Charlotte’s 99,923-unit apartment market saw another drop in vacancy in the second quarter of 2012. After finishing the first quarter at 5.6%, the rate actually fell to 5.3% in the second quarter. July data show no change. The quarterly rate is down fully 180 basis points year-over-year. The Class A vacancy rate is 4.5%, the Class B/C rate is 6.3%. The highest overall vacancy has ever reached in the current cycle is the 11.3% rate recorded during the recession. Given its modest size, Charlotte has been an active multifamily market until recently, averaging over 2,000 new units per year from 2002 to 2011, with demand roughly keeping pace. So far in 2012, Reis reports 338 multifamily units have completed in Reis submarkets. The 240-unit Village of Ballantyne completed in April and the 98-unit first phase of the Lofts at Charleston Row completed in September. Another 297 units are on tap for completion in 2012, in the Woodfield Whitehall Parc project. Net absorption for the quarter is reported at 452 units, mirroring first quarter’s 451, plus another 17 recorded in July. From 2012 to 2016, new construction so forecast to average about 2,200 units, while net absorption will average 2,300, creating a supply/demand balance that will keep vacancy below the 5.0% mark
Reis reports average asking and effective rents of $835 per month and $756 per month, up 1.1% and 1.4%, respectively, over the quarter, and up 2.8% and 3.6% over 12 months. July data show 0.3% gains for both measures. Class A and B/C asking rents are reported at $963 and $686 per month, respectively. Reis forecasts asking and effective rents to increase by 3.9% and 5.0%, in 2012, which are substantial gains for any market, followed by similarly strong annual gains thereafter.
Marcus & Millichap’s third quarter 2012 report states “a growing population and uncertainty in the housing market will sustain demand for apartments” in Charlotte. This source predicts a year-end 2012 vacancy rate of 5.0%, “the lowest since the mid-90s.”