Oct. 24 (Bloomberg) -- If Patrick McCrory fails to eke out a victory next month in North Carolina's race for governor, it won't be because he's one of the few Republicans with credibility on the economy who has helped lift Charlotte, North Carolina, from the shadows of London, New York and Zurich as the world's most resilient financial center.

McCrory, Charlotte's mayor since 1995, presides over a city with the lowest downtown vacancy rate for office towers in the U.S. and a housing market that ranks No. 1 in the past year among 20 measured by S&P/Case-Shiller. The downtown office vacancy rate is lower than in midtown Manhattan and central London thanks to growth in the city's banking industry.

McCrory's persuasiveness on economic issues contrasts with his party's presidential nominee, John McCain, who has struggled to gain footing on fiscal matters. A Los Angeles Times/Bloomberg poll taken this month showed more people trust Democrat Barack Obama to make the right decisions on the economy.

``A good economy gives him credentials to take before the rest of the state,'' Eric Heberlig, an associate professor of political science at the University of North Carolina at Charlotte, said of McCrory. ``What Republicans are afraid of is that Obama's just going to generate turnout among Democrats like no one's ever seen before.''

Lieutenant Governor Beverly Perdue, McCrory's opponent in the race, is running on her own record of bringing jobs to the state.

Charlotte's downtown vacancy rate is 2 percent, down from 3.5 percent last year, data compiled by brokerage Colliers Pinkard show. The average rent rose 35 percent this year to $29.80 a square foot from $22 last year and is 55 percent higher than in 2004.

Manhattan to Zurich

Midtown Manhattan's vacancy rate was 5.3 percent in the second quarter, according to CB Richard Ellis Group Inc., the world's biggest commercial real estate brokerage. Central London's office vacancy rate was 6.8 percent in the period and the vacancy rate in the city's financial district was 8.8 percent.

Zurich's vacancy rate was 6.6 percent in the second quarter, though in certain parts of the central business district it was less than 1 percent, data compiled by DTZ Holdings Plc, a global real estate advisory company, show.

With Election Day less than two weeks away, Charlotte now confronts its biggest economic challenge with the planned takeover of Wachovia Corp. by Wells Fargo & Co. The mayor has promoted his skill in bolstering jobs and attracting companies, helping make the contest between McCrory, 52, and Perdue tight, much like the presidential race in North Carolina between Obama of Illinois and McCain of Arizona.

Campaign Maneuvers

Wells Fargo agreed on Oct. 3 to buy Wachovia, the second- biggest bank in Charlotte after Bank of America Corp., in a deal valued at the time at about $15 billion. San Francisco-based Wells Fargo plans to cut $5 billion in annual expenses.

``This Wachovia deal is the first major setback that Charlotte has experienced in decades,'' said David Goldfield, a history professor at the University of North Carolina at Charlotte. ``Maybe ever.''

McCrory has met with Wells Fargo Chief Executive Officer John Stumpf to try to protect Wachovia jobs. Stumpf told Wachovia employees earlier this month ``my goal is to keep all of you with the company.''

Charlotte's mayor is emphasizing his hands-on role during the takeover to try to win voters.

``Just today as a mayor I was actually working trying to save jobs by building a relationship with the new CEO of Wells Fargo,'' McCrory said at a debate on Oct. 15. He added that he also met with hundreds of employees worried about their jobs.

Fort Bragg

McCrory's Democratic rival Perdue, 61, also highlights her economic record to voters, including her work to prevent the loss of North Carolina military bases and helping to bring the Forces Command to Fort Bragg. The command is the equivalent of a Fortune 500 company, according to her campaign Web site.

Perdue said at the Oct. 15 debate she wanted to boost the growth of alternative energy and other ``green jobs'' and promote the health of the state's core businesses and build up the aerospace and defense industries.

``The future is limitless with what we can do with green collar jobs in North Carolina,'' Perdue said then. ``I think green is gold in this state.''

One Perdue political advertisement links McCrory as a follower of the economic policies of President George W. Bush.

Copy of Bush?

``On the economy, Pat McCrory is a copy of George Bush,'' the narrator of the ad said.

The News & Record of Greensboro endorsed McCrory, saying in an editorial: ``Obviously, McCrory can't take all the credit for Charlotte's prosperity. It has had many champions over the years, among them a formidable banking industry. But he has helped keep the city moving forward and reaching higher.''

Business and the economy have played a role in the state's race for the U.S. Senate too. North Carolina Senator Elizabeth Dole, 72, facing a challenge from Democrat Kay Hagan, 55, a state senator, has embraced a second economic stimulus package - - a proposal supported by Obama -- as the U.S. faces a recession and a 38 percent decline in the Standard & Poor's 500 Index that has erased about $5 trillion of market value this year.

`Trading City'

Banking is the latest industry to drive Charlotte's economy. The intersection of Trade and Tryon streets in downtown Charlotte was where trading paths used by Native Americans crossed, and it was the birthplace of commerce for the city, said Tom Hanchett, historian at Charlotte's Levine Museum of the New South. Bank of America's 60-story headquarters stands there now.

``Charlotte has always been a trading city,'' Hanchett said. ``It was a trading city before the Europeans got here.''

Charlotte's resilience is in part a result of the close partnership between public and private interests, said Dan Morrill, a history professor at the University of North Carolina at Charlotte.

``The whole mantra of Charlotte is public-private cooperation,'' Morrill said. ``Pat McCrory stands in the line of mayors: Richard Vinroot, Eddie Knox, John Belk. All these people are business people tied into the corporate world.''

Gold Rush

Gold was a key part of the city's economic growth in the 1830s and 1840s, Morrill said. The city even had a branch of the U.S. Mint. Then the California Gold Rush came. In the 1850s, railroads were built in Charlotte, and the city became a junction, which helped increase its fortunes, Hanchett said.

In the Civil War, Charlotte had its transportation ripped apart and afterward local leaders decided to establish a textile industry to promote growth, Morrill said.

Banking put Charlotte on the national map in the latter part of the 20th Century. Wachovia and Bank of America's ascendance in Charlotte was led by their former leaders, Edward Crutchfield and Hugh McColl.

Crutchfield, who retired in 2000, was the CEO of First Union Corp., which bought Wachovia in 2001, and McColl was CEO of NationsBank Corp., which acquired BankAmerica Corp. in 1998.

The ambitions of the men spread across Charlotte, a city of 700,000, which RelocateAmerica.com ranked as the best place to live in the U.S. The executives helped build Charlotte and their towers are in the heart of Uptown Charlotte, as Charlotte's downtown is known.

Household Income

About 70 percent of downtown was built in the past 15 years, said David Dorsch, a principal at Colliers Pinkard in Charlotte.

The banks helped more than double the city's population to 695,995 in 2008 from 315,473 in 1980, according to the Charlotte Chamber of Commerce Web site. Non-farm payrolls have climbed 21 percent since 1998 to 871,900 in August, U.S. Bureau of Labor Statistics data show.

Charlotte's fortunes, like New York and San Francisco, improved as bank profits increased. Since 1990, the city's median household income increased 53 percent to an estimated $48,670, according to U.S. Census data.

Wachovia and Bank of America are the second- and third- largest employers in the Charlotte area respectively, with more than 30,000 workers, according to the Chamber.

They account for more than 50 percent of the office space downtown and paid $18.5 million in real estate and other taxes to Charlotte and Mecklenburg County. The Charlotte metro area's largest private employer is Carolinas Healthcare System, with about 25,000 workers.

Job Cuts

Wells Fargo may fire as many as 5,000 employees at Wachovia in Charlotte, Dorsch said. That could put another 2,000 workers in related industries out of work.

``Losing one of those bank headquarters is a blow,'' Hanchett said. ``It's a city that reinvented itself and this is just the next reinvention.''

For every 1,000 banking jobs cut in Mecklenburg County, an additional 390 positions could be lost, according to research from the Chamber and Harrison Campbell, an associate professor at the University of North Carolina at Charlotte.

Charlotte's market for office towers, already slowed by the credit crunch, probably will be frozen until Wells Fargo, the largest U.S. bank on the West Coast, makes clear its plans for Wachovia, Dorsch said.

Taking the Shine Off

``It'll take some of the shine off downtown Charlotte in the short and long term,'' said Dorsch.

Bank of America occupies, owns or has under construction 5 million square feet of office space, or 36 percent of the downtown market, according to Colliers. It's building a 32-story tower at College and 5th streets, across from its headquarters.

Wachovia owns, leases or controls about 20 percent of downtown real estate and is leading the construction of a $1 billion office, retail, condominium and museum complex. The project includes a 48-story Wachovia headquarters.

Those construction plans and other projects probably will help boost Charlotte's vacancy rate to as high as 8 percent in 2010, Colliers said. With the Wachovia takeover, that rate may rise to 12 percent, Dorsch said, excluding Bank of America's plans for the proposed acquisition of Merrill Lynch & Co.

Wachovia, facing rising defaults on the mortgages it held, and the need to raise cash as credit markets were frozen, initially agreed Sept. 29 to sell itself to New York-based Citigroup Inc. for $2.2 billion. That deal, supported by the Federal Deposit Insurance Corp., was trumped by Wells Fargo.

In an interview after Citigroup's bid, McCrory raised concern about the transaction.

`Body Blow'

``I'd be lying if I didn't say this was a body blow,'' McCrory said then. ``In the long run, the pain will subside and we'll stand strong.'

McCrory said in an Oct. 10 interview he's encouraged that Wells Fargo wants to make Charlotte its East Coast headquarters.

The mayor is promoting his record as spokesman and booster of the city to help draw companies to Charlotte and he said he has also built ties to existing companies to keep jobs.

``That's experience that I think carries over well into the governor's office,'' he said in an Oct. 17 interview.

One of McCrory's campaign advertisements focuses on the economy. ``North Carolina must be a leader in job growth, have a tax system that puts more money in our families' pockets and a quality of life that attracts good-paying jobs,'' McCrory said in the ad.

The mayor has been a driver behind light-rail construction in Charlotte and the Time Warner Cable Arena downtown, home of the city's National Basketball Association franchise, the Charlotte Bobcats, said Ted Arrington, a political science professor at the University of North Carolina at Charlotte.

Special Taxes

The projects were paid for by special taxes, including hotel and restaurant taxes, which aren't popular among conservatives, Heberlig said.

North Carolinians generally vote Democratic for state offices and Republican in federal races. As of Oct. 23, of the 6.2 million registered voters, 2.8 million are Democrats, almost 2 million are Republicans, and 1.4 million are unaffiliated, the North Carolina State Board of Elections said.

``The state Democratic Party has done a very effective job distancing itself from the more liberal philosophy of the national Democratic Party,'' said Jack Fleer, professor emeritus of political science at Wake Forest University in Winston-Salem.

Tight Race

Obama has campaigned in North Carolina to try to win a state which hasn't voted for a Democrat for president since Jimmy Carter of Georgia in 1976. According to a Fox News/Rasmussen Reports poll published Oct. 13, the race is tied at 48 percent each for Obama and McCain in North Carolina.

In a poll published on Oct. 7 conducted by SurveyUSA for WTVD-TV in Raleigh, McCrory led Perdue by a percentage point, 46 percent to 45 percent. That's within the poll's margin of error of 4 percentage points. McCrory leads in the Charlotte and Greensboro areas.

``He doesn't want to overestimate the Charlotte connection because he's got to reach out to the small towns and the rural areas,'' Arrington said. ``The cities in the state have done real well. The rural areas have not.''

Rural and small towns in the state are ``in an economic recession'' and ``have been for a long time,'' Arrington said. Those areas have been hit by job losses in the textile and furniture industries, which have closed factories and moved production overseas.

``Currently the polls are dead even,'' Arrington said. ``If I were to bet, I would bet Perdue could squeak through.''

Still, Arrington added: ``You just don't underestimate Pat McCrory.''

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.

Last Updated: October 24, 2008 00:01 EDT