Multifamily Permits Up in Charlotte, Raleigh – Occupancy and Rent Pressure Starting in ’13?

According to Axiometrics, Raleigh and Charlotte are two of the top 10 MSAs in terms of multifamily permitting the 12 months leading up to October, 2012:

The top ten MSAs for MF permitting for the trailing twelve months ending October 2012 are: New York (13,097 units), Houston (12,415 units), Dallas (12,258 units), Austin (10,066 units), Los Angeles (8,842 units), Washington, DC (7,958 units), Seattle (7,589 units), Denver (5,718 units), Raleigh (5,327 units), and Charlotte (4,662 units). The bulk of the supply is being delivered into the urban core of these markets, although construction is starting to spread to the suburbs of some of these MSAs now. Some of the top MF permitting places on a trailing twelve-month basis through October 2012 are the City of Houston (7,633 units); City of Austin (7,000 units); the City of Dallas (6,743 units); the City of Los Angeles (5,979 units); City of Seattle (5,719 units); Mecklenburg Co., Charlotte (3,998 units); and the City of Washington, DC (3,927 units). – Emphasis mine.

The ramp up in units could lead to a decline in occupancy and rents the latter part of 2013:

In the markets that led the early apartment market recovery with robust growth, new supply is expected to pass the long-term historical average during 2013. On the other hand, those markets that went through a greater housing boom and bust during the last cycle are expecting new supply growth below their historical growth rates during 2013. Even though apartment market fundamentals are strengthening in these heavy hit housing markets, they have not grown enough to trigger a large increase of new supply. Axiometrics expects the impact of new supply to start effecting most markets by the second half of 2014. The graph below shows impact of new supply to occupancy and rent growth by market. Markets with current robust occupancy and rent growth will be impacted the most by the surge of new supply during the outlook period through 2017.

Graphs from Axiometrics

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