Q2 2022 Multifamily Real Estate Report: Charlotte, NC
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.
Home to a variety of well-known companies from Wells Fargo to NASCAR, Charlotte’s commercial real estate market continues to progress in a variety of sectors. Rent growth is forecast to pass 10% during 2022.
Unemployment rates within Charlotte remain low, as the city’s financial and retail sectors continue to expand. Financial activities companies expanded by 7.3% in the past 12 months, and retail giant Macy’s has announced plans to expand its supply chain within North Carolina.
Rising renter demand helped create a successful 2nd quarter for the Charlotte multifamily real estate market. Net absorption topped 1,500 units, which represented a 60% rise from 1Q 2022.
Let’s take a closer look at the city nicknamed the “Queen’s City”. Charlotte was named after King George III’s wife, Queen Charlotte, in 1768, a time when the area was still a colony.
General Area Overview & Demographics
The city of Charlotte is the most populous area of North Carolina and the heart of the Charlotte metro’s cultural, economic, and transportation center.
It ranks as the second-largest city in the Southeast region, only trailing Jacksonville, Florida.
As of 2020, the median family income for a local household was just over $59,000. However, the city’s cost of living comes in at 5% below the national average.
Similar to other cities within the Piedmont region, a plateau that stretches from Alabama to New York, Charlotte enjoys a subtropical climate.
- Summers are hot and humid, with a normal July daily mean temperature of 80F with mid-summer highs often reaching 90F.
- Winters are cool, with January temperatures averaging around 43F.
These and other attractive assets are currently drawing newcomers to Charlotte at a rate of around 100 every week, which contributes to a favorable climate for multifamily investors.
Summary of Charlotte Multifamily Real Estate Performance in Q2 2022
The Charlotte multifamily real estate market posted improved numbers during this quarter as demand for rental properties spiked more than 60% when compared to the first quarter of 2022.
What are multifamily rents like in Charlotte?
Rental pricing has increased steadily from 2020 to 2022, with a 6.2% spike recorded during Q2 2022.
- This recent increase is attributed to fewer completions of multifamily real estate during 2021.
- However, more apartment buildings are expected to be completed during the remainder of 2022.
- Newcomers seeking an apartment rental will have a variety of choices, with average rents currently just under $1,700 for a one-bedroom unit.
Investors and developers are both responding to this demand with increased activity.
Purchase & Leasing Activity
The Charlotte area’s multifamily real estate market is going through a highly competitive phase, with per-unit prices rising.
The median price for multifamily properties during Q2 2022 went into overdrive, reaching nearly $300,000 per unit. This is 15% higher than the median price during Q1 2022.
Purchase transactions have involved a variety of assets, from new construction to properties that were built up to 50 years ago.
In particular, the older properties are offering value-added potential in a growing market where rents are on the upswing.
Leasing activity has been steady during Q2 2022, which the vacancy rate holding steady at 4.8%.
Notable Multifamily Real Estate Deals in Charlotte in Q2 2022
The most expensive transaction was the sale of the Bell Uptown, a 22-story building offering a variety of studio, 1-bedroom and 2-bedroom floor plans.
- Bell Partners acquired the 352-unit complex from Childress Klein in late May.
- Price per unit came in at $468,750, bringing the sales price to $165 million.
Other major purchases included:
- Avant at Steele Creek, a 456-unit multifamily property that sold for $140 million.
- The Collins, a 350-unit property on Shopton Road West. This property sold for over $108 million.
Investors who may have missed out during the first half of 2022 will have more possibilities in the future as development numbers continue to rise.
New Multifamily Real Estate Development Activity in Charlotte in Q2 2022
Developers specializing in apartment complexes and similar projects delivered around 2,650 new units during the first half of 2022. This number is 36% less than Q2 activity in 2021.
However, multifamily development is heating up for the months ahead, as projects with a total of 20,700 units are currently under construction. This is up 38% year-over-year.
Some builders and developers are concentrating on building new apartments within Charlotte’s suburbs, away from the urban core.
- This strategy cashes in on cheaper land prices outside the heart of the city.
- Developers are also encountering fewer regulatory obstacles in suburban areas.
Analysts predict that the pace of apartment deliveries will continue to accelerate during the rest of 2022, with projects totaling around 10,000 units scheduled for completion before the end of the year.
Market Forecast for Charlotte’s Multifamily Real Estate Market
While the pace of economic growth is tapering off nationally, Charlotte’s outlook remains more favorable, with continued employment growth driving renter demand.
Even though the number of units entering the market in 2022 may result in a temporary supply-demand imbalance, the long-term outlook remains favorable. This is because investor demand in Charlotte is expected to remain high during 2022 and 2023.
The Lower South End submarket, aka LoSo, is fast-becoming one of the top spots for new development within the city’s core, while the University area is expected to lead the way in the northeast portion of the market.
Takeaways for Multifamily Real Estate Investors
Charlotte isn’t just the largest city in North Carolina, it’s the fastest-growing city as well, outpacing other hotspot locations like Raleigh.
Population numbers have grown by around 170,000 during the decade 2010 to 2020. Currently, the city is home to around 875,000 people.
Charlotte is also part of the state’s Research Triangle because of its proximity to three major research universities (Duke, the University of North Carolina at Chapel Hill, and North Carolina State University).
These and other factors combine to make the area especially attractive to multifamily investors.
Methodology
All figures presented in this article are based on MyEListing.com’s commercial real estate listing data in corroboration with other freely available data and information covering the commercial real estate industry.
List & Browse Commercial Real Estate in North Carolina for Free on MyEListing.com!
You can list and browse commercial real estate in North Carolina for free right here on MyEListing.com.
Simply sign up for a free account and get unlimited access to accurate local market intelligence, customized property type alerts, comp software, and more.
Other recent articles
Article Search
Share
All Article Categories
