$1,581 2Q 2024
-2.3%
91.7% 2Q 2024
-120 BASIS POINTS
3,078 [YTD: 5,530]
4,086 [YTD: 8,085]
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
Charlotte’s apartment market has shown remarkable resilience, emerging strong from the typically slower winter leasing period. In the second quarter alone, renters absorbed 3,078 units, contributing to a total of 5,530 units absorbed over the last two quarters. This sustained demand, marked by six consecutive quarters of positive absorption, underscores the market’s robust capacity for rental demand. However, the introduction of new supply remains at historical highs, which continues to overshadow the strength of renter demand in the market.
Charlotte’s apartment market is facing a significant surge in supply, ranking it among the top markets for inventory expansion. In the first half of 2024 alone, over 8,000 units were introduced, and an additional 7,700 units are anticipated by the end of the year. This rapid expansion of apartment inventory is likely to continue impacting the ability of property owners and operators to increase rents in the near term.
Charlotte’s apartment market is experiencing significant supply pressures. Despite strong demand, the overall occupancy rate has decreased annually by 120 basis points, settling at 91.7% by the end of the second quarter. This decline, while moderating, highlights the effects of a 6.9% increase in apartment inventory over the past year. In the last 12 months, new unit deliveries reached approximately 15,400, surpassing net absorption, which was a robust 8,600 units. With an additional 27,000 units currently under construction, the inventory is expected to increase by 12.2%, positioning Charlotte as one of the leading U.S. markets in new apartment construction. Despite these overarching challenges, market performance remains varied across different submarkets. Lincoln County holds the highest occupancy rate at 94.0%, whereas Gaston County has seen a notable 330 basis point decline.
Charlotte’s rental market is under considerable strain due to a high influx of new apartment supply. The market has seen rent growth decline for five consecutive quarters, with effective rents for new leases dropping by 2.3% over the past year. This downturn is primarily due to the ongoing surge in apartment inventory, which is expected to reach a peak of 15,700 units by the end of 2024. In the first half of the year alone, over 5,500 new units were delivered, and with 27,000 units still under construction, the total inventory is set to increase by 12.2%. Luxury apartments in prime neighborhoods such as South Park and South End have been particularly affected, experiencing rent declines of over 3.5%. In contrast, more affordable units in suburban areas like Rowan and Chester Counties have seen rent increases of 1.8%, benefiting from lower competitive pressure.
Average Monthly Mortgage Payment
Average Monthly Rent
Between January and June of this year, single asset transaction volume in Charlotte’s multifamily market reached $493.8 million across 14 transactions—three more than the previous year. Although this total is 1.1% lower than last year’s performance, it aligns with pre-pandemic averages, indicating a market adjustment to the new normal of higher capital costs. Despite these challenges, private buyers continue to dominate the market, while institutional investors are showing renewed interest after pulling back in 2022 and 2023. Charlotte’s multifamily market remains appealing to investors due to its relative affordability, with average asset prices staying below $200,000 per unit.
*Most Active Buyers and Sellers are based on the sale volume of apartment units.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
0.7%
|
-1.1%
|
-0.5%
|
0.2%
|
0.5%
|
0.0%
|
0.2%
|
Between 2019 and 2022, the under-35 renter demographic expanded by 0.7%, making it the fastest-growing segment of the market. This trend highlights the rising demand for housing options that cater to the preferences and lifestyles of younger renters, including proximity to lifestyle amenities and employment hubs.
Charlotte’s apartment market is currently facing a supply-demand imbalance. This past year saw the introduction of 15,400 new units, significantly exceeding the net absorption of 8,600 units. With 27,000 units still under construction, the inventory is expected to increase by 12.2%, positioning Charlotte as having one of the largest construction pipelines in the nation. Despite a surge in new supply, the city’s economy continues to show strength, driven by sectors such as financial services, technology, and a burgeoning young professional population. Additionally, significant local investments, like the Heyco Group’s $12.75 million manufacturing plant and the anticipated expansion of the airport, are expected to spur further travel and job growth, bolstering rental demand. Although short-term challenges are evident, Charlotte’s long-term prospects are reinforced by its economic resilience and ongoing population growth.
