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The Uptown office space dilemma 

Sure, they call it Uptown, but it's essentially a glorified office park, subject to the whims of its tenants.

That's what worries me, and, if they were candid, a whole lot of other people, too.

A recent blip in The Charlotte Observer published under the nondescript title "Office Vacancy Rate Jumped in 2009," captures this dilemma perfectly. A report by CB Richard Ellis forecasts a near doubling of the Uptown vacancy rate to 15 percent in 2010, the paper reported. That follows a more than tripling of the rate in the fourth quarter of 2009, up from 2.5 percent the year before.

Here's the money quote: "Adding to the gloom for the future, uptown's largest occupants -- Bank of America Corp. and Wells Fargo & Co. -- plan to consolidate their work forces, freeing up more available space. The two banks occupy about 50 percent of the center city."

Fifty percent? Consider the turbulence of the last two years at the Charlotte-based banks and let that sink in. Former Observer business editor Doug Smith put it best in a rare moment of candor in 2008: "What they and many newcomers don't realize is that the skyline looks like that today primarily because of Bank of America, Wachovia and their predecessor institutions," Smith wrote. "Using the clout of the financial institutions, the bank brass were able to fill the towers by pulling in law firms and other companies that cherished their business."

Let me translate. Banks and bank dependent businesses occupy the majority of the office space Uptown. Without them, or with a significant decrease in their presence, Uptown is screwed.

A potential 15-percent office vacancy rate isn't the end of the world in this economy. The city's current suburban office vacancy rate, which CB Richard Ellis puts at 22.8 percent, is worse. But there are a couple of key differences. The suburban office market serves a diverse pool of businesses and its vacancy rate will fluctuate with the economy.

One more sneeze by the banking industry or the present leadership of the two banks and the Uptown market is S-O-L for a long time, regardless of what happens with the economy.

The other key difference here is that local government doesn't have plans to invest $1.5 billion (probably closer to $2 billion when they are done) in transportation dollars in the suburban office market.

Incredibly, Charlotte's elite are simultaneously debating how to handle what everyone acknowledges will likely be Charlotte's post-banking-era future while furiously plowing forward with plans to build a billion-dollar, 11-mile extension of the Lynx light rail line to connect Uptown to the UNCC area. The ultimate purpose of that line is to move employees between the suburbs and Uptown. So are we building this thing for bank employees? If so, isn't that a risky proposition? If not, then whose employees are we building it for?

Last week, the Charlotte City Council moved forward with plans to seek a federal grant to begin work on a segment of an Uptown-area streetcar line that will cost at least half a billion dollars.

The South Boulevard light rail line has become a popular way to shuffle workers for the banks and businesses that serve the banks from point A to point B. If things remain as they are today, the University line and streetcar will no doubt be popular with the bank crowd, too.

But simultaneously holding public cram sessions on Charlotte's future without banking, as Charlotte's elites have recently, while blowing most of the transportation cash we'll have in the next two decades on transportation lines to move bank workers around seems to be a sketchy scheme of hair-raising proportions.

Clearly there's a good probability that Charlotte won't be a bank town a decade from now. So why are we doing this?

Part of the problem is that the basic assumptions about who will ride this stuff in 15 years predate 2007 and the banking industry turmoil. Still left unanswered is whether the Uptown office market could survive a continued "consolidation" of bank presence.

Who do we expect to replace the banks and the law firms Uptown should that happen? Could Uptown continue to thrive without its anchor tenants? Most office parks can't. If Charlotte does manage to attract new business sectors like the green businesses that are so in vogue right now, will they even want to locate Uptown? If not, who will and why? The rents up there aren't exactly cheap and the location isn't all that convenient.

Or do we plan to spend the $1.5 billion to become a tourist destination, and can we succeed at that? Or are we hoping the state will eventually expand the UNCC campus Uptown to such a degree that students will be forced to ride the transportation lines?

Or is the plan to simply hope that the banks stay put, expand here and keep a large presence Uptown forever and ever?

Don't let Charlotte's elites fool you. They don't have even the vaguest answers to these questions.

Which makes this a great time to reassess whether we should "consolidate" our transportation plans for a few years until we figure out what is going on.

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