North Carolina loses 730-job operations center over House Bill 2

Rendering of CoStar’s new research headquarters in Richmond, Va.
Rendering of CoStar’s new research headquarters in Richmond, Va. CoStar

North Carolina’s House Bill 2 played a deciding role in a Washington-based real estate company choosing Richmond, Va., over Charlotte for a 730-job expansion, real estate sources told the Observer Tuesday.

CoStar Group, a real estate research firm, announced Monday that it had chosen Richmond for its research operations center after a national search. The company said it expected to create 730 jobs and invest $250 million into the “local economy.”

CoStar officials had earlier focused their search on a new office tower under construction at 615 S. College Street in uptown Charlotte, where it would have been an anchor tenant, said the sources, speaking on condition of anonymity because they were not authorized to discuss the matter publicly. But the company’s board rejected the location because of HB2, which limits protections for LGBT individuals, the sources said.

The decision marks one of the biggest economic blows to Charlotte and North Carolina in the wake of the controversial law passed by the state legislature and signed by Gov. Pat McCrory in March to overturn a Charlotte anti-discrimination ordinance.

CoStar on Tuesday confirmed it had been considering Charlotte as a finalist for the expansion, along with Richmond, Atlanta and Kansas City.

“We will not comment on Charlotte. We will affirm LGBT rights and the rights of every one of our employees and those in the community are a very high priority and core to our firm’s values,” CoStar said in a statement provided to the Observer.

The firm is already hiring for a number of positions at the Richmond office, including researchers, managers and software developers, according to its website. CoStar says its Richmond expansion will make it one of the city’s largest private employers.

Peter Zeiler, director of the Mecklenburg County economic development office, said the county talked with CoStar officials in July and invited the company to apply for tax incentives. Officials with the Charlotte Chamber and the Economic Development Partnership of North Carolina, however, were more involved in the recruitment process, he said.

Asked if HB2 played a role in the company passing over Charlotte, Zeiler said he had no “direct knowledge” to confirm that.

Virginia Gov. Terry McAuliffe approved a $4 million grant for the project, among other incentives, according to a news release from the state. Representatives for McCrory, the N.C. Department of Commerce and the Economic Development Partnership of North Carolina did not respond to requests for comment.

The Charlotte Business Journal first reported CoStar’s decision to choose Richmond over Charlotte because of HB2.

“The primary reason they chose Richmond over Charlotte was HB2,” David Dorsch, senior vice president at Cushman & Wakefield’s Charlotte office, told the publication. Dorsch had been working with CoStar in its real estate search.

Dorsch called the decision a “big disappointment,” saying it was a loss of “good paying, career-track jobs with a great company.” Contacted by the Observer, Dorsch said he had no further comment.

Later Tuesday, Steve Gassaway, managing principal for Cushman & Wakefield’s Charlotte office, said Dorsch made his comments in “the heat of the moment.”

Gassaway added: “Cushman & Wakefield is not privy to the CoStar board of directors’ decision to choose Richmond over three other cities. These comments should be left to CoStar.”

McCrory signed HB2 into law on March 23 to overturn a Charlotte measure supported by Mayor Jennifer Roberts that would have allowed transgender individuals to use bathrooms that match their gender identity. Since HB2’s passage, Charlotte has lost major sporting events such as the 2017 NBA All-Star Game, concerts by major performers and business expansions such as a 400-job PayPal operations center.

The campaign for Democratic gubernatorial candidate Roy Cooper, who is running against Republican McCrory, said on Tuesday “it’s disheartening to see yet another company say no to North Carolina because of House Bill 2.”

Despite the loss of sporting events and corporate expansions, Commerce Secretary John Skvarla told the Observer Monday that HB2 wasn’t hurting the state’s economy.

“It hasn’t moved the needle one iota,” Skvarla said during a visit to Charter Communications’ training center in Matthews.

North Carolina is in the “best position” it’s ever been in, financially and operationally, Skvarla added, citing the state’s taxes, regulation, quality of life, workforce and environment that make it an attractive place for companies to relocate.

PayPal first announced plans to open an operations center in Charlotte in March, but reversed course days after HB2 was passed, saying that it “perpetuates discrimination.” Skvarla dismissed the notion that such cancellations damage the economy, and said instead that there’s been “a lot of rhetoric” perpetuating that idea.

“PayPal wasn’t even a grain of sand on the beach,” he said. “It was 400 call center jobs over five years. Much too much is being made of PayPal.”

That contrasts, however, with the warm reception PayPal received from officials when it said it was coming to the state. “This company’s global reputation for innovation and customer service makes it a strong fit for our state’s business-friendly community,” Skvarla said in a news release at the time.

Staff writers Katherine Peralta and Ely Portillo contributed.