Apartment developers in Charlotte are sleeping well, as the city’s building boom continues and shows no signs of stopping.
At a forum Tuesday sponsored by Bisnow, two panels of developers said they expect the demand for new apartments to stay strong and buoy the industry through its record cycle of building. There are more apartments under construction and planned in Charlotte now – more than 20,000 – than at any other single point before. Vacancy rates are creeping up, to around 6 percent, but are still low by historic standards.
And when moderators asked what keeps them up at night, the developers answered: not much.
“Generally speaking, I sleep pretty darn good,” said Ben Collins of Crescent Communities.
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Lou Davis, director of investment for Cortland Partners, said he does as well.
“Everything looks rosy from a projection standpoint. There’s nothing to suggest, here’s a cliff we’re all marching toward like lemmings,” said Davis. Cortland buys and renovates existing apartments, mostly garden-style complexes from the 1980s or ’90s. The company is then able to increase rents, while remaining below the market average. “I love sleep.”
What worries them is not so much major shifts, such as a reversal of the apartments over homeownership trend, but unexpected items and smaller-scale problems. Davis said he worries about “black swan” events, such as an ISIS attack or a major Greek debt default – unexpected, major crises that no one could predict. That, and White Walkers, Davis said, in a “Game of Thrones” reference.
Collins said he worries about improving execution on Crescent’s new projects, making sure that processes and procedures at each project are the best they can be.
“You can’t spend enough time on execution,” he said.
Some of the developers were a bit less sanguine. Ben Yorker, of Northwood Ravin, predicted we’ll hit oversupply sooner rather than later.
“I would predict to see some oversupply sooner than a lot of the folks we’ve heard today,” said Yorker. “I hope I’m wrong.... I think we’re in some of the later innings, to be honest.”
Rachel Russell of Grubb Properties agreed, but said she’s not too concerned.
“I think we’re in a later inning, but that’s the best part of a baseball game for me,” said Russell.