Centene backs out of plans to have $1 billion East Coast HQ, 3,200 jobs in Charlotte

Health insurance giant Centene confirmed late Thursday afternoon it is backing out of plans to create its East Coast hub in Charlotte — a stunning blow to the city, which had been counting on the 3,200 jobs and $1 billion investment Centene had once promised.

Centene made the decision about the University City site because more people prefer working from home or in a hybrid situation, a company spokesperson told The Charlotte Observer.

“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,” the spokesperson said.

The move stunned local leaders.

“We are sorely disappointed to see this project vaporize essentially into thin air,” said Tobe Holmes, the interim executive director of University City Partners.

When the deal was unveiled in mid-2020 to much fanfare, it was the single largest job announcement in the history of the state’s current incentives program. Centene was in line to get up to $450 million in incentives over 39 years, and company leaders said their move ultimately would lead to 6,000 jobs.

The St. Louis-based managed healthcare company serves more than half a million North Carolinians, and was most recently ranked No. 26 on the latest Fortune 500 list. Centene said its range of government-sponsored and commercial healthcare programs offers products to nearly 1 in 15 people in the U.S.

Work on its hub in University Research Park began two years ago and has been underway since.

“These decisions (to end its Charlotte plans) will not impact the quality, comprehensive healthcare we provide to our members or the long-standing partnerships we have with the state, our providers, and our community partners,” the Centene spokesperson said.

Centene employees living in North Carolina will continue to work remotely or in a hybrid work environment.

History of the deal

In July 2020, state and local officials touted the Centene headquarters deal as a huge boon to the region and state with its promise of a billion-dollar investment and over 3,200 jobs.

Gov. Roy Cooper said he was “proud to announce” the deal.

The company was planning on building a 1 million square foot regional headquarters, focusing on information technology. The campus would ultimately have six buildings, including an early childhood development center and a training center, as well as walking trails and water features.

These would have been high-paying jobs in such areas as technology, operations, customer service, finance, human resources and medical management. The average salary for the Centene positions $100,089 in a county where the overall average annual wage was $68,070 in 2020.

Centene’s CEO at the time, Michael Neidorff said during the announcement, “We intend to be a strong partner in this community.”

North Carolina primarily competed with Tampa, Florida, and York County, S.C., for the project, state officials had said.

Cooper also was on hand with other local and state officials when touring the site in June 2021 to check out the construction progress.

The first phase was expected to open in 2022, and the Centene campus ultimately was planned to cover 2.4 million square feet in the middle of the natural green space at University Research Park.

“When you talk about this many highly paid employees with a company like Centene that’s committed to diversity and inclusion and committed to making sure that everybody has healthcare in North Carolina, that’s a good partnership for us to have,” Cooper said at the time of the tour.

But late Thursday, Cooper’s office released a statement saying “we are disappointed” Centene won’t move into the Charlotte campus, and acknowledging the company is “drastically cutting back” office space throughout the country. But the governor’s office still sees potential in the north Charlotte site, said Mary Scott Winstead, Cooper’s deputy communications director.

City and county concerns

The city of Charlotte will not follow through with the $31.6 million incentives initially promised to the company through a business investment grant now that Centene has backed out, city communications director Jason Schneider said.

Gregg Phipps, who serves on Charlotte City Council at-large and lives in University City, said the decision was a surprise to him. But he understands the pandemic is affecting businesses’ return to office.

“I’m disappointed by it,” Phipps said. “(COVID) just took a toll and affected their plans.”

Likewise, the state had not yet paid any incentives to Centene.

Mecklenburg County was set to invest $26 million in incentives for the company and, like the city, will change course.

“With this change of plans, those funds will no longer be available to Centene since those funds were based on a physical presence in Mecklenburg County,” said county spokesman Andy Fair.

Phipps hopes the construction that’s begun on the 800,000-square foot office will attract other businesses.

“I hope it will be a magnet for corporate interests with more ambitious plans,” Phipps said. “It’s a big space over there, a beautiful space.”

The Charlotte Business Journal first reported Centene’s decision.

What next for the site?

Cenetne is committed to finishing construction on the office building and listing it to be sold, according to Assistant City Manager Tracy Dodson.

Dodson also said she was disappointed in the company’s decision.

Still, she added, “Centene will maintain a significant presence in Charlotte, including 700 employees, and is planning to keep its space at Camp North End near uptown.”

Holmes recently had taken a tour of the building, which he described as having about six months left of work. The building had many nice components like a grand atrium when you walk in and water features, he said.

The news shows how unpredictable the office market remains to be in a post-COVID world, Holmes said.

He still is confident that the building will be leased up in the future, pointing to its proximity to a nearby greenway. Whether that’s with a single tenant or multiple ones remains to be seen.

Observer business editor Adam Bell contributed to this report