MARKET SNAPSHOT: Demand in Charlotte Remains Strong as Population Surges
By Philip Shea, Associate Editor
A strong influx of younger residents in the Queen City will keep vacancies low and rents high for at least another year, as a new wave of supply will likely become absorbed thereafter. As reported by Marcus & Millichap, the area’s financial services sector continues to be a draw with graduates from across the country, with 50,000 new residents between the ages of 20 to 34 years old expected to be added to the metro by 2018.
This year alone, employers in the Charlotte metro are expected to add 18,500 jobs, representing a 2.2 percent increase year-over-year and raising employment to near 99 percent of the city’s pre-recession peak. Many of these, of course, will be concentrated in two of the city’s most notable employers—Wells Fargo and Bank of America—yet the health services sector is also expected to see significant gains.
In order to effectively service the growing demand for apartments, Marcus & Millichap notes that developers will add another 3,500 to the market this year, which is nearly four times the number of units completed in 2012. These additions will be enough to finally outweigh demand for the first time in years, but only slightly. Charlotte’s overall vacancy is expected to rise 40 basis points to 5.3 percent by year’s end, which is still one of the lowest levels in decades.
Additionally, rents will continue to rise considerably, with asking rents jumping 3.8 percent to $840 per month and effective rents rising 4.3 percent to $770 per month.
The Charlotte metro area continues to attract investor activity, and the marked level of new construction this year will bring many once enticed buyers back to the market. Marcus & Millichap notes that many private investors are likely to target the currently limited supply of stabilized assets in the city, which should become more available in the coming years.
Another potential boon for the local economy overall in the next few years will likely be the extension of the city’s light rail line—the Lynx Blue Line—with 11 new stations expected to be added by 2017. Transit-oriented development around these stations could be substantial, as the extension will allow easy commutes between outlying suburban areas and central employment hubs.
For more news from Charlotte, click here.Tags: construction, employment, Financial, market report, occupancy, rents, vacancy