Rachel Russell, Grubb Properties
Since the recession, Uptown/South End has experienced a period of remarkable growth in the multifamily market, and has seen an 82 percent increase in units since 2012, the study says. Overall, renter-occupied units make up just over two-fifths, or 40 percent, of the city’s housing market, a percentage that is already higher than the national average and anticipated to increase. As more properties are built, Charlotte’s 5.1 percent vacancy rate is likely to increase over the long term, but demand is expected to remain strong as the city’s dynamic economy and population continue to grow.
The area’s population is set to increase about 2 percent annually over the next five years, far outpacing the country’s overall rate of 0.75 percent. Much of that is due to an influx of well-educated, younger people moving to take advantage of the city’s bright economic outlook. Charlotte’s unemployment rate has dropped to about 5.5 percent, the lowest rate since the economic recovery began, and the area added more than 23,800 jobs in the last year, according to the Bureau of Labor Statistics.
Uptown on the Rise
Demand for multifamily housing is centered on neighborhoods in and near Uptown Charlotte, where renters can take advantage of urban amenities. By 2020, Uptown is expected to have more than 65 percent of its housing as rented units. While this is a small geography compared to New York City, it’s noteworthy that they share near the same percentage for renter household projections.
Since 2000, Uptown’s population has more than doubled to nearly 14,000 people, fueled by interest in living in the city’s job center and enjoying cultural draws, including Romare Bearden Park and the new Charlotte Knights baseball stadium. New buildings adjacent to these sites include the 22-story, 168-unit Element Uptown from Childress Klein and Spectrum Properties’ forthcoming 177-unit The Mint.
With several new multifamily projects still on the way, including 995 Class A units under construction, Uptown already has the highest concentration of renters in the city, and it is one of Charlotte’s most expensive submarkets, with monthly rents averaging $1,340. Vacancy remains low at 5.4 percent but it has started to increase with a 3.1 percent change over the last 12 months. Still, continued demand is expected to keep the vacancy rate in line with the historical average of 6.8 percent over the next five years, according to CoStar.
The planned expansion of the LYNX light rail Blue Line out to the University of North Carolina-Charlotte is also spurring demand for multifamily housing. To further revitalize the northern part of Uptown along that extension, a collaborative mixed-use master plan development called the North Tryon Vision Plan is underway. Along North Tryon, Grubb Properties is partnering with Novare Group to develop SkyHouse Uptown, a 336-unit high-rise luxury building targeted toward Millennials. Nearby, Levine Properties is building a six-story, 264-unit apartment building as part of the First Ward Urban Village. The property will include a new park and housing, as well as office, retail and hotel space.
South End on the Fast Track
South End is another strong Charlotte submarket, featuring near-constant construction on multifamily buildings clustered near the LYNX light rail. From 2010 to 2014, South End increased its population by nearly 25 percent, the largest growth among Charlotte’s multifamily submarkets, according to CoStar.
Similar to Uptown, the neighborhood is experiencing a low vacancy rate of 2.9 percent, less than half its historical average, but that is expected to increase as units come on the market. Currently, 2,303 units are under construction in the neighborhood, which recently added a Publix grocery store. Development is expected to continue along the Rail Trail, a 3.3-mile public park aimed to improve walkability and access to retail and cultural venues within South End and Uptown.
Other Submarkets
Other neighborhoods seeing an uptick in proposed development are NoDa, an arts district located around North Davidson Street, and Plaza-Midwood, a diverse and historic former streetcar suburb about one mile from Uptown. Other areas to watch will be those where significant investment is being made to community amenities.
The brand new streetcar route from Uptown to Elizabeth Avenue highlights an area where Grubb Properties is working on redevelopment, including several new restaurants and retail space.
The city is also lengthening its Sugar Creek Greenway as part of the 16-county Carolina Thread Trail master plan, connecting major employers, shopping centers and residences, including the in-progress, 261-unit Astoria at Metropolitan. These projects will unite new neighborhoods with the heart of Charlotte, making them areas to watch.
— By Rachel Russell, Vice President-Development, Grubb Properties. This article originally appeared in the June 2015 issue of Southeast Real Estate Business.