Here’s another sign the economy might be slumping: plans for a major new retirement community in Charlotte have been scrapped. Aldersgate Life Plan Services says it’s canceling the Generations at Shalom Park living community near South Park. For more, we turn now to Tony Mecia of the Charlotte Ledger Business Newsletter for our segment BizWorthy.
Marshall Terry: Before we get into it, Tony, I do want to mention that Aldersgate is an underwriter of WFAE. Did the company offer any more specifics on what led to the decision to scrap this retirement community?
Tony Mecia: Yes, they said that high-interest rates and inflation and construction costs, that all of these things were contributing to the decision to pull back on this project that was a plan for 125 apartments on 11 acres off Providence Road in South Charlotte.
They had done a lot of work on it. They had design. They had acquired some land. But they said that because of economic conditions, they decided they were going to not move forward with it. And, you know this is something I think, Marshall, we’re going to see a little bit more of in the months ahead.
You know, the Ledger reported last month that the number of apartment starts in the fourth quarter was only about a quarter of the number it was in the previous fourth quarter of 2021. So, you know, a lot of apartment developers are making these same kinds of decisions for the same reasons.
Terry: So this was a pretty high-end, pricey, project; this retirement community. It’s a bit reminiscent of the real estate slowdown that happened in the late 2000s when luxury condos were being canceled. How worried should we be here?
Mecia: Well, I don’t know if worried is quite the right word. I mean, there’s still gonna be apartments built. There’s still going to be retirement communities built in the Charlotte region. We’re just going to see this slow down. And for Charlotte, for the last few years, that’s unusual territory. I think there is this belief that apartment construction and big apartment towers, that it’s sort of unending, that it’s going to go on forever. And more people are moving here and we need all this new housing.
The reality is that, you know, the cost of these things is going up because of these higher construction costs and higher interest rates. And right now, at this moment, as we sit here in January of 2023, you know, a lot of times these aren’t making economic sense at the moment. So I think we are going to see more of a pullback. And I think it’s going to come as a surprise to a lot of people.
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Terry: Well, switching gears now to layoffs. Salesforce has announced it’s cutting 10% of its workforce. The company has a location along I-77 in South Charlotte. What does Salesforce do exactly? And do we know if any jobs in Charlotte are getting cut?
Mecia: Yeah. Salesforce hasn’t said exactly which offices it’s going to make reductions at. It said it has about 74,000 employees nationwide. So 10% of that would be a little over 7000 workers nationally.
Salesforce is a software provider. It makes what is known as customer relationship management software or CRM. This is software that helps people who are in sales sort of manage their prospects and sort of get the most out of their contacts, that sort of thing.
Terry: Let’s move over to Wall Street now. Tony, you did a 2022 year in review of Charlotte area stocks and you wrote that investors should brace themselves for those year-end statements. So not good, I take it, right?
Mecia: Marshall, I feel like the theme this morning is bad economic news. But yes, the stock market, if you look at 2022, I know okay, we’ve talked about jobs, we’ve talked about fewer apartments being built. But even the stock market in 2022, a lot of people sort of perceived it didn’t do very well.
You know, the Nasdaq was down about 33%. The S&P 500 down about 19%. You know, that trickled down the local companies, too. I mean, the banks were all down pretty significantly. Bank of America stock lost 26%. Truist was down 27% in 2022. Wells was off 14%. We go down the line and, you know, of the three dozen or so stocks, local affiliated stocks that we track at the Charlotte Ledger, all but a handful of them were in negative territory.
The biggest drop was LendingTree, its stock fell 83% in 2022. There were a few that were in positive territory. All manufacturers, Nucor up 15%, SPX up 10%, and Honeywell was up 3%. But for everybody else, it was not a great year.
Terry: Well, let’s end this week on StarMed Healthcare, which made a name for itself during the pandemic for COVID testing and vaccinations. But now that demand has fallen off for those, StarMed has been turning to other services, including an urban farm. What’s their plan and how does food equal medicine?
Mecia: Yeah, StarMed, a lot of people don’t know this. It was known for COVID vaccinations and testing, but it does have medical clinics. And so this is sort of an outgrowth of its work with medical clinics.
Queen City Nerve reported that it is starting an urban farming program in which patients who have some sort of an ailment, they can get a prescription for the medicine that they need. But they’ll also get a prescription for vegetables grown in StarMed’s Urban Farm.
So they said, well, you know, you get a prescription for your medication, maybe you get a prescription for carrots and beets and turnips because all those things contribute to better health. And so we know that in Charlotte there are parts of town that don’t have great access to grocery stores. So I think this is part of a way to kind of alleviate some of those food deserts and get people healthy food to make them better.
Terry: All right. Well, I think maybe there was one story there that wasn’t quite so negative. So. Well, we’ll leave it there this week.
Mecia: Thanks, Tony. Well, here’s to a better week next week.
Terry: I second that. Thank you, Tony.
Support for WFAE’s Biz Worthy comes from Sharonview Federal Credit Union, UNC Charlotte’s Belk College of Business and our listeners.