MARKET SNAPSHOT
Charlotte’s multifamily construction pipeline reached the peak of a historic expansion by the end of 2024. More than 16,700 units were delivered throughout the year, representing a 25% increase from the previous record set in 2023 and more than double the market’s pre-pandemic annual average of 7,400 units between 2015 and 2019. While 2024 is expected to mark the peak for apartment completions, an additional 22,400 units remain underway. However, completions are projected to decline to approximately 12,000 units in 2025. Considering all units currently under construction, Charlotte’s pipeline ranks as the second largest in the nation, trailing only Miami and slightly ahead of Nashville.
Supply-side pressures are expected to persist through much of 2025, with nearly 12,000 units slated for completion this year—approximately 29% fewer than in 2024 but still above the historical average. However, new construction starts declined by nearly 40% in 2024, suggesting that fewer deliveries are on the horizon likely by 2026.
Apartment absorption in Charlotte has rebounded strongly as of early 2025. Annual absorption reached an all-time high in 2024 at approximately 12,700 units—an 80% year-over-year increase that significantly exceeded expectations and surpassed the previous record set in 2021 by several hundred units.
However, despite this strong demand, the delivery of more than 16,700 new units in 2024 outstripped absorption, driving the overall occupancy rate down to 91.6%. High-end properties have accounted for more than three-fourths of Charlotte’s substantial development pipeline. As a result, Class A properties currently report the lowest occupancy rate among asset classes, standing at 85.5%. In contrast, Class B properties have demonstrated greater stability, maintaining an occupancy rate of 92.3%.
Looking ahead, with approximately 22,000 units under construction—reflecting a 9.6% expansion of inventory—absorption must continue to outperform expectations to alleviate vacancy pressures in the near term. However, a 40% year-over-year decline in construction starts suggests that fewer new properties will be delivered in 2026, potentially leading to a tightening market next year.
While the historic expansion of apartment inventory has tempered rent growth, recent demand outperformance has helped stabilize some of those losses. Still, heightened competition among the market’s newest properties has shifted average rents downwards on a year-over-year basis for two consecutive years. As of the end of December 2024, annual rent growth stood at -0.8%, an improvement from the first quarter of 2024 when rent cuts averaged -2.3%.
Rent reductions have been most prevalent in the high-end segment, where concession offerings have become more widespread. Currently, approximately 40% of properties are offering incentives, typically ranging from one month to six weeks of free rent. In contrast, rent growth in the middle-tier segment has been more resilient, with rents remaining relatively flat, posting a modest 0.1% year-over-year increase.
Looking ahead, the substantial construction pipeline, one of the largest in the country as a share of total inventory, will continue to place downward pressure on rents throughout the remainder of the year. However, with a declining delivery schedule and another year of robust demand anticipated in 2025, the supply-demand gap is expected to narrow. As a result, rents are projected to rise gradually throughout the year, culminating in a 2.1% year-over-year increase by the end of 2025.
12-month period ending November 2024
Charlotte’s multifamily market continues to experience significant expansion, with a record-breaking 16,700 units delivered in 2024, marking a 25% increase from the previous year. Despite robust demand, evidenced by record annual absorption of approximately 12,700 units in 2024—new supply has outpaced leasing activity, driving overall occupancy down to 91.6%. High-end properties have been most affected, with Class A occupancy rates falling to 85.5%, while mid-tier Class B properties have demonstrated greater resilience at 92.3%. Rent growth has also been challenged by the influx of new supply, with annual rent growth currently at -0.8%, though this represents an improvement from early 2024 lows. Concessions remain prevalent, particularly in the luxury segment, where nearly 40% of properties are offering incentives such as one to six weeks of free rent.
Looking ahead, Charlotte’s development pipeline remains substantial, with approximately 22,000 units under construction, reflecting a 9.6% inventory expansion. This sustained supply growth will continue to place downward pressure on rents and occupancy levels in the near term. However, a sharp 40% decline in new construction starts in 2024 signals a slowdown in future deliveries, which, coupled with another year of strong demand expected in 2025, should help rebalance market conditions. As a result, rents are projected to gradually rise throughout the year, culminating in a forecasted 2.1% year-over-year increase by the end of 2025, as the gap between supply and demand narrows.
