How long can Charlotte's multifamily boom sustain itself? According to the speakers at our Charlotte Multifamily Boom! event at the Ritz-Carlton Charlotte this week, a while longer. Demand and demographics are on Charlotte's side.
By the end of this year, our speakers noted, about 10,000 new apartment units will have come on line during the year, and about that many more are in various stages of planning. Marketwide, vacancies are creeping up toward 6%. That might sounds like the beginnings of an overbuilt market, but maybe not. Demand continues to be robust, though at some point there might be oversupply in some submarkets—at least for a while.
Speakers included: CohnReznick partner Cristi Lewis, who was one of the moderators, Grubb Properties VP of development Rachel Russell, Northwood Ravin VP-development Ben Yorker, and Selwyn Property Group partner Grey Poole. Historically, 6% is a relatively low vacancy rate, and much of the new development is making up for the fact that for years there was very little development—none to accommodate the spike in demand after the recession, our speakers noted. Younger, educated workers moving to Charlotte are taking the new inventory. People want to be here, and there are employment opportunities.
More speakers: Crescent Communities VP Ben Collins, Cortland Partners director Lou Davis, and Walker & Dunlop VP Brett McGuire. Even so, investors and lenders are being very prudent, which will act as a check on overbuilding over time, the speakers said. The market isn't going to see 5% to 6% rent increases every year, and no one is investing or lending based on that kind of projection, as they did in the mid-2000s.
Snapped: Lou, Ben and Brett, along with Partner Engineering and Science principal Michael Chang (left), who was also a moderator. Despite the strong demand, challenges remain for multifamily developers, our panelists agreed. It's a very competitive environment now, not only in the development of new rental product, but also value-add redevelopment, because there are a lot of capable players in the game. Thus it's harder to find good ground-up sites, so developers need to consider mixed-use plays to get the residential done. Smaller sites are also an option, though a developer needs to be creative to build successfully on that kind of space.
Making a special appearance: Bisnow event coordinator Lindsey Benfield's entire family, all of whom live in Charlotte. Lindsey's the perky one in the middle in the black dress. Along to see the event she coordinated were her dad, stepmom, mom, stepdad, brother and sister.
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