Q3 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.
The Charlotte, NC, employment market thrived in Q3 2022, with job growth expanding across various industries.
With the addition of over 70,000 jobs, Charlotte’s total employment grew by 5.3% year-over-year.
Local employers alone brought 20,000 more workers to the market in the third quarter alone.
The professional and business services sector grew by over 7.6% in the last few months, adding 16,000 jobs.
With a strong labor market and rapid population growth, Charlotte’s multifamily real estate will remain in solid demand.
General Area Overview & Demographics
Charlotte, North Carolina, is the largest city in the state and the 17th most populous city in the United States. It is home to over 885,000 people and is one of the fastest-growing cities in America.
According to the 2019 US Census estimate, the city’s population was 37.5% White, 33.3% African American, 9.1% Hispanic or Latino, 7.9% Asian, 0.3% Native American or Alaskan Native, and 0.1% Pacific Islander.
The city is home to The University of North Carolina at Charlotte, founded in 1946. It is the largest university in the area, with over 29,000 students annually enrolled. UNC Charlotte offers more than 180 degree programs spread across seven colleges and also operates an Honor’s College.
Charlotte’s transportation connectivity has helped fuel its growth, facilitating the influx of businesses to its downtown core. Bank of America maintains a corporate headquarters here, while other major companies, such as Wells Fargo and Belk, have a significant presence in the area.
Charlotte is home to numerous attractions, such as Reed Gold Mine, Blumenthal Performing Arts Center, and Ovens Auditorium. Golf courses like Quail Hollow Golf Club and Latta Plantation Park or nature areas like Catawba River Park and Freedom Park Trails provide outdoor options.
Summary of Charlotte Multifamily Real Estate Performance in Q3 2022
Q3 showed modest signs of Charlotte’s multifamily cooling compared to Q1 and Q2 2022.
Q3 2022 was the first to see an increase in vacancy rates throughout 2022, rising to 5.4% but remaining in range with the market’s annual average of 5%, an average it’s held since 2015.
All asset classes saw a rise in vacancy, but Class C has held the most steady, ending Q3 2022 with a 4.5% vacancy rate.
What are multifamily rents like in Charlotte?
After surging in recent periods, average rents for Charlotte Multifamily recorded a quarterly dip for the first time in three years.
Local asking rents fell less than 1% during the third quarter to $1,609 per month. Rents began the quarter recording gains, and several projects still saw increases in renewals and trade-outs.
While asking rents declined in Class A and Class B units in recent months, rents increased in lower-tier assets. Average rents for Class C apartments rose nearly 1% during Q3 2022 to $1,249 per month.
Asking rents are projected to hold reasonably steady for the remainder of the year. Local apartment rents are forecast to rise to $1,615 per month.
Purchase & Leasing Activity
From Q2 to Q3, sales velocity increased by 12%, and transaction volume was the highest since Q4 2021.
The median sales price for 2022 is up 20% from 2021, with units closing at around $262,000.
After being at 3.5% for the previous year, the average cap rate in sales this quarter was nearly 4%.
Notable Multifamily Real Estate Deals in Charlotte in Q3 2022
There were several deals for Charlotte multifamily space this quarter.
- NOVEL LoSo sold for $140,000,000 at $406,977 per unit;
- The Vive at Kellswater sold for $91,250,000 at $292,468 per unit; and
- 5115 Park Place sold for $87,550,000 at $320,696 per unit.
These are a few among other transactions that took place for multifamily real estate in Charlotte.
New Multifamily Real Estate Development Activity in Charlotte in Q3 2022
Q3 2022 saw around 3,500 multifamily units delivered alone, with year-to-date deliveries totaling over 6,100 units.
Year-over-year, the number of projects in the pipeline has nearly doubled, with nearly 22,000 units currently under construction.
Permit activity is down this quarter by half compared to Q2, as permits were only pulled for 1,100 units. Year-to-date is down by 12% when compared to 2021.
It’s expected that 2022 will end with 9,700 units becoming available, keeping totals on pace with numbers seen in the previous two years for multifamily real estate in Charlotte.
Market Forecast for Charlotte Multifamily Real Estate Market
The market is expected to remain steadily where it currently is throughout the end of 2022. Vacancy is expected to increase as the year comes to a close due to absorption steadily declining.
However, Q3 will be another period of rent growth above the trend.
The economy’s health will also continue to attract significant employers, and population growth will drive workers to these businesses.
Takeaways for Multifamily Real Estate Investors
Charlotte’s multifamily market has indicators of promise to remain well-performing.
Current economic uncertainties have brought a mild cooling, but as interest rates are expected to level off in the coming months, the market is expected to pick up its pace.
Conduct your research to determine what’s best.
Find & Connect With Commercial Agents & Brokers in Charlotte, NC for Free on MyEListing.com
MyEListing.com maintains one of the country’s largest national directories of commercial real estate agents and brokers. Use it for free to find an agent or broker in Charlotte, NC.
Other recent articles
Article Search
Share
All Article Categories
