Notes from Charlotte Multifamily Forecast Breakfast

Our friends at the Greater Charlotte Apartment Association hosted their annual industry forecast breakfast on January 26, and it generated some great coverage in the Charlotte Business Journal. Here’s an excerpt:

The general sentiment among panelists was that Charlotte’s multifamily market is dropping off from 2015, when it hit an all-time high, but the current pace of growth is more in line with the national rate of growth and historic norms. And, because of strong population migration and demographic shifts, demand for apartments will be sustained over the long term, especially as members of the generation after millennials graduate from college and land their first jobs.

Charlotte continues to be well-positioned with steady job growth, though Porter cautioned that our housing market — for-sale or rental — is so reliant on corporate relocations that stalled or canceled relocations as a result of state law House Bill 2 will eventually have a meaningful impact if it’s not resolved…

  • Homeownership is expected to pick up, but younger demographics won’t abandon renting altogether. In fact, as Olsen pointed out, the for-sale housing market at price points affordable for first-home homebuyers is very competitive. As a result, many younger populations — who are already delaying homeownership — will likely end up renting for longer, until they can save up to spend more on a house or until the for-sale market offers more affordable options. “Even if I hit those major life events as a millennial and want to buy a home, I have incredible barriers,” Olsen said. “If I’m a first-time homebuyer, there’s even less for me. This inventory constraint (means) the housing market ins’t friendly to the first-time homebuyer, putting pressure on the rental market. It goes to show how much extra room we have in housing, both for-sale and rental.”
  • Rental rate is growing faster than median income for the renting population. Amon said the average median household income for Charlotte’s renting population is $36,500 — with current rental rates, apartment dwellers are putting an average of 34% of their income toward rent every month. That in itself isn’t alarming but, Amon noted, that rate has increased dramatically in the past few years, meaning rental growth is outpacing wage growth for many renters.
  • When designing new apartment communities, stay flexible and think about generational needs. Zella led a presentation about the latest in multifamily unit and community design — what renters today and in the next few years are seeking and how to design a property to maximize those desires. Staying on top of technology and “going green” when possible are known to most, but Zella also advised incorporating unique unit features (such as a wine cooler in the kitchen or a built-in valet bench in the entryway) and keeping color palettes neutral and design flexible — after all, trends are changing more rapidly than ever. “We have the broadest array of ethnicities and generations vying to live in the same spaces,” Zella said. “Having the broadest generational appeal without being generic provides challenges but a great opportunity.” Boomers are seeking social spaces and pet amenities (much like their younger counterparts), while those in Generation X value design, convenience and healthy living. Millennials, many of whom work remotely or from home, are looking for spaces for productivity, so Zella encouraged developers to think about adding micro-offices or smart conference rooms in clubhouses.