Luxury Apartment Project in Charlotte Cleared for Construction with HUD Financing
- Aug 11, 2011
Charlotte, N.C.–The construction of Phillips Mallard Creek, a premier 300-residence apartment project scheduled to sprout up just a stone’s throw from the University of North Carolina at Charlotte, is due to get underway as Phillips Development & Realty LLC secures financing through the U.S. Department of Housing and Urban Development’s 221(d)(4) program.
Mallard Creek will occupy a 30-acre site along Mallard Creek Rd., a location within close proximity to I-85 and Hwy. 29, as well as such leading employers as AT&T, Carolina Medical Center and IBM, as well as the multi-tenanted University Research Park.
The HUD financing comes in the form of a 40-year, fixed non-recourse loan. The number of commitments through the FHA 221 program, which provides Federal Housing Authority mortgage insurance to HUD-approved lenders, is on the upswing once again, returning from a low point during the collapse of the housing market in 2008, a HUD spokesperson tells MHN. Commitments that year dropped to 18, but quickly began to recover in 2009 and 2010 with 36 commitments and 57 commitments, respectively.
Phillips will commence construction of Mallard Creek once the company settles on a general contractor, with plans to complete the project within 18 months of the start date.
If the newfound success of the Charlotte apartment market continues, the new development will likely experience a smooth ride to full occupancy. The numbers tell the story. “Charlotte was a middle-of-the-pack type of market up until the last few months,” Jay Denton, vice president of research with apartment market research firm Axiometrics, tells MHN. “Its annual rent growth ranked 50th out of 88 markets in January. Now it has the 10th best annual rent growth in the country at 8 percent. Presently, the average occupancy level in the city is a respectable 94 percent, the highest since 2007.”
Industry experts are confident that favorable conditions will lead to further tightening of Charlotte’s apartment market. “Demographics for apartments are up in general,” Engle Addington, an analyst with multifamily market statistics provider Real Data, says, speaking to MHN. “People aren’t buying homes right now, and you’ve got the echo boomers who are starting to rent and people who lived with roommates during the recession. Those factors are leading to historically high demand. The occupancy levels aren’t there yet, but with the rate of demand and lack of new construction, they’re going to reach record levels.”