The hot Charlotte apartment market shows no sign of cooling, according to the latest report produced by Real Data.
During the past six months, the average vacancy rate for area apartments continued to improve to reach 5.8 percent – down from a high of nearly 14 percent in February 2010, the report says. Demand also proved to be strong with 2,490 units absorbed between Feb.12 and Aug. 12.
Rental rates also showed solid growth, rising five percent to an average $839 per month. One-bedroom rents average $746 a month, two-bedroom units average $855 a month and three-bedrooms average $995 a month. Average rents bottomed out around $646 in February 2005.
New development continues with 1,608 new units finished during the last six months. Currently, there are 4,329 units being built and another 11,217 units proposed. Many of the units are in the uptown, South End, Northlake and University City areas.
While lending remains subdued for many types of commercial projects, apartment developers have been able to find capital for projects.
Rents are forecast to grow 5 percent in the next year as average occupancy reaches 95 percent.
The apartment industry typically operates on a boom-bust cycle. While the housing market and commercial development in general has been weak, investors and developers have flocked to the Charlotte multifamily market. More people are expected to rent thanks to demographics (more younger professionals moving into the market) and the recent housing bust that has scared some would-be buyers.
Demand will wane, the report says, but it will continue to exceed new supply over the next two years.
Rents are projected to grow, but remain cheaper than the cost of owning a home, Real Data research shows.
And rent growth and occupancy rates are expected to see “significant” growth during the next two years.