Luxury Apartment Market Sizzles

Steady job growth, including corporate relocations and hiring in recent months, have piqued investor interest in high-end Charlotte apartments even more than at the beginning of this year, ARA principal Blake Okland tells us. (Don't discount the influence of a warm sun, either.)

That’s because the quality of the new jobs is driving average incomes upward, and as incomes grow, demand for better dwellings increases, especially new product. Infill luxury projects completing construction this year report strong leasing velocity and high rent levels, Blake says. These strong rents have a positive trickle-down effect for owners of A, B, and C properties, who now have more pricing power across the product spectrum. Rental growth is at a steady pace throughout the region, and in Charlotte in particular, he explains.

Last week's Sealed Air Corp’s decision last week to move its HQ to Charlotte is a good example of the trend, bringing about 1,300 jobs to the area from New Jersey, Connecticut, and Wisconsin, most of them white collar. Some $36M in incentives helped the plastics specialist, which makes Bubble Wrap among other things, make its decision. (We can’t begin to describe how cool it is to have the maker of Bubble Wrap in this town.)

Also driving demand for apartments locally, Blake says, is an increased propensity to rent, even among those who can buy. Recently Blake and colleagues Dean Smith, John Heimburger, and Sean Wood repped Denver-based Simpson Housing in the sale of the 277-unit Arboretum Apartments in South Charlotte. The Connor Group acquired the late ’80s property, which is 98% occupied, for $32M. Dean says the property has walkability and a low- density site plan that “cannot be replicated today.”

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