If you’ve looked anywhere near uptown lately, you’ve seen Charlotte’s apartment boom.
So far, developers have been pretty rosy about their ability to fill the record number of new apartments they’re building – 10,400 under construction, another 10,300 or so planned after that.
A new mid-year apartment market forecast from Integra Realty Resources predicts Charlotte’s apartment vacancy rate will rise once all of that new supply hits the market. And that, in turn, could mean rents leveling off or falling over the next few years.
“It appears it will be a challenge for the Charlotte market to provide the necessary demand to absorb the amount of supply that has been added to the market,” the company wrote. “Once the units under construction are completed, vacancy rates will likely increase over the next few years, which in turn will keep rent growth most likely flat, or even drop ...when accounting for future concessions that may be necessary in order to keep vacancy levels below double digits.”
Charlotte’s apartment vacancy rate was 6.7 percent in March, the most recent data available from apartment-tracking firm Real Data.
Fitzhugh Stout, senior managing director of IRR’s Charlotte office, said he’s still optimistic that the long-term future of Charlotte’s apartment market is bright. Underlying demand, driven by shifts such as downsizing baby boomers and millennials living in urban areas, as well as infrastructure like the Blue Line, should buoy the multifamily market. But, in the short term, he said, an increase in vacancy rates is inevitable.
“There’s no question vacancy will go up, and there may be some rental concessions in the short term,” said Stout. “It’s going to take a while to absorb these.”