Like most spots across the country, metro Charlotte turned in an impressive apartment rent growth performance during 2nd quarter 2014. Effective rents for new leases climbed 2.2% during the three-month period.
That was quite a turnaround from the stats seen a little earlier, as pricing declined a tiny bit during late 2013 and early 2014. Furthermore, 2Q’s rent growth proved very broad, with rates up meaningfully in every product niche and across all neighborhoods.
Important to Charlotte’s upturn in pricing momentum is that operators now appear to have regained some confidence, after previously worrying that a burst of completions would prove more than the market could handle.
Increased deliveries, in fact, have been met with strong demand, so occupancy remains in healthy shape, and there’s been no real damage done to performances within the already-existing stock. The mid-2014 occupancy figure came in at an even 95% overall, leaving available product concentrated mostly in the brand new properties moving through the initial lease-up process.
While prospects look promising for further solid rent growth in Charlotte’s middle-market and bottom-tier apartments, it’s likely to be more difficult to push pricing at the very top of the product spectrum over the near term.
That outlook reflects that the biggest portion of this cycle’s block of new supply will reach delivery over the coming few months. With ongoing construction at the end of 2Q totaling about 10,500 units, the metro’s inventory is set to expand by some 8% over the next year and a half. That’s one of the most aggressive inventory growth rates seen anywhere across the country. Furthermore, the future deliveries in Charlotte are heavily concentrated in the last half of 2014, when some 5,900 units should be completed. That delivery pattern should make for a competitive leasing environment for upscale units during late 2014 and early 2015, especially in the urban core Uptown/South End submarket that is getting so much of the new supply.
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