Recently I sat down with veteran appraiser Fitzhugh Stout, CRE, the Managing Director at Integra Realty Resources. He and I chatted about what a lot of people in our industry are finding hard to believe is happening in SouthEnd.
Land in SouthEnd is selling for $286 per square foot. That’s $12 million per acre for dirt! Twelve million dollars….hmmm. South End, once an industrial no man’s land, is selling at prices that rival those in Uptown Charlotte.
Here are some comps I found eye-opening.
- $285.97/SF – East West Development – 1812, & 1820 South Blvd. Charlotte, NC 28203 Land Comercial, Retail 1.73 Net Acres Closed: 10-31-2019 $21,587,000 $12,456,434/Acre
- $177.29/SF – 2151 Hawkins St. Charlotte, NC 28203 Land Commercial, Office 1.66 Acres Closed: 10-29-2018 $12,833,316 $7,722,539/Acre
- $127.02/SF – 1100 S. Tryon St. Charlotte, NC 28203 Land Commercial 4.88 Acres Closed: 01-15-2019 $27,001,000 $5,532,991.80/Acre
The numbers were pretty astounding, and they turn my notion of “funny money” on its head.
Funny Money in real estate deals – What’s it all about?
A tactic that real estate veterans often use in negotiating is what I call “funny money.” In essence, it involves negotiating in small numbers that ultimately add up to big ones. Everything is transparent and out in the open. But smaller numbers can be emotionally easier for negotiators to accept, even as they add up quickly.
These comps prove that in SouthEnd, where you can develop density by developing a building in excess of eight stories, have reached Uptown prices. I remember just a few years ago when prices were quoted at $60 per square foot and thinking that was insane.
One aspect that I always found fun when selling land was how the prices seemed really small at the start when you are negotiating price per square foot or acre. (There are 43,560 square feet per acre.) They use this negotiating style in commodities selling. Think of selling a bale of cotton 63 cents per bale. If you are working with a million bales, you are talking real money.
Tip of the hat to Fitzhugh, a mild-mannered serious guy with a funny name for sharing this stunning information. Funny money used to be a good negotiating tactic. But now, at least in SouthEnd, these values aren’t funny anymore.