Charlotte’s South End Remains ‘Go-To’ Submarket for Young Renters
Charlotte’s South End district has firmly established itself as one of the most dynamic millennial urban submarkets in the Sun Belt. It is increasingly on par with the most thriving areas in other growth cities such as Atlanta, Austin and Nashville and is becoming a 24-hour neighborhood with dining, nightlife and high-end jobs.
Charlotte is one of the few cities in the region that has both a true city center as well as a relevant mass transit system. The city’s LYNX Blue Line, which runs from Interstate 485 to the University of North Carolina at Charlotte’s main campus, has proven to be very meaningful for the local multifamily market. LYNX was the catalyst driving South End’s emergence and gives the neighborhood its own heartbeat as renters can commute to Uptown for work or UNC Charlotte for class.
Developers are taking note with several apartment projects and mixed-use developments underway in the area, including Broadstone Queen City and Haven South End.
As South End has grown into a more dynamic district, Charlotte is becoming an even more attractive destination for recent college grads who are looking to work in the city’s established financial sector, as well as for firms like Lending Tree, USAA, Credit Karma, Honeywell and Robinhood that are establishing offices in the area. The growth prospect and the evolution of Charlotte is in high gear as there has been some maturity of these millennial pockets.
Other emerging submarkets
On the north end of the LYNX line is the University City area near UNC Charlotte, which also has several multifamily developments in the works. A major employer coming to the northern area is Centene, which is building out its $1 billion East Coast headquarters that will ultimately house more than 6,000 employees.
Another area that we’re going to start to see some meaningful development activity is the Morehead corridor and Dilworth, which happens to be in close proximity to the new Wake Forest Medical School. The new institution is a joint venture between Wake Forest University, Wake Forest Baptist Health and Atrium Health, which is one of the leading healthcare organizations in the metro Charlotte area. That area is mostly office at the moment, but there are several multifamily projects along that corridor that are in the planning phases.
There is also a meaningful concentration of development activity in the LoSo district (Lower South End). That’s a new frontier that’s experiencing critical mass for multifamily, but there’s also some commercial offerings. Also in the works in the LoSo area are some build-to-rent developments. We’ve seen some deliver recently and they did remarkably well during lease-up.
Absorption and rent hikes
Overall Charlotte is very balanced, unlike some of its peer markets that currently have a supply problem. We are seeing growth move to the suburbs, but it’s concentrated in the urban submarkets. Overall Charlotte is performing in line with many of the other high-growth markets in the Sun Belt.
One trend that has gained traction in recent months in the market is leasing momentum for both new and existing product. As demand has increased for Charlotte-area apartment communities, landlords are seeing robust absorption activity and can expect to lease 30 units or more per month during lease-up of newer communities coming to the market.
With such strong demand landlords are able to confidently push rents. The rate increase that we’re seeing from one year ago to now is substantial, and it’s not only happening here in Charlotte. It’s a theme we’re seeing throughout the Sun Belt.
We’re certainly seeing more capital enter the Carolinas from other parts of the country than we’ve ever seen before. And it’s originating most notably in New York and the Northeast overall, such as KKR’s acquisition of Broadstone Queen City. We are also seeing non-domestic capital play an increasing role in the multifamily market.
Additionally, investors that have historically been active in other property sectors such as retail and office are entering the buyer pool. They are shifting over to multifamily and doing so in the Carolinas as a starting point. They’re not necessarily winning deals in droves, but they are actively bidding for opportunities.
— By Marc Robinson, Executive Vice Chairman, Cushman & Wakefield. This article originally appeared in the June 2021 issue of Southeast Real Estate Business.