Commercial Real Estate News / Investing / 2022 Multifamily Market Report: Charlotte

2022 Multifamily Market Report: Charlotte

Published: 06-03-22 Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Investors are taking advantage of new and existing multifamily investments in the Sun Belt, as more people flock to the warmer climates and more relaxed environments of the southern U.S.

In particular, Charlotte, North Carolina is a growth market with occupancy rates well above 95%.

The city was known for its finance and banking sectors. However, more industries are coming to Charlotte. This includes Arrival, an electric vehicle manufacturer, and Eli Lilly, the pharmaceutical company.

In this Charlotte multifamily market report, we’ll discuss the growth of Charlotte and what it means for multifamily investments.

Charlotte Multifamily Highlights

While Charlotte’s rents grew on par with the national average, some other highlights of the multifamily sector in Charlotte include:

Rents grew by 0.7% in Q1;
Average rent in Charlotte was $1,522, as of March 2022;
198,574 multifamily units in Charlotte as of 2022.

As this Charlotte multifamily market report highlights, these numbers only detail part of the growth in Charlotte.

Rents, commercial investments, and multifamily acquisitions are strong in this market.

The Pacing of Multifamily Rents in Charlotte

In 2021, American rents rose by 11.3%, on average. Rents for a one-bedroom apartment rose in Charlotte in:

Alexander County from $549 in 2019 to $560 in 2021;
Anson County from $593 in 2019 to $537 in 2021;
Cabarrus County from $897 in 2019 to $1,010 in 2021;
Catawba County from $549 in 2019 to $560 in 2021;
Iredell County from $763 in 2019 to $810 in 2021;
Union County from $897 in 2019 to $1,010 in 2021;
Mecklenburg County from $897 in 2019 to $1,010 in 2021.

However, differences in location within each county may cause rents to be variable.

Some more desirable downtown areas command even higher rents.

Long-Term Changes in Rent

As more large corporations invest in Charlotte and scoop up its land, the long-term possibility for increases in rent are high.

A larger demand for housing will create an increased need for developers to build more apartments to accommodate the rising population.

As the economy continues to grow, more people will be moving to Charlotte to take advantage of the new job opportunities.

A shortage in qualified workers could result in higher wages and increased demand for housing.

Short-Term Changes in Rent

While rent prices have fluctuated significantly over the past few years, over the short-term, apartment rents have remained fairly stable in Charlotte when compared to other cities.

In particular, rent prices have remained relatively affordable in comparison to cities like New York and San Francisco, for example.

In addition, some owners are choosing to renovate their properties in order to attract more renters.

As a result, there may be a slight increase in rent prices over the next few years.

Overall, it is important to keep an eye on the market and be prepared to take action if necessary.

Multifamily Sales in Charlotte

In the past year, there have been many notable acquisitions and sales in Charlotte covered in the news.

Notable Acquisitions So Far

In May 2022, Bell Partners purchased Element Uptown and Waypoint West for an undisclosed amount.

Bell Partners is one of the leading multifamily real estate firms and did more than $4.8 billion in acquisitions and sales in 2021.

In mid-2022, a joint venture between Clarion Partners and Blackfin Real Estate Investors secured 3,564 units in a 12-facility sale.

The sale was a part of another joint venture between CARROLL and PGIM Real Estate.

Since January 2022, Excelsa has raised $153 million in equity from overseas investors. The fund is set to acquire multifamily housing options on behalf of investors.

In late 2021, Preferred Apartment Communities, Inc. purchased Solis Chestnut Farm for an undisclosed amount. The facility has 256 units and is listed as a Class A property.

Notable Sales So Far

ZOM Living set a new sale record as it sold Hazel SouthPark for $130.75 million.

It has the largest per-unit price in Charlotte’s history and the facility also has 150 commercial spaces (14,000 square feet) that are leased.

The facility was built in 2021 making it one of ZOM’s latest projects.

Market Forecast for the Rest of 2022

The population of Charlotte, NC is growing.

This growth is driven primarily by an influx of young professionals and retirees who are being attracted to the city by its strong job market, burgeoning tech scene, and low cost of living.

In Q1, $793 million in multifamily investments in the city of Charlotte transitioned between different owners.

By 2023, the Charlotte-area apartment market is expected to grow. This growth will be driven by population and job growth in the region.

General Investor Activity: Where is the most money flowing?

In Charlotte, money is being spent on multi-family acquisitions and new developments, with a focus on newer, luxury communities.

Money is also being poured into new retail developments and office buildings.

The bottom line is that people are moving to Charlotte, and money is being spent on building more housing to accommodate them. That’s not likely to change anytime soon.

Takeaways for Multifamily Investors

Charlotte has a strong multifamily market with steady, long-term demand. There are many developers and landlords who are committed to investing in Charlotte for the long term.

As a result, there is plenty of opportunity for investors savvy enough to invest now.

From a national perspective, one might think that the Charlotte multifamily market would be overcrowded with investors.

However, the city is growing at a rapid pace and there is plenty of scope for new projects to be built.

The combination of steady demand and limited supply will lead to continued rent growth in Charlotte.

As a result, investors who are willing to buy right now can expect to see an increase in their multifamily investment’s value over the next several years.