Charlotte’s apartment boom. Why? Demand? How long? Design?
Years after the boom, bust and recovery in single family housing, a different sector of the market is on fire right now: Apartments. In-fill apartments especially.
A look back:
– Oversupply (2005-2008): Ahead of the Great Recession, Charlotte apartment construction gets overdone.
– Slack Demand (2008-2009): The cadence of migrants to Charlotte slows. Young Charlotteans move in with friends, live at home, go back to school (household formation slows). New apartments sit empty as a hangover from boom-time QC growth. Apartment developers miss loan payments (some file for bankruptcy), banks stop lending, construction stops.
– Equilibrium (2009-2010): Times are tough around bank-town, but things look better than in the upper Midwest. Folks still trickle into town. Empty units fill up. Meager rental demand and the overhang of apartment supply come into line.
(1) Why are so many apartments being built?
Developers is the quick answer, but the trend driving apartment construction is simple – more renters (shocking, I know). The way I get there is unconventional, but very simplistic. Although we all agree Charlotte is a great place to put down roots – since 2008, the number of Mecklenburg County households remained unchanged. What’s happening is a shift towards what I call “rental households.” While this phenomenon is national in scope, it’s more pronounced in Mecklenburg County. For example, home ownership rates peaked at 74% in 2003 and dropped to 58% in the latest quarter. More people want to rent and less people want to own.
(2) Why the increase in Charlotte rental demand?
20-somethings finally started forming households, moving out of basements, off couches and into rentals. High hurdles related to down payments, distrust of banks, desire for mobility, cheaper rent in Charlotte vs comparable cities – all combined to drive the shift to rentals. Growth in rental households means growth in apartments.
(3) Will this apartment development continue?
According to sources, yes. Apartment demand has outpaced new construction, and projects completed in 2013 and 2014 are quickly reaching occupancy.
(4) Why does apartment construction all look the same to me (wood+brick)?
It’s cheaper. I’d argue steel and concrete structures appear more permanent, more solid, more like steel and concrete, but by using wood framing techniques, developers can quickly build 3-5 story buildings. Minimal lead time for expensive materials/equipment (steel, concrete, cranes, etc) leads to more flexibility and faster turn-times. Steel and concrete are useful for office buildings where large open spaces provide tenant flexibility. However, apartments will never be repurposed.
(5) When will the apartment boom end?
Hopefully it won’t. Responsible, dense development is the best way to handle a city’s growth. Public transportation, bike lanes and sidewalks all support this new-urban lifestyle. Planners in South End apparently get this concept. A closer look at the City’s area plans show live/work /play nodes all the way out Independence, putting down a blueprint for 100 years of responsible development.
Photo: Mark Hames / Charlotte Observer
This story was originally published January 7, 2015 at 12:54 AM with the headline "Charlotte’s apartment boom. Why? Demand? How long? Design?."