This week, Kannapolis officials announced a potentially transcendent investment in and around the city’s downtown that could include a significant amount of office development. That came as one national site-selection firm views Kannapolis as among the nation’s most attractive cities for corporate headquarters.
Charlotte-based Insite Properties has agreed to purchase Castle & Cooke’s land holdings in Kannapolis. The deal will see 236 acres change hands, including much of the N.C. Research Campus land adjacent to downtown. Insite’s preliminary plans for the land include 800,000 square feet of office, medical and research space. The company says it expects to facilitate investments totaling at least $500 million at the properties.
If the plans come to fruition, they would reignite the long-stalled development momentum at the campus and bring new types of uses to Kannapolis’ downtown revitalization effort.
Earlier this year, The Boyd Co., based in Boca Raton, Florida, released a study that determined the 15 best corporate headquarters cities based on remote and hybrid work trends, state tax rates and policies, and operating costs, among other factors. Kannapolis is one of two North Carolina cities on The Boyd Co.’s list of most attractive sites.
Fourteen of the 15 places are suburban or exurban cities, able to tap into bigger-city entertainment, sports and cultural offerings while providing a lower cost of living and cheaper real estate. That last factor is becoming more important in an era when remote and hybrid work are must-haves for many companies to compete for scarce talent, said The Boyd Co. principal John Boyd. Other considerations used in the site-selection firm’s study: cost of labor, construction, utilities and travel.
Boyd recently spoke to CBJ at an uptown hotel after spending several days here scouting sites in the region. Kannapolis and the other cities chosen by The Boyd Co. portend what Boyd and his colleagues expect to see more of: moves away from central business districts.
“Rumors of the death of the suburban office were greatly exaggerated,” Boyd told CBJ. “The downtown narrative dominated commercial real estate for most of the past two decades. … Companies now planning downtown expansion or relocation are also considering suburban areas, whether it be a SouthPark or a Kannapolis.”
Boyd believes that there is increasing interest in making a satellite office the corporate headquarters “to take advantage of superior business and tax climates as well as lifestyle amenities for the company, its C-suite executives and significantly downsized support staff.”
As for the staying power of hybrid and remote work — trends that make smaller and lower real estate costs more attractive — Boyd cited an example that stands tall in the Charlotte region: health insurance company Centene Corp.’s recent decision to scrap a $1 billion East Coast headquarters in University City because of remote work wiping away the need for an 800,000-square-foot building and adjacent corporate campus.
Local leaders in Kannapolis feel those trends play to their advantage.
Page Castrodale, executive director of Cabarrus Economic Development, said the county’s corporate headquarters prospects have been largely focused on the N.C. Research Campus land. The land availability coupled with the amenities developed as part of Kannapolis’ downtown revitalization make the campus a unique asset for the area.
“We’ve seen some of that shifting already after the pandemic just in terms of different companies’ comfort level being outside of the city limits and being more comfortable being in suburban markets,” Castrodale said. “We felt like once that becomes more common, Kannapolis is so well-positioned to benefit from that type of development just with everything they’ve got going on there with the ballpark and all of the private investment that has taken place there over the last couple of years. It is such a cool area now and it is certainly getting a lot of looks. It is on, maybe, more folks’ radar than it would’ve been a couple of years ago.”
The N.C. Research Campus, which includes three main lab buildings totaling over 500,000 square feet, opened in October 2008. The opening was expected to be the first piece of Castle & Cooke owner David Murdock’s $1 billion vision for a research hub focused on health, nutrition and innovation that was first unveiled in 2005.
However, the campus’ momentum was almost immediately stalled by the Great Recession.
Castle & Cooke has invested $600 million to transform shuttered mill buildings in downtown Kannapolis into a large research hub, but the vacant land there leaves the campus with more potential for growth. Local leaders had been hoping that a sale, which had been in the works for months, would activate the site and spur more development for uses such as office in Kannapolis.
City manager Mike Legg said Insite’s purchase of the land and plans for it was a “once-in-a-lifetime legacy project.” He views office uses as essential to Kannapolis’ downtown revitalization effort, which has drawn over $370 million in investment thus far.
“In my mind, it has always been critical,” Legg said of landing office uses in downtown Kannapolis. “Part of the reason is to help feed the retail. Residential does that and we’re going to have plenty of residential, but the office market does too. There is a real efficiency from just a land-planning standpoint. If you build a parking deck, it is largely empty Monday through Friday until 4:00 (p.m.) every day. So, maximizing those spaces with office users that might need them during daytime hours is really a good, long-range plan. Another thing is to build wealth in our community. Office projects are generally going to have wages that are higher than the local average.”
The other N.C. city to make Boyd’s top 15 was Cary, 12 miles from Raleigh, and home to software giant SAS, which employs 4,000 people at its headquarters there.
Boyd noted that North Carolina boasts an attractive quality of life, a personal income tax rate of 4.99% and a corporate income tax that is scheduled to be entirely phased out in 2030. The current rate is 2.5%. In addition, according to data compiled by the site-selection firm, Kannapolis’ property tax rate of $14.70 per $1,000 of valuation is fourth-lowest among the 15 cities named as top candidates for corporate expansion.
Real estate value and availability are important for both residential and commercial uses when companies are considering sites.
“One of the reasons we like Kannapolis is because so much of business today is real-estate driven,” he added. “It’s always been important but given the lack of inventory, that’s a major advantage.”
Boyd said the trend toward Kannapolis and other areas near major metros but with lower costs is becoming more and more apparent. When companies don’t move out of downtowns, they will consider what’s known as the hub-and-spoke model: a central site with additional smaller offices in lower-cost ring cities and towns.
“Talent is paramount,” he said. “Where do people want to live? Census data doesn’t lie. Millennials and Gen Z want to live in areas with a lower cost of living and a lower tax burden.”
The rest of the top 15 named by The Boyd Co.: Minden, Nevada; Mt. Juliet, Tennessee; Punta Gorda, Florida; Lake Nona, Florida; St. Petersburg, Florida; Westlake, Florida; Blue Ash, Ohio; Dublin, Ohio; Leander, Texas; Plano, Texas; Round Rock, Texas; Woodlands, Texas; and Bellevue, Washington.
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