Centene Cancels East Coast HQ in Charlotte

When it was announced in 2020, it was the year’s biggest economic development deal in North Carolina and the largest single job-creating project in the state’s history: healthcare provider Centene’s East Coast headquarters campus in Charlotte.

In 2020, the company said it planned to invest $1B in a public-private partnership to build a 1M SF regional headquarters campus and locate 3,200 of its workers in the Queen City. The project, undertaken by Centene and development partners Clayco and Rafco Properties, broke ground in 2021 for complex of six office buildings.

Today, the campus is almost ready for delivery—but Centene abruptly has changed its mind about moving into it.

Centene has canceled its plans to make the new campus its East Coast HQ, disclosing that it is in negotiations to find another occupant for the building, which the company says it will complete, according to a report in the Charlotte Business Journal.

The healthcare giant cited a “fundamental shift” in the way its employees want to work as the reason for canceling its plan to make the building, located in Charlotte’s University City neighborhood, its East Coast HQ.

“Since announcing our plans to establish an East Coast headquarters in Charlotte, there has been a fundamental shift in the way people want to work,” Centene said, in a statement. “Today, almost 90% of our workforce is working fully remote or in a hybrid work environment, and workplace flexibility is essential to attracting and retaining our top talent.”

In its statement, Centene said it will maintain its current NC workforce of about 1,700 employees in various locations around the state, including 700 in Charlotte who work remotely.

In a Q2 earnings call that took place on July 25, Centene execs did not mention the decision to pull out of the East Coast HQ deal in NC.

However, Drew Asher, Centene’s chief financial officer, revealed that the firm had recorded a $1.45B “impairment charge” in the second quarter related to a significant reduction of Centene’s real estate footprint in locations he didn’t identify.

“We recorded an impairment charge of $1.45 billion related to the reduction in the company’s real estate footprint consisting of $744 million related to leased real estate and $706 million related to owned real estate assets,” Asher said, in a transcript of the call published by Motley Fool.

Asher said in the earnings call that the reduction of Centene’s real estate footprint—which the CFO said was part of the company’s “value creation plan”—was ongoing, “with approximately $200 million more expected to come over the next couple of quarters related to real estate optimization.”

In canceling the East Coast HQ, St. Louis-based Centene is walking away from at least $50M in performance-based county and local incentives that required the company to deliver the jobs it promised for the project.

The package included nearly $32M in grants from the Charlotte City Council and another $26M from the Mecklenburg County Commission. The economic development deal was based on an expectation that the HQ project would have an overall regional economic impact, including direct and indirect jobs, of nearly $30B in the next three decades.

In an interview with WBTV, Mecklenburg County Commissioner Susan Rodriguez-McDowell said the incentives package given to Centene was unprecedented. “The fact that such a record-setting incentives package can be left on the table is fascinating,” she said.

“I’m disappointed that a huge financial investment in the community has been lost, however, I feel optimistic that there will be another opportunity around the corner,” Rodriguez-McDowell told WBTV.