What's Next for Charlotte?

July 12, 2008
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As city's dazzle turns to dread, what's next?
The Charlotte Observer/DOUG SMITH
A lot of people are holding their breath in Banktown these days.
Troubled Wachovia Corp. has selected a new chief executive officer with impressive credentials, but he doesn't walk on water. Even as the announcement of former U.S. Treasury Department official Bob Steel's hiring came Wednesday, bank officials predicted second-quarter losses could reach $2.8 billion.
Wachovia's uptown neighbor, Bank of America, hasn't been immune either from the nation's sub-prime lending and financial markets turmoil. In Charlotte, I think we're starting to see bravado – “We're the nation's second-largest banking center” – give way to doubt and anxiety.
Wachovia and Bank of America are builders of the center city skyline, patrons of the arts, pillars of the economy.
If they falter, what happens to Charlotte?
Many worry that a weakened Wachovia could be acquired, losing its independence and hometown allegiance to Charlotte.
Real estate brokers say potential homebuyers who perceive their financial center jobs in doubt already are pulling back, wary of what might happen.
The uptown condo market in particular has thrived on a supply of young professionals, many of whom are employees of banks or in financial businesses tied to the growth of banks.
If hiring for those jobs wanes or if more layoffs come – and some say they already are under way – what happens?
Real estate developers believe there's little chance that a half a dozen or so residential towers proposed uptown – but not yet started – will get under way this year. Lenders will be skittish about financing them, they say, until the housing market shows solid signs of recovery.
Landlords in the office-leasing market are concerned, too.
One major office-condo-retail development – 300 South Tryon – was postponed earlier this year over worries that a bank slowdown could squelch office demand.
The city's big towers have filled with tenants in large part because the bank anchors pulled in law firms and other related vendors around them.
If the banks aren't growing, who leases the estimated 1 million-plus square feet of speculative office space expected to come on the market over the next two years?
Maybe the financial bleeding will stop, and everything will work out for Charlotte and the banks over the next year.
Some economists can see a turnaround coming possibly by mid-2009.
But in the meantime, nail biting has become the norm in Banktown.
The city's Hugh McColl Jr. swagger has faded.
Remember how the former Bank of America chairman used to dazzle stock market analysts in New York with the bank's next bold move?
Today, Charlotte's two big banks aren't dazzling.
They're too busy defending their actions to Wall Street analysts and fending off angry shareholders.
How quickly fortunes can be reversed. In Banktown, this is something we never thought we would see when our banking giants were flying high just over a year ago.

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