Such a very, very telling few lines from one of our local uber developers, Smokey Bissell. As captured by Kerry Hall Singe:
Speaking before a group of roughly 100 real estate professionals at the Knight Theater in uptown, Bissell said the recent economic downturn has been “catastrophic” for the community. The market, he added, probably won’t improve for another two to three years. …
Bissell pointed to last year’s auction of land near the Charlotte Knights baseball stadium as illustrative of how difficult the market has become. In October, six buyers bought pieces of Gold Hill Commons, a $200 million mixed-use development in Fort Mill, S.C., for a total of a half million dollars.
About 310 acres at Interstate 77 and Gold Hill Road were offered. The property, adjacent to the Charlotte Knights baseball stadium, includes office and shop spaces and residential units.
Of 30 parcels available, buyers bought 14.
“That’s the only time I’ve seen the free market tested,” Bissell said, “and it totally flunked.”
Wow. Where to start with that? I guess, first off, Bissell is validating everything we’ve told you about the real estate market for the past two or three years running. Reams of supposed “reporting” to the contrary, Charlotte did have a real estate bubble, it did burst, and things are not getting better any time soon.
Next, check Bissell’s twisted definition of a free market in real estate. He admits that the vast majority of big real estate transactions in the local market have traditionally been closed, brokered deals — no real market pricing involved, just speculative guesses on ROI.
But most of all — the free market flunked? Really, Smokey? In an open market process the price signal was unmistakable — a correction — a massive one. That is how markets work, when allowed to, Smokey. A market does not mean you always make money, some times you lose money. A lot of it. Provided the losses are not socialized via — oh, umm — tax incentives, publicly subsidized infrastructure, or a local government structure which actively rewards development it likes via zoning, etc.
Gee, what local market could that be?
Bissell pulled back the curtain even further:
Asked about the city’s future, Bissell likened it to synchronized swimming, where above the water one sees poised swimmers. But look below the water’s surface, he said, and one sees how frantically they’re having to work to appear calm. He said he suspects many property owners are that way now as they struggle to meet loan payments.
Bissell also shared a story about how he once saw a chicken get slaughtered. After its head was cut off, the bird ran around, blood squirting everywhere, until it suddenly stopped and fell over dead.
“That’s what happened to us as developers,” he said. “We were fat and sassy wandering around the barnyard and the farmer decided to whack our head off.”
Uh-huh. What have we been telling you about the upcoming county reval of property? Developers are going to scream like mad and run towards any perceived safe harbor.
Expect more blood.
