What's on the horizon for Charlotte's apartment market as it tops list for fast growth?

What’s on the horizon for Charlotte’s apartment market as it tops list for fast growth?

Charlotte’s apartment market continues to post nation-leading growth.

Within the past eight years, metro Charlotte’s apartment inventory has increased at a rate faster than any other market in the nation, according to a new report from RealPage Inc. (NASDAQ: RP), a Texas-based company that provides software and data analytics to the real estate industry.

Although Charlotte’s total number of units in the current cycle, 41,857, isn’t the overall highest, its 30.6% bump in inventory eclipses that experienced by other quickly growing metropolitan areas. That includes Austin, Texas (29.2%), Nashville, Tennessee (28.3%), Salt Lake City (26%) and San Antonio, Texas (25.3%). It also registers higher than Raleigh’s 25.1% increase in inventory, which came in at 31,890.

In its report, RealPage notes that while substantial new apartment developments have delivered in many of Charlotte’s submarkets since 2010, the uptown/South End submarket has been on the receiving end of the most additional multifamily units, with a surge of 10,150 apartments in the past eight years and inventory growth of about 140%. That ranks among the highest expansion rates among national submarkets, according to RealPage.

Charlotte’s apartment boom continues to be met by "robust" demand, says Jay Parsons, who, based in Charlotte, is RealPage’s vice president. Parsons said that apartment occupancy is holding at 95.2% — nearly matching the 95.8% seen in the cycle’s peak a couple of years ago.

Annual rent growth in the Charlotte market registers at 2.8%, down from about 5% two to three years ago, he said in an email to CBJ.

"Still, Charlotte rents are climbing a little faster than the U.S. norm of 2.5%, and property owners and operators in Charlotte still have more pricing power than is typical in other metros where new supply is coming on stream most rapidly," he said.

And don’t expect the Queen City to fall from its perch as a national leader in apartment supply anytime soon.

The new report comes on the heels of another RealPage study that shows Charlotte logging a whopping 64.7% increase in multifamily permits for the year ending in May. Those 10,194 permitted units more than doubled in count from the previous year and ranked eighth, following metros like New York City, Dallas, Seattle, Los Angles and Austin.

Parsons said ongoing apartment construction tops 10,606 units, which is expected to grow the market’s inventory another 5.9% within the next year and a half.

"New product will continue to be delivered in Charlotte at a very rapid pace," Parsons said.

He said that "mild backtracking in Charlotte’s occupancy rate is anticipated over the next year or two, and the rent growth pace likely will slow to 1.5% to 2% as the metro’s delivery volume escalates even more."

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