The North Carolina city boasts employment, population, and income growth.
MFE-PaulWillis11.13.22 — Charlotte is notable for its distinct-yet-charming neighborhoods, pleasant subtropical climate, and a healthy contingent of high-level employment opportunities within the financial sector.
Oh, and a thriving apartment market.
The Queen City, located in the Piedmont Region of North Carolina, seldom is regarded as one of the nation’s largest cities, but ranked No. 15 in 2022, boasting a population greater than that of San Francisco, Denver, and Washington, D.C. While multifamily markets in those cities are often regarded as more prominent, Charlotte has certainly joined the fray.
“Charlotte has the primary characteristics of what you like to see in a market in that it’s large with a diverse economy,” says Brian Schneider, principal and co-founder of Addison Partners, a New York-based apartment owner. “It’s a prominent regional hub with a heavy finance component, with Wells Fargo having a sizable presence. It’s experiencing great population growth with many younger generations relocating there. It’s just a fun and vibrant city that draws renters.”
According to a market insights report from NorthMarq, Charlotte has experienced increased demand, accelerating rent growth and a steady vacancy rate of only 4.8% in the second quarter of 2022. The city had 20,657 units under construction as of the second quarter. “The local investment market remained competitive during the second quarter with activity gaining momentum, per-unit prices rising, and cap rates remaining low,” according to the report.
Home to the corporate headquarters of Bank America and Truist Financial—and the East Coast headquarters of Wells Fargo—Charlotte ranks as the second-largest banking city in the U.S., trailing only New York City. The city also boasts a collection of eclectic neighborhoods, from Uptown (the city’s downtown area), Fourth Ward, SouthPark, South End, the arts district of NoDa, and several more.
Three operators recently imparted their thoughts on the market, sharing some of their immediate and upcoming plans in the city.
Developments Underway in a Thriving City
Mill Creek Residential Trust expanded into Charlotte in 2019 and is rapidly building a presence within the city. The prominent developer, builder, and operator, based in Boca Raton, Florida, also added a regional office in the city, which underscores its fondness.
“Charlotte is consistently ranked as one of the best places in the U.S. to live,” says Alex Eyssen, senior managing director in the Carolinas for Mill Creek. “Charlotte’s population has been steadily growing, and demand continues to outpace supply. This became even more evident during the pandemic, when remote workers and families relocated from other cities to Charlotte.”
Mill Creek is developing Modera SouthPark, a 239-unit community in the popular SouthPark neighborhood, which is projected to open in early 2024. The company recently broke ground on Modera LoSo, located in the rapidly growing Lower South End submarket, which will feature a sky lounge overlooking Uptown. In addition, Mill Creek acquired the Alister Uptown community in Uptown.
Eyssen says the highest rent per square foot is typically attributed to the Uptown and SouthPark communities, but that several SouthEnd communities have recently risen to the top. Other light rail-adjacent neighborhoods are poised to experience increased demand, as well. Likewise, pockets west of Uptown—such as FreeMoreWest, the Wilkinson Boulevard corridor, and areas northeast of Uptown—are also experiencing growing interest, he says, along with every county adjacent to Mecklenburg County.
Investment activity in the city’s multifamily market remains strong, Eyssen says, as several institutional investors and REITs that have historically favored major gateway markets have recently targeted the Queen City.
“Almost everyone has a neighbor or colleague that relocated to Charlotte in the last two years,” Eyssen says. “I don’t see that trend stopping. Charlotte also is part of a regional, prosperous economy that attracts a talented and educated employment base, many of whom are relocating from markets where renting is commonplace. Thus, we view Charlotte and the surrounding areas as having great fundamentals.”
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