CHARLOTTE Accelerating Success
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Research & Forecast Report CHARLOTTE Accelerating success. Q4 2017 | Multifamily Source: AXIOMetrics. RCA, CoStar Market Survey Results and Forecasts Sequential Month Annual 1Q17 2Q17 3Q17 4Q17 Dec-17 2015 2016 2017 2018F 2019F 2020F 2021F Effective Rent Per Unit $1,039 $1,063 $1,071 $1,053 $1,054 $987 $1,032 $1,056 $1,083 $1,123 $1,157 $1,183 Per Sq. Ft $1.08 $1.11 $1.12 $1.10 $1.10 $1.03 $1.07 $1.10 $1.13 $1.17 $1.20 $1.23 Effective Rent Growth - Annually 3.1% 2.7% 2.1% 1.5% 1.5% 5.4% 4.6% 2.4% 2.5% 3.8% 3.0% 2.2% Effective Rent Growth - Quarterly 0.1% 2.3% 0.8% -1.7% Occupancy Rate 94.9% 95.2% 95.4% 94.8% 94.5% 95.2% 95.4% 95.1% 95.2% 95.6% 95.0% 94.4% Occupancy Change - Annually -0.2% -0.5% -0.2% -0.5% -0.4% 0.6% 0.2% -0.4% 0.2% 0.3% -0.6% -0.6% Occupancy Change - Quarterly -0.4% 0.4% 0.2% -0.7% Economic Concessions Concession Value $-6.82 $-6.36 $-4.10 $-5.19 $-7.25 $-4.32 $-5.29 As a % of Asking Rent -0.7% -0.6% -0.4% -0.5% -0.7% -0.4% -0.5% SUPPLY AND DEMAND According to the Bureau of Labor Statistics, job growth in Charlotte-Concord-Gastonia, NC-SC Metro Area was 1.7% in November 2017, reflecting 20,100 jobs added during a 12-month period. The metro job growth figure was above the national number of 1.4%. Axiometrics forecasts Charlotte-Concord-Gastonia, NC-SC Metro Area’s job growth to be 2.1% in 2018, with 25,151 jobs added. Job growth is expected to average 1.6% from 2019 to 2021, with an average of 20,068 jobs added each year. On the supply side, permits for 7,147 multifamily units were issued in the 12 months ending in November 2017, up 854 units from the prior year’s sum. In terms of total residential housing, 21,433 units were permitted in the 12 months ending November 2017, an increase of 2,080 units from the prior year’s total. Market Employment and Permitting Annual November-17 Annual Forecast 2014 2015 2016 Market National 2017 2018F 2019F 2020F 2021F Employment (000s) 1,066.2 1,108.8 1,149.5 1,195.6 148,507.0 1,177.8 1,203.0 1,227.2 1,247.3 1,263.2 Job Gain (000s) 37.2 42.6 40.7 20.1 2,114.0 28.4 25.2 24.2 20.1 15.9 Job Growth (%) 3.6% 4.0% 3.7% 1.7% 1.4% 2.5% 2.1% 2.0% 1.6% 1.3% Total Residential Permitting 17,812 18,790 19,353 19,451 1,155,517 20,575 22,045 24,750 21,085 19,226 Relative Change 10.4% 5.5% 3.0% 4.0% 6.3% 6.3% 7.1% 12.3% -14.8% -8.8% Single Family Units Permitted 11,157 11,742 12,989 13,126 756,569 Relative Change 7.5% 5.2% 10.6% 10.2% 10.2% Multifamily Units Permitted 6,510 6,861 6,293 6,235 366,148 Relative Change 16.5% 5.4% -8.3% -7.4% -1.3% Multifamily as a % of Total 36.5% 36.5% 32.5% 32.1% 31.7% Demand/Supply Ratio Job Gain / Total Residential Units Permitted 2.3 2.4 2.2 1.1 1.9 1.5 1.2 1.1 0.8 0.8 Job Gain / Single Family Units Permitted 3.6 3.8 3.5 1.7 3.1 Job Gain / Multifamily Units Permitted 6.7 6.5 5.9 3.0 5.7 Multifamily Absorption and Supply Annual 4Q17 Annual Forecast 2014 2015 2016 Market National 2017 2018F 2019F 2020F 2021F Total Units Absorbed 6,164 6,628 8,401 8,059 367,785 7,678 8,742 4,979 3,259 4,328 New Supply 5,772 5,914 9,046 8,982 365,158 8,982 8,177 4,811 5,106 5,888 Inventory Growth 3.7% 3.7% 5.4% 4.8% 1.5% 5.1% 4.4% 2.5% 2.6% 2.9% COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 2 IDENTIFIED SUPPLY As of January 15, 2018, Axiometrics has identified 7,798 apartment units scheduled for delivery in 2017, which all units have been delivered. As a comparison, there were 8,172 apartment units delivered in 2016. Properties delivered to the market in the last 12 months have achieved an average asking rent of $1,424 per unit, or $1.54 per square foot. Effective rent has averaged $1,323, or $1.43 per square foot, resulting in an average concession value of $-100.22. As a comparison, existing properties in the market had an average asking rent of $1,058 per unit ($1.10 per square foot) and an average effective rent of $1,053 per unit, or $1.10 per square foot, in 4Q17. Concessions for existing properties averaged $-5.19. Submarket Delivery Schedule Pipeline Delivery Schedule Pipeline Lease Up Trend Units Absorbed Asking Rent Effective Rent Top Submarkets 2015 2016 2017 Total Totals PPM Per Unit PSF Per Unit PSF Concord/North Concord 213 243 577 1,033 318 15 $1,376 $1.19 $1,246 $1.08 Downtown 703 625 1,278 2,606 505 7 $1,927 $2.25 $1,723 $2.01 N. Tryon St. - The Plaza 182 317 910 1,409 625 15 $1,418 $1.74 $1,343 $1.65 North Pineville 729 1,059 1,128 2,916 723 10 $1,206 $1.16 $1,172 $1.12 ROCK HILL 1,084 758 645 2,487 490 13 $1,449 $1.63 $1,373 $1.55 Other 2,470 5,170 3,260 10,900 3,251 11 $1,375 $1.45 $1,280 $1.35 Charlotte-Concord-Gastonia, NC-SC 5,381 8,172 7,798 21,351 5,912 11 $1,430 $1.54 $1,333 $1.44 *Based on 2017 deliveries *Trend based on a trailing 12 month period COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 3 RECENT SALES Date Property Name Address City Units Year Built Price in $ $/Units Dec-17 Enclave at Bailes Ridge 1004 Bailes Ridge Ave Lancaster 246 2014 44,200,000 179,675 Nov-17 Aspen Peak 8625 Winter Oaks Ln Charlotte 384 1985 49,650,000 129,297 Nov-17 Willow Glen 211 Garden Way Rock Hill 96 1970 4,600,000 47,917 Nov-17 Fields at Patriot Parkway 709 Patriot Pkwy Rock Hill 106 1994 10,525,000 99,292 Oct-17 Tryon Park at Rivergate 12620 Toscana Way Charlotte 202 2014 32,724,000 162,000 Oct-17 Legacy Grand at Concord 1940 Trinity Church Rd Kannapolis 240 2009 32,900,000 137,083 Oct-17 The Meadows at Russell 501 Russell St Statesville 100 1976 4,500,000 45,000 Oct-17 Country Club Arms 1755 Cedar Post Ln Rock Hill 80 1974 4,000,000 50,000 Oct-17 Biscayne Apartments 3407 Biscayne Dr Charlotte 54 1993 4,114,999 76,204 Oct-17 Briar Creek Apartments 1419-1431 Briar Creek Rd Charlotte 66 1995 5,885,000 89,167 Oct-17 Highland Park at Northlake 7116 Finn Hall Ave Charlotte 240 2014 35,625,000 148,438 Oct-17 Hunters Pointe Apartments 1841-B Prospect Dr Charlotte 386 1974 22,100,000 57,254 Oct-17 Rosecroft Apartments 7204 Rose Terrace Ct Charlotte 60 2004 3,415,000 56,917 Oct-17 The Arboretum 7700 Arboretum Dr Charlotte 277 1989 46,750,000 168,773 Sep-17 Wren Northlake 8524 Mason Andrew Wy Charlotte 310 2016 57,250,000 184,677 Sep-17 Northwoods Townhomes 2600 Celanese Rd Rock Hill 76 1975 5,315,000 69,934 Sep-17 Brittany Woods 1636 Chippendale Rd Charlotte 84 1986 4,250,000 50,595 Sep-17 Cardinal Pointe 1711 Wallick Ln Rock Hill 64 2003 3,600,000 56,250 Aug-17 Berkeley Place 500 Solano Dr Charlotte 368 2001 52,450,000 142,527 Aug-17 Pavilion Village 131 Gracyn Olivia Dr Charlotte 294 2016 44,690,000 152,007 Aug-17 Stone Gate Apartments 950 Southwood Oaks Ln Charlotte 144 2000 12,650,000 87,847 Aug-17 Tower Place 100-700 And 51 Tala Dr SW Concord 128 2000 9,950,000 77,734 Aug-17 Park Lane 1610-1641 Waybridge Ln Charlotte 60 1998 6,100,000 101,667 Aug-17 Grand Terraces 6000 Regal Estate Ln Charlotte 240 1999 24,000,000 100,000 WE CAN HELP As an investor in multifamily properties, you need a firm that provides experience, broad reach and the ability to market an asset no matter how challenging the economic environment. You need a team that specializes in your market you need The East Region Multifamily Advisory Group. Colliers International has one of the largest and most experienced teams in the industry, strategically located in key markets throughout North America. Our combination of market dominance, expertise, and singular focus, make us uniquely successful in helping our clients achieve their disposition objectives. How are we able to bring together the skills and tools necessary to complete challenging assignments? Our East Region Multifamily Advisory Group is connected by purpose and focus. Our team is dedicated to sharing information on market opportunities, capital sources and buyers/sellers to achieve the best results for our clients.