve and change faster than ever. Before determining appropriate land uses, the changing demographic and economic dynamics of the community must be understood. In addition to the many challenges and constraints of development, it is important for the plan to provide a range of market-driven land use guidance that creates economic opportunities, builds quality of life and balances preservation within the built environment. Locational Analysis New Hanover County is situated in the southern most region of the Coastal Plains of North Carolina. It is located within the Wilmington Metropolitan Statistical Area (MSA), one of sixteen in the state of North Carolina. The MSA includes Brunswick, New Hanover and Pender Counties which comprise both coastal towns and beaches, as well as rural and agricultural areas and game lands. The region has a rich history in agriculture, trade and transportation, military and defense, and naval operations. Major centers of influence include the City of Wilmington, and in neighboring Onslow County to the north, the City of Jacksonville and the military installations of Camp Lejeune. Primary transportation routes include Interstate 40, US Highways 17 and 421, Wilmington International Airport and the Port of Wilmington. Key Attributes Wilmington International Airport, which was ranked the fastest growing airport in NC, and third for the entire U.S. in 2023. Port of Wilmington, a major US port which ranked #1 for container terminal efficiency in 2023. Highly ranked natural resource qualities, including land and air quality, along with significant costal ecosystems. Expanding Interstate and Highway connections including the in-progress U.S. 17 Hampstead Bypass (Section B. 48% complete as of Oct. ’24). The University of North Carolina at Wilmington (UNC-W) and the Cape Fear Community College are prominent educational institutions in the region. Wilmington is fastest growing in the UNC system. Demographic & Economic Profile North Carolina is projected to become the 7th most populous state in the U.S. by 2030 according to the North Carolina Office of State Budget & Management. New Hanover County is classified as an urban county based on population projections from 2020 vs. 2060, with the overall population estimated to increase 6.7% by 2030. The City of Wilmington, the county seat, sits on the edge of New Hanover and Brunswick Counties, one of the most rapidly growing counties in the state. Wilmington grew by 6.44% from 2020 (last decennial census) to 2023. Demographic & Economic Profile New Hanover County has experienced a steady, gradual population growth adding around 13,500 people from 2020 to 2023 based on Census data. The total population of 239,225 was reported by ESRI as of 2023. The current population estimate grew by 13,523 since the last decennial 2020 U.S. Census. The North Carolina Office of State Budget and Management (NCOSBM) projects a 16.3% increase in population from 2020 – 2030, with most of the growth attributed to net migration vs natural births (negative). These projections would place New Hanover County 15th out of the 100 North Carolina counties for percentage change in population growth. Along with population growth, households also grew, as 8,248 additional housing units were added from 2020 to 2023. The median age in New Hanover County is 41.2 which would imply that the population is trending older, however, generational analysis suggests that its largest cohorts are Generation Y (Millennials) and Gen Z, which combined are 46.3% of the population, followed by Baby Boomers (21.5%). While many in Gen Z may be in college or in early career stages (see College Town Tapestry Segment among top three in the county), Generation Y are moving into mid-stage careers and are forming families and households. Being a “college town”, Wilmington at the center of New Hanover County boasts high educational attainment, with 47% of the county population having a Bachelor’s degree or higher. The majority of working age adults are in White Collar professions, many of whom are in the healthcare industry or other professional and technical sectors of the economy. The economy is otherwise largely driven by the tourism industry – and its popular beaches - fueling hospitality, food & beverage and retail uses, along with rental housing. Accommodation/ Food Services and Retail are dominant employers in the county. The county is an economic anchor as the concentration of population and jobs are located along the region’s primary corridors. The following graphs and charts depict the demographic and economic data of New Hanover County. Demographic & Economic Profile – New Hanover County Demographic & Economic Profile Generational Cohorts New Hanover County Characteristics Silent Generation Baby Boomers Generation X Generation Y/Millennials Generation Z Alpha Generation Beta Generation Pre 1945 1946-1964 1965-1980 1981 - 1997 1998-2016 2017 - 2024 2025 Defining Events WW II, Great Depression Cold War, Vietnam, Woodstock Gulf War, Divorce, LatchKey Kids 9/11, Y2K, Financial Crisis, Helicopter Parents Great Recession, Climate Change, Pandemic Political Unrest & Division, Protests, Equity Artificial Intelligence % of Local Population 5.5%21.5%19.4%24.0%22.3%7.4%N/A % of US Workforce <1%15%31%36%18%TBD TBD Single, College/HS, Starting FamiliesLife Stage Veteran, Retired, Elder Active Adult, Grandparents Family Life, Active Single, Married, Fun/Entertainment School years, formative Newborns Career Stage Late Stage/Retired Late Stage Mid/Late Stage Early-Mid Stage Early Stage N/A N/A Aspiration Home Ownership Job Security Career Success Freedom & Flexibility Security & Stability Independence N/A Source: Rose Associates, ESRI, CareerPotential LLC, US DOL Density & Employment Source: ESRI; Rose Associates The density of both population and employment can be seen along primary corridors throughout the County including: •US Highway 17 •US Highway 421 •Market Street Corridor •College Street Corridor New Hanover County is a regional employment center, as more workers travel to or live and work within the county. Source: NC Dept. of Commerce New Hanover County - 2022 Source: US Census; Rose Associates Employment & Economy Construction Accommodation & Food Services Healthcare & Social Assistance Location Quotient (LQ) % of Average Employment Healthcare & Social Assistance The Location Quotient (LQ) measures those industries performing above the national average, thus creating the greatest economic impact. The strongest include Real Estate, Rental and Leasing, followed by Construction and Accommodation and Food Services. Employment is measured two ways 1) by the sectors of employment that exceed national averages (LQ); and 2) by the average percentage of employment by industry. The largest employing industries within New Hanover county in descending order include Healthcare & Social Services, Accommodation and Food Services, and Retail Trade. However, the largest employment sectors differ from those industries whose goods/services are exported or consumed outside of the local market. Most of the employees in New Hanover county are in white collar professions, impacting commercial real estate demand, particularly in office and institutional uses influenced by the strong regional healthcare industry. Source: US Bureau of Labor and Statistics (2023); Rose Associates Real Estate, Rental & Leasing Retail Trade Accommodation & Food Services Retail Trade Construction Professional, Scientific, and Technical Services Tourism Domestic and international visitors to and within New Hanover County spent more than $1.1 billion in 2023, representing an increase of 5.9 percent from 2022 spending. New Hanover County ranks 8th in visitor spending among North Carolina’s 100 counties. Tourism employment in New Hanover County increased to 6,790 in 2023. Total payroll generated by the tourism industry in New Hanover County was $278.9 million. State tax revenue generated in New Hanover County totaled $37 million through state sales and excise taxes, and taxes on personal and corporate income. About $40.3 million in local taxes were generated from sales and property tax revenue from travel-generated and travel-supported businesses. www.partners.visitnc.com/economic-impact-studies New Hanover County Board of commissioners in their 41st Annual National Travel and Tourism week proclamation stated that Room Occupancy Tax collections in 2023 exceeded $24 million, setting a new benchmark. New Hanover has an occupancy tax rate of 6%. The first 3% of Room Occupancy Tax collected will be distributed with 60% for beach nourishment. The remaining 40% is to be used by the Tourism Development Authority (TDA) to promote travel and tourism throughout New Hanover County. https://www.nhcgov.com/999/How-Room-Occupancy-Tax-Funds-Are-Distrib Lodging $288.57 Million Tourism can be in many forms: Ecotourism Heritage Tourism Wildlife Tourism Agritourism New Hanover County ranked 8th in NC for visitor spending in 2023. Food & Beverage $349.04 Million Recreation $136.73 Million Demographic & Economic Profile Demographic & Economic Summary With growth comes challenges and opportunities. The rising price of housing has increased the number of cost burdened households. Added demand in housing increases pressure on affordability, and demand for goods and services. Retail dynamics have changed since the pandemic, influenced by online shopping and consumers seeking discount options among a shrinking retail pool of operators. The primary focus is on grocery, food and beverage and entertainment. With a year end unemployment rate of 4%, many exiting college continue to look for jobs. The port and transportation network have accelerated industrial growth, largely in distribution and warehousing. All of this is underpinned by a job market that is growing to meet the demands of this dynamic. The population and workforce must match the demands of the job market, while providing wages that support the cost of living in the region. Continued migration to coastal areas has influenced the tourism market, as short-term rentals reduce the amount of housing inventory for sale/rent at market prices. While this market has traditionally been seasonal, this may be transitioning. The Commercial Real Estate Market Market Segment Trends in 2024/2025 In the post pandemic and post election era expectations are that remote work dynamics will continue to impact office uses, with slow leasing activity in central business districts. Much of the office activity is in medical office and professional uses in suburban markets. Continued growth in online shopping will influence the retail market. “Consumers placed a high premium on speed and convenience, while at the same time demonstrating a willingness to go out of their way for quality or value finds,” according to the new white paper by PlacerAi, titled Retail Trends to Watch in 2025. Discounters and grocery providers are expanding among fierce competition, as well as restaurants and food & beverage operators, while several general merchandise categories close underperforming stores. Continued reshoring of manufacturing, foreign investment, and tech innovation will drive industrial markets as warehouse and distribution space hits its peak. The Commercial Real Estate Market Review of commercial real estate inventory highlights the current conditions within the market, while comparing to the broader Wilmington metro market to understand market capture. Data from commercial real estate data provider CoStar includes office, industrial, retail and multifamily housing (4+ units) categories. The commercial real estate market in the metro consists of 13 submarkets, 6 of which are outside of the City of Wilmington and beach communities of New Hanover County. Based upon strong population and employment growth the overall market and submarkets within the county are all performing well in each category. The following data highlights the performance of each of the submarkets for each product category. Submarket Map Source: CoStar; Rose Associates •Industrial inventory is dominated by the Airport & Port submarkets •Emerging submarkets include Castle Hayne, Porters Neck & Hospital due to limited inventory and low vacancy The Industrial Real Estate Market New Hanover County - Industrial 4th Quarter 2024 Submarket Inventory SF Vacancy Rate Available SF Direct Available SF Sublet Available SF Total Market Asking Rent/SF Market Asking Rent Growth 12 Mo Delivered SF Under Constr SF Under Constr % of Inventory 12 Mo Net Absorp SF Airport 5,385,642 3.9%320,749 20,000 340,749 $10.84 4.7%107,073 15,000 0.3%-27,665 Market Street Corridor 2,549,448 1.9%55,808 11,712 67,520 $12.37 4.7%0 11,100 0.4%-43,423 Port 2,125,686 0.9%328,730 0 328,730 $8.42 4.4%18,000 298,730 14.1%295,551 New Hanover Outlying 2,063,752 6.5%173,216 0 173,216 $9.19 4.7%17,648 131,981 6.4%65,123 Castle Hayne 2,023,451 0.4%7,500 0 7,500 $10.54 4.7%0 0 0.0%-5,000 Downtown 1,108,267 5.2%57,350 6,027 63,377 $8.94 4.7%15,598 0 0.0%-8,324 Midtown 874,928 0.0%5,860 0 5,860 $12.75 4.8%0 0 0.0%0 Hospital/Independence 648,897 1.2%20,757 0 20,757 $10.71 5.0%0 0 0.0%-7,347 Ogden/Porters Neck 355,076 0.0%1,152 0 1,152 $12.01 4.7%0 0 0.0%0 Monkey Junction 104,941 3.3%3,419 0 3,419 $14.18 4.2%0 0 0.0%228 Landfall 82,250 0.0%0 0 0 $11.14 4.6%0 0 0.0%0 Carolina Beach 55,397 0.0%0 0 0 $14.55 4.8%0 0 0.0%0 Wrightsville Beach 29,328 0.0%0 0 0 $11.14 4.6%0 0 0.0%0 Source: CoStar; Rose Associates •Office inventory is dominated by the Hospital, Downtown and Midtown submarkets •Emerging submarkets include: Castle Hayne, Monkey Junction & Wrightsville Beach •Pent up demand driving down vacancy due to lack of new product. New Hanover County - Office 4th Quarter 2024 Submarket Inventory SF Vacancy Rate Available SF Direct Available SF Sublet Available SF Total Market Asking Rent/SF Market Asking Rent Growth 12 Mo Delivered SF Under Constr SF Under Constr % of Inventory 12 Mo Net Absorp SF Hospital/Independence 2,650,061 1.3%42,208 1,777 43,985 $25.39 1.9%0 0 0.0%-10,014 Landfall 1,978,522 1.1%27,510 49,423 76,933 $29.11 1.4%0 0 0.0%25,502 Downtown 2,162,931 1.2%142,399 6,140 148,539 $25.24 1.7%0 0 0.0%12,512 Midtown 2,271,817 1.4%33,022 4,990 38,012 $23.35 2.4%0 0 0.0%18,454 Market Street Corridor 507,534 3.1%13,504 0 13,504 $21.90 2.1%0 0 0.0%-2,264 Monkey Junction 291,202 1.2%17,662 0 17,662 $28.24 1.9%0 13,125 4.5%4,490 Ogden/Porters Neck 277,170 2.5%6,898 0 6,898 $27.33 1.9%0 0 0.0%3,353 Airport 361,985 1.3%4,527 0 4,527 $22.03 1.8%0 0 0.0%-3,603 Port 302,104 0.0%0 0 0 $23.09 1.8%0 0 0.0%0 Carolina Beach 101,852 4.5%4,596 0 4,596 $24.92 1.8%0 0 0.0%-4,596 Wrightsville Beach 84,229 3.8%0 3,232 3,232 $29.35 2.0%0 0 0.0%-3,232 Castle Hayne 56,461 0.0%0 0 0 $24.30 1.9%0 0 0.0%0 New Hanover Outlying 32,429 0.0%0 0 0 $23.37 1.8%0 0 0.0%0 The Office Real Estate Market Source: CoStar; Rose Associates •Retail inventory dominated by the Midtown & Market St. submarkets •Emerging submarket include: Porters Neck & Monkey Junction The Retail Real Estate Market New Hanover County - Retail 4th Quarter 2024 Submarket Inventory SF Vacancy Rate Available SF Direct Available SF Sublet Available SF Total Market Asking Rent/SF Market Asking Rent Growth 12 Mo Delivered SF Under Constr SF Under Constr % of Inventory 12 Mo Net Absorp SF Midtown 6,811,007 1.4%123,699 15,107 138,806 $20.75 3.9%0 0 0.0%-50,047 Market Street Corridor 3,065,571 3.0%89,311 0 89,311 $18.80 3.2%8,730 0 0.0%-18,812 Landfall 2,170,962 1.4%53,658 0 53,658 $31.61 5.2%3,000 32,263 1.5%17,175 Downtown 2,364,857 1.2%31,503 0 31,503 $19.07 2.4%0 0 0.0%-5,308 Ogden/Porters Neck 1,517,861 1.3%39,230 0 39,230 $25.34 2.9%18,713 27,200 1.8%14,167 Monkey Junction 1,414,440 1.6%20,250 0 20,250 $25.31 4.5%0 0 0.0%-8,498 Hospital/Independence 979,350 3.6%44,909 8,240 53,149 $22.50 2.9%0 0 0.0%-15,854 Carolina Beach 709,828 0.1%7,620 0 7,620 $22.91 2.7%4,204 25,000 3.5%9,461 Airport 687,330 1.2%8,140 0 8,140 $16.44 3.0%5,000 0 0.0%4,400 Port 457,688 0.0%0 0 0 $13.73 2.9%0 0 0.0%0 Wrightsville Beach 162,400 0.0%0 0 0 $19.77 2.7%0 0 0.0%0 Castle Hayne 149,529 0.0%0 0 0 $15.84 2.6%0 0 0.0%2,636 New Hanover Outlying 28,892 0.0%0 0 0 $19.69 2.9%0 0 0.0%0 Source: CoStar; Rose Associates Current Urban Mixed-Use Growth Areas . Sidbury/Blue Clay @ N. College Industrial Dominant Growth . Market @ I-40 (Porters Neck) Retail Dominant Infill . S. College & Piner (Monkey Junction) Retail Dominant Infill The currently adopted comprehensive plan considered three primary growth nodes for urban mixed-use development. While these areas have experienced some growth, we revisited these land use designations to determine the most appropriate areas for both urban and community mixed-use. However, first we must consider these designations and the various types of mixed-use development. Urban mixed-use contemplates the highest intensity of development regarding density, while community mixed-use contemplates less intense development with lower density allowances. Mixed-use can either be vertical, with multiple uses within one structure, or horizonal, with multiple uses in one development among multiple buildings. Mixed-Use developments are generally anchored by: 1) employment (e.g. office space); 2) lifestyle (e.g. multifamily apartments); or 3) entertainment (e.g. retail), or often a combination of two or more. Current Mixed-Use Growth Areas 5 Minute Drive Time Each of these areas have developed in different ways, with various dominant uses. The population within a 5-minute drive time and walk score assesses the suitability to support mixed-use development. 1.The Sidbury/Blue Clay area dominated by industrial development has limited population growth and is not walkable by most standards. 2.Porter’s Neck is limited by environmental constraints and low-density development. However, its location and proximity to new health related employment provides growth opportunities. 3.The area with the greatest probability to support mixed-use development is Monkey Junction. . Sidbury/Blue Clay @ N. College Population: 6,499 . Market @ I-40 (Porters Neck) Population: 6,789 . S. College & Piner (Monkey Junction) Population: 20,432 Potential Growth Areas Key Factors in Future Development Determining the most appropriate potential growth areas for mixed-use or other development should first consider site suitability. The most appropriate methodology for assessing the suitability of a growth area may be found in a common site feasibility test known as Highest & Best Use. Highest & Best Use is used to determine the most appropriate use of land, given the underlying economic base. It is site specific. Highest & Best Use, as defined in The Dictionary of Real Estate Appraisal, is: “The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the Highest & Best Use must meet are legal permissibility, physical possibility, financial feasibility and maximum profitability.” Legal permissibility lies in the adopted land use plans and zoning ordinances. Physical possibility is determined by site suitability, in other words, does it have characteristics that might hinder development, such as wetlands or other environmental constraints, in adequate infrastructure, utilities, or other conditions. Financial feasibility lies in the market potential, with supportive population, job growth, appropriate income, capital and other factors. Each of these varies depending upon the proposed uses, which are highlighted on the following pages. Site Suitability Factors by Development Type General Supportive Zoning Proximity to existing water & sewer lines Constraints/conflicts with environmentally sensitive areas Parcel accessibility from major roads, suitable size and topography Residential Walkable and/or adjacent to greenways/parks Adjacent to retail Adequate amenities for quality of life Proximity to public schools Retail/Office Proximity to residential customers/workers Minimum traffic thresholds Adequate accessibility and parking Proximity to workforce Industrial Transportation/Interstate connectivity including proximity to railroads Adequate Utilities such as power and broadband Proximity to workforce Zo n i n g Wa t e r & S e w e r S e r v i c e Fl o o d Z o n e s 1 Holly Shelter Corridor – Employment (Industrial) US 421 Corridor – Employment (Industrial) US 17 & Scotts Hill – Employment (Medical) Sidbury Corridor – Lifestyle Mixed Use (Residential & Retail) Monkey Junction - Lifestyle Mixed Use (Residential & Retail) 2 34 5 1 2 3 4 5 Potential Growth Areas for Mixed-Use Development: •Employment anchored •Lifestyle anchored Based upon the test for highest and best use, and suitability five primary areas were defined. This includes the most probable dominant use for future development to meet local goals for economic development and future housing, adding a variety of housing types and densities. These were supported by large undeveloped land parcels and areas that may be underutilized for future redevelopment. While this may not be all inclusive, we suggest redefining some of the areas noted as “urban mixed-use” such as Sidbury and Porter’s Neck, and large swaths of land designated as “community mixed-use” on the existing land use plan. Each of these areas are shown in the following pages including their suitability considerations such as environmental sensitivities and proximity to water/sewer. Mixed-Use Growth Areas Potential Product Types 1. Holly Shelter Industrial Office General Commercial 2. US 421 Industrial Office General Commercial 3. US 17 & Scotts Hill Institutional (medical) Medical Office General Commercial 4. Sidbury Corridor Apartments Townhomes Single Family Retail 5. Monkey Junction Retail Townhomes Single Family 2 3 1 4 5 Holly Shelter Employment Anchored Primary Use: Industrial Current Zoning I-2 Water & Sewer Limited Flood Zone Impacted US 421 Employment Anchored Primary Use: Industrial Current Zoning I-2 Water & Sewer Limited Flood Zone Impacted US 17 & Scotts Hill Employment Primary Use: Medical/Institutional Current Zoning R-15 & Commercial Water & Sewer Available Flood Zone Impacted Sidbury Lifestyle Anchored Primary Use: Residential Current Zoning R15 & Commercial Water & Sewer Available Flood Zone Impacted Monkey Junction Lifestyle Anchored (New/Redevelopment) Primary Use: Housing & Retail Current Zoning R15 & Commercial Water & Sewer Available Flood Zone Limited Findings The expansive growth in New Hanover County has created development pressures in all directions, which are limited by physical constraints. The push northward to undeveloped areas begs the question of community vision. What areas should support more intensive growth and what areas should be preserved? Economic Development goals for industrial development and job creation must be reconciled with pressures to provide additional housing that ensures future affordability for all generations and income levels. The market dynamics are supportive of all types of development however, each must consider the traffic impacts for each product type in order to maintain quality of life.