It’s probably the most common question I get: How the heck are developers going to fill all these new apartments they’re building in Charlotte?
The Census Bureau population estimates released Thursday offer an answer to that question. Charlotte grew faster than all but 10 cities in the U.S., adding some 15,656 residents in 2016, for a growth rate of 1.9 percent from the year before.
In fact, the city’s estimated population last year of 842,051 is about 103,490 people more than lived here in 2010 – a 14 percent increase. And all those new people moving to Charlotte are driving a lot of the new apartment construction you see on seemingly ever corner.
Some back-of-the-envelope calculations for last year show how many apartments all of those new Charlotteans might occupy. Those 15,656 new arrivals might represent about 8,000 new households (assuming some are married, couples or children living with parents, while others are singletons moving to the city).
If about half of those new households rent an apartment rather than buy a house when they move to Charlotte (a reasonable assumption, especially in a tight for-sale market with rising prices), that’s demand for about 4,000 new apartments in Charlotte right there.
According to Charlotte-based Real Data, which tracks apartment demand, the five-year average for the number of new apartments rented (or “absorbed,” to use the technical term) each year in Charlotte is 4,807. That’s across the whole region, not just in Charlotte.
Seen in this light, the number of apartments under construction might not seem quite so crazy. There are roughly 12,000 apartments under construction throughout the region, with a similar number on the drawing books over coming years. So while that number might be eye-popping, keep in mind that the region’s population growth is powering nearly 5,000 new apartment rentals annually, over the past five years.
That’s one reason why the vacancy rate has actually gone down in the Charlotte market, even as thousands of new rentals increase the supply. In February 2015, the vacancy rate stood at 6.7 percent. A year later, it was 6.2 percent. And this February, the vacancy rate was just 6.1 percent. That means even though developers built nearly 14,000 new apartments during that time, there were fewer empty units by the time they were done – an indication of just how strong demand has been.
So, does that mean developers will never over-build again? No, but it does mean that as long as Charlotte’s population keeps swelling and new apartments keep renting fast, that’s probably less of a concern. Whenever the local economy dips and population growth slows...well, then we’ll see.