Charlotte Growing Fast Enough To Fill New Apartments
Does demand for multifamily product have enough momentum to prevent overbuilding in Charlotte, especially of the most expensive projects? The speakers at our 2016 Multifamily Surge event on June 23 at the Hilton City Center will take up that question.
Walker & Dunlop VP Brett McGuire, who will be a speaker, points out that Charlotte’s population has increased at close to three times the national average over the past decade. That growth, and the lack of new development during the downturn, led to a significant increase in new multifamily projects over the last several year. The peak in deliveries will occur in 2016 and '17.
"Charlotte MSA vacancy figures in the very short term will naturally rise above today’s levels with that amount of growth in such a short period," Brett notes.
"The good news is that there are several factors that should create a long-term outlook of healthy net absorption," Brett continues. First, the overall Charlotte MSA continues to have a strong and increasingly diverse economy. Not only that, the recovery hasn't seen the massive number of condo units that accompanied the mid-2000s boom and competed for a portion of the multifamily tenant base.
"Also, banks and other construction lending sources have become more selective with their capital allocation in 2016, which has the market tracking to a moderate, sustainable level of future development." Assuming these supply/demand factors continue as projected, the market is set up for successful, smart growth in the future, Brett predicts.
Synco Properties president Tim Hose, who will also be a speaker, tells us the macro-level data pertaining to Charlotte and the Carolinas seem to indicate that demand will exceed supply, even in the comparatively high-rent rate strata associated with essentially all of the new construction. "The pace of development will slow only when developers begin to miss their projections on lease-up timetables and rental rate achievement."
He agrees that lenders are beginning to be more selective in making loans for new apartment construction. "Proceeds are more restricted, sponsorship needs to be stronger, and the project itself needs to be in a proven, highly desirable location for many lenders these days."
Hear more from Brett, Tim and our other expert speakers at our 2016 Multifamily Surge event beginning at 7:30am on June 23 at the the Hilton City Center. Breakfast and schmoozing no extra charge. Sign up here.