For nearly a decade, Charlotte’s high-end apartment market has boomed.
Developers bought up land in the city’s hottest neighborhoods — South End, NoDa, Plaza Midwood, Dilworth — and built luxury communities, each one fancier than the last.
Rent continued to climb, and each new building filled up with the crush of young professionals moving to town.
Could all that be nearing an end? Industry insiders have been watching for the peak of the market for several years now. A common parlor game among developers has been to predict which “inning” of the cycle we’re in.
There are signs that the peak is finally here — at least in some parts of the market.
The latest development: New luxury apartments are increasingly turning to special offers, discounts and incentives to get people in the door.
An Agenda review of apartment leasing sites for communities around the center city shows that many of them are prominently displaying offers. These range from discounted monthly rates, free months of rent, gift cards or electronic devices.
Novel NoDa is offering $2,000 off rent, plus a smart home device.
SkyHouse and Novel Stonewall Station are offering two free months rent on some of its units.
The Abbey in Montford Park is giving new tenants a $1,000 gift card.
And at least a half-dozen other apartments are offering a month of free rent.
This isn’t a city-wide trend. Charlotteans still want to rent apartments.
Overall apartment demand remains strong, and apartment communities at lower price points or that are slightly older do not appear to be offering discounts as aggressively.
Rent also continues to climb — hitting $1,142 in March, according to Real Data. The vacancy rate across the entire city is around 7 percent, much lower than the Uptown area. The average rent Uptown has been falling over the past year and a half.
The apartment communities offering discounts tend to have a few things in common:
- They were built in the past year.
- They’re in markets with a lot of construction activity.
- They charge high prices — generally about $1,200 a month for a studio and $2,000 for a two-bedroom unit.
It’s just simply harder to find people who can afford to live there.
What comes next?
If you’re a renter looking to move to a hot neighborhood, be prepared to shop around. You’ll be ever more in-demand, and should be able to command some (relative) bargains.
In the construction world, attention will likely shift to the suburban parts of Charlotte. It’s mostly a math problem.
To make any money on an apartment building in Uptown or South End or NoDa, developers must charge a luxury-priced rent. As we’re finding out, the demand for apartments in that price range has diminished.
But since overall demand is steady, developers will move to parts of town where they can build apartments at those price points and still make money — closer to the I-485 loop than the I-277 one.
This should keep rents rising and construction steady, most observers say.
Fannie Mae recently estimated that the number of new apartment completions would hit a record high in another year or two.