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With 50 people moving to Charlotte a day, real estate investors and developers are scrambling to find places for new residents to call home. Increasingly, the answer is the suburbs.
The Queen City is the No. 1 destination for millennials, Charlotte Regional Partnership Director of Business Development Steven Pearce said at Bisnow’s Charlotte’s Rise of the Suburbs event. He himself chose to move here after graduating from East Carolina University.
Pearce said his is a story told over and over again daily among graduates at engineering schools, including Georgia Tech, Clemson, Virginia Tech and of Charlotte’s alumni.
“It has a very high quality of life here,” Pearce said. “Charlotte is where they want to be.”
Where are all the new residents going to live? More importantly, developers ask, where are they going to live 10 years from now?
A 2017 study by Hoyt Advisory Services, commissioned by the National Multifamily Housing Council and National Apartment Association, stated Charlotte will need to add 72,000 new apartment homes by 2030. That is in addition to the 135,800 apartment homes that are already here.
Center City is in demand, but it is getting full, according to Cushman & Wakefield Vice Chair of the Multifamily Advisory Group Marc Robinson. Investors are unable to expect rent growth in markets where there is sufficient or oversupply, he said.
“Conversely, over the last four or five years, suburban multifamily development has been relatively limited because everybody was focused on the intown millennial and/or the intown baby boomer,” Robinson said. “The suburbs were sort of out-of-fashion.”
Now, he said, we are moving toward an environment in which “the suburbs are very much en vogue, and deals make sense, and investors are bullish about rent growth.”
That does not mean those in the suburbs are thrilled to see the apartment growth coming their way. Most of the suburban communities are relatively resistant to multifamily, mostly because of the load on the schools, Robinson said.
“There is a real concern of oversupply in the suburbs.”
Quality of schools is becoming one of the primary drivers of investment dollars, Robinson said. School systems are a draw to places such as Union County and the South Carolina areas of Fort Mill, the upstate of Lancaster County and York County, Northwood Office President Ned Curran said. “It tells you that people want to go where the schools are excellent.”
Ballantyne’s plan is to bring “more of everything,” to the suburbs, Curran said. He has the room to do that, too: Northwood bought more than 4M SF in Ballantyne from The Bissel Cos. over the summer, spending about $1.2B.
Curran said he is ready for the growth coming his way. Developers are considering the family formation occurring within millennials, he said. “‘Where are they today and where are they going to be a decade from now?’”
Large employers will want to dissipate the workforce to ease congestion and use technology to their advantage, having locations at the lake, in Ballantyne, at the airport. “It will only increase demand in the suburbs,” Curran said.
Development will have a different energy in the suburbs.
“In the Center City, you think of a 24-hour cycle. Here, we think of an 18-hour cycle,” Curran said. “Our goal is to get to the community that feels active 18 hours a day: it’s consistent with demand but also being thoughtful about the symmetry of the development.”
The extra space available in the suburbs and having one owner that controls a large portion of Ballantyne means consideration can be given to reserve those spaces for parks, Curran said.
“Here, we’ve got 200 acres to play with,” Curran said.
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