CHARLOTTE Accelerating Success
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Research & Forecast Report CHARLOTTE Accelerating success. Q3 2016 | Multifamily Source: AXIOMetrics. RCA, CoStar Market Survey Results and Forecasts Sequential Month Annual 4Q15 1Q16 2Q16 3Q16 Sep-16 2014 2015 2016F 2017F 2018F 2019F 2020F Effective Rent Per Unit $993 $1,000 $1,027 $1,041 $1,045 $929 $979 $1,026 $1,056 $1,091 $1,136 $1,171 Per Sq. Ft $1.03 $1.04 $1.06 $1.08 $1.08 $0.96 $1.01 $1.06 $1.09 $1.13 $1.18 $1.21 Effective Rent Growth - Annually 5.5% 6.0% 4.8% 4.0% 3.5% 3.4% 5.4% 4.8% 3.0% 3.2% 4.1% 3.1% Effective Rent Growth - Quarterly -0.8% 0.7% 2.7% 1.4% Occupancy Rate 95.6% 95.2% 95.9% 95.8% 95.7% 94.8% 95.4% 95.6% 94.8% 95.2% 95.6% 95.0% Occupancy Change - Annually 0.7% 0.5% 0.5% 0.0% -0.1% 0.1% 0.6% 0.2% -0.8% 0.3% 0.4% -0.6% Occupancy Change - Quarterly -0.2% -0.3% 0.7% -0.1% Economic Concessions Concession Value $-4.56 $-5.71 $-3.98 $-3.92 $-4.50 $-5.15 $-4.32 As a % of Asking Rent -0.5% -0.6% -0.4% -0.4% -0.4% -0.6% -0.4% SUPPLY AND DEMAND According to the Bureau of Labor Statistics, job growth in Charlotte-Concord-Gastonia, NC-SC Metro Area was 2.6% in August 2016, reflecting 28,600 jobs added during a 12-month period. The metro job growth figure was above the national number of 1.7%. Axiometrics forecasts Charlotte-Concord-Gastonia, NC-SC Metro Area’s job growth to be 2.2% in 2017, with 25,291 jobs added. Job growth is expected to average 2.0% from 2018 to 2020, with an average of 23,458 jobs added each year. On the supply side, permits for 7,023 multifamily units were issued in the 12 months ending in August 2016, up 162 units from the prior year’s sum. In terms of total residential housing, 19,712 units were permitted in the 12 months ending August 2016, an increase of 922 units from the prior year’s total. Market Employment and Permitting Annual August-16 Annual Forecast 2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F Employment (000s) 1,028.6 1,065.6 1,104.6 1,133.1 144,424.0 1,131.5 1,156.8 1,177.7 1,201.2 1,227.1 Job Gain (000s) 25.3 37.1 38.9 28.6 2,451.0 26.9 25.3 21.0 23.5 25.9 Job Growth (%) 2.5% 3.6% 3.7% 2.6% 1.7% 2.4% 2.2% 1.8% 2.0% 2.2% Total Residential Permitting 16,139 17,812 18,790 17,404 1,056,185 18,373 20,564 22,045 24,750 21,085 Relative Change 23.1% 10.4% 5.5% 1.9% 2.3% -2.2% 11.9% 7.2% 12.3% -14.8% Single Family Units Permitted 10,378 11,157 11,742 11,352 658,713 Relative Change 37.3% 7.5% 5.2% 8.3% 9.1% Multifamily Units Permitted 5,590 6,510 6,861 6,022 368,231 Relative Change 4.2% 16.5% 5.4% -5.4% -8.2% Multifamily as a % of Total 34.6% 36.5% 36.5% 34.6% 34.9% Demand/Supply Ratio Job Gain / Total Residential Units Permitted 1.9 2.3 2.2 1.7 2.4 1.4 1.4 1.0 1.1 1.0 Job Gain / Single Family Units Permitted 3.3 3.6 3.5 2.7 4.1 Job Gain / Multifamily Units Permitted 4.7 6.6 6.0 4.5 6.1 Multifamily Absorption and Supply Annual 3Q16 Annual Forecast 2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F Total Units Absorbed 4,502 6,169 6,950 8,787 274,353 9,159 5,367 5,759 4,024 3,409 New Supply 4,825 5,772 6,249 9,542 367,859 9,904 7,138 4,718 3,826 5,196 Inventory Growth 2.3% 3.4% 4.1% 4.8% 1.4% 5.4% 4.8% 3.1% 2.3% 2.4% COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 2 IDENTIFIED SUPPLY As of October 9, 2016, Axiometrics has identified 8,903 apartment units scheduled for delivery in 2016, of which, 7,083 have been delivered. As a comparison, there were 5,465 apartment units delivered in 2015. Properties delivered to the market in the last 12 months have achieved an average asking rent of $1,416 per unit, or $1.53 per square foot. Effective rent has averaged $1,346, or $1.46 per square foot, resulting in an average concession value of $-69.82. As a comparison, existing properties in the market had an average asking rent of $1,045 per unit ($1.08 per square foot) and an average effective rent of $1,041 per unit, or $1.08 per square foot, in 3Q16. Concessions for existing properties averaged $-3.92. Submarket Delivery Schedule Pipeline Delivery Schedule Pipeline Lease Up Trend Units Absorbed Asking Rent Effective Rent Top Submarkets 2014 2015 2016 Total Totals PPM Per Unit PSF Per Unit PSF Fairview North 327 507 1,080 1,914 414 7 $1,661 $1.94 $1,541 $1.80 Harris Blvd/Mallard Creek Church Rd 497 414 968 1,879 681 17 $1,162 $1.16 $1,143 $1.14 Northwest Charlotte 743 499 986 2,228 421 23 $1,196 $1.21 $1,117 $1.13 Rock Hill 166 792 1,197 2,155 499 12 $1,173 $1.05 $1,158 $1.04 West - Charlotte Airport 828 1,084 899 2,811 646 16 $1,490 $1.75 $1,406 $1.65 Other 3,137 2,169 3,773 9,079 2,741 12 $1,460 $1.59 $1,383 $1.51 Charlotte-Concord-Gastonia, NC-SC 5,698 5,465 8,903 20,066 5,402 12 $1,420 $1.54 $1,348 $1.46 *Based on 2016 deliveries *Trend based on a trailing 12 month period “We were extremely pleased with the East Region team and its ability to attract an incredible amount of interest in our 3 assets. The number of offers received and the end results exceeded our expectations. They have a talented group who was a pleasure to work with. Their performance stands out against any of the groups we work with nationally.” Nels Billsten, Vice President | CORE Realty Holding Management COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 3 PIPELINE MAP GREATER CHARLOTTE 47 50 17 8 39 93 1 65 64 85 25 4 67 90 34 69 27 Downtown Charlotte 88 9 35 52 75 42 15 18 55 80 23 11 59 66 60 13 96 72 16 41 38 30 97 82 Key 51 56 95 28 92 Lease-Up 29 63 87 6 5 31 53 Under Construction Proposed DOWNTOWN CHARLOTTE 32 24 74 84 26 79 36 7 10 43 68 21 40 44 61 89 57 73 20 33 54 22 77 49 37 94 76 91 46 14 12 3 58 83 70 45 19 71 62 2 48 86 81 78 COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 4 PIPELINE DETAIL # Name Status Owner Address Market Units Lease Up 1 Ardmore King's Grant Lease Up Ardmore Residential 9015 Kings Grant Dr Mallard Creek-Withrow 294 Dow 2 Berkshire Dilworth Lease Up Berkshire Group 1351 E Morehead St Dilworth 296 3 Camden Gallery Lease Up Camden Property Trust 1750 Camden Rd Wilmore 323 4 University House BLVD Lease Up Canada Pension Plan Investment 9825 University City Blvd Harris-Houston 300 Board 5 Apartments at Brayden Lease Up Charter Properties, Inc. 1027 Aubrey Ln Outlying York County 270 6 Solis Waverly Lease Up Childress Klein Properties 6101 Ardrey Kell Rd Providence Estates East 267 7 Cedar Flats Lease Up Delray Ventures, LLC 225 N Cedar St Fourth Ward 82 8 Legacy Concord - Phase I Lease Up Goldberg Companies, Inc. 5020 Avent Dr NW Cabarrus Country Club 187 9 M Station Lease Up Goode Properties 6215 Forest Way Dr East Forest 260 10 SkyHouse Uptown Lease Up Grubb Properties 640 N Church St Fourth Ward 336 11 Allure Lease Up JLB Partners, LP 5720 Carnegie Blvd Barclay Downs 350 12 Midtown 205 Lease Up Lennar Multifamily Investors LLC 205 S Kings Dr Cherry 261 13 The Lofts at Charleston Row - Lease Up New Forum, Inc. 2025 Ayrsley Town Blvd Outer South Charlotte 132 Phase II 14 The Village at Commonwealth Lease Up Northwood Investors LLC 2426 McClintock Rd Commonwealth 196 Phase II 15 5115 Park Place Lease Up Pollack Shores Real Estate Group 5115 Park Rd Madison Park 273 16 Fountains Matthews Lease Up Proffitt Dixon Partners 10624 Parrish St Outer East Charlotte 258 17 Silver Collection at The Park Lease Up Silver Companies 13816 Boren St Outer Huntersville/Cornel 120 18 Encore Southpark Lease Up Simpson Property Group 6205 Morrison Blvd Barclay Downs 280 19 Solis Dilworth Lease Up Terwilliger Pappas 1010 Kenilworth Ave Dilworth 183 20 Loft 135 Lease Up The NRP Group, LLC - Property 135 W Morehead St Third Ward 298 Management 21 Circa Uptown Lease Up The Prudential Insurance 360 S Graham St Third Ward 243 Company of America 22 One 305 Central Lease Up TriBridge Residential 1305 Central Ave Plaza Midwood 247 23 Crescent SouthPark Lease Up UBS Realty Investors LLC 5725 Carnegie Blvd Barclay Downs 321 24 The Mercury NoDa Lease Up Woodfield Investments 3310 N Davidson St North Charlotte 241 25 Woodfield Northlake Lease Up Woodfield Investments 8524 Mason Andrew Way Northlake 310 Units 6,328 Under Construction 26 The Lofts at NC Music Factory Under Construction ARK Group 630 Music Factory Blvd Lockwood 205 27 The Residence at Tailrace Under Construction Arnold Companies 1001 Marina Village Dr Outlying Gaston County 192 Marina 28 Beckett Farms Under Construction Beckett Farms Apartments LLC 645 Gold Hill Rd Outlying York County 280 29 Millcrest Park - Phase II Under Construction Blue Ridge Companies 208 Sedgewick Dr Outlying York County 100 30 Copus 1 Indian Trail Under Construction Bonterra Builders, LLC 1021 Glenn Valley Ln Union County 204 31 Solis Waverly Phase II Under Construction Childress Klein Properties 6101 Ardrey Kell Rd Providence Estates East 108 32 Crescent NoDa Under Construction Crescent Communities, LLC 424 E 36th St North Charlotte 344 33 Crescent Stonewall Station Under Construction Crescent Communities, LLC 400 E Stonewall St Second Ward 459 34 Sovereign at Belgate Under Construction Davis Development 8075 Ikea Blvd Mineral Springs 266 35 Solis Berewick Under Construction Dixie River Land Company, LLC 4913 Dixie River Rd Dixie-Berryhill 275 36 1010 West Trade Under Construction Dominion Realty Partners, LLC W Trade & N Sycamore St Fourth Ward 297 37 Midwood Station Under Construction DPJ Residential 2007 Central Ave Plaza Midwood 97 38 District South Under Construction Flournoy Companies 12600 District South Dr Ballantyne 397 39 Legacy Concord - Phase II Under Construction Goldberg Companies, Inc.