Charlotte Apartment Building Boom and How It's a Rerun of the 70s

[Jordan T.]

There was an awesome article in the Charlotte Observer (see the link below) about the current building boom in Charlotte and how it compares to the last massive building period in the early 1970's - including a discussion of some of the complexes that were built then and how they look today.

http://www.charlotteobserver.com/news/local/articl...

Takeaways:

- Trendy apartments go out of fashion, and will offer frequent opportunities for renovation.

- Despite falling from a class A  to class C level of community, the rent growth over the past 45 years in these complexes was 3% per year on average.

- Today's B and C class apartment complexes generally started as class A apartments decades ago - that's where the best returns are for developers.

- Unit mix is important - having most or all 1 bedroom units limits the customer base and increases turnover.

- Real estate is forgiving - as long as you keep vacancy down and don't let deferred maintenance pile up, the properties will do OK.  Though the best returns obviously come from keeping the unit conditions fresh and modern.

[Dan Handford]

@Jordan T. I read this article earlier this week and posted in on LinkedIn. Great takeaways. I am in the Charlotte market too.

@Hadar Orkibi The Charlotte multifamily market is terrible. Stay away. --- Just kidding. It is a very hot, growing market right now. Here are 10 reasons why we are investing in Charlotte and why our investors are looking to buy apartments in Charlotte:

1. In December 2017, Business Insider ranked Charlotte as the #1 City in America for Millennial Population Growth and Forbes listed Charlotte as the #7 Best Places for Business and Careers. Apartment rent grew 6% in 2017 and is projected to continue to grow 2-3% more in 2018 due to continued population growth and strong demand.

2. Charlotte is a financial center hub as it is ranked the third largest financial center in the US right behind New York and San Francisco. It hosts the Bank of America headquarters and has the largest employment base for Wells Fargo. According to FINRA, there are more than 10,000 licensed brokers and investment advisors in Charlotte.

3. Logistics and distribution is one of Charlotte’s largest industries as well. Over 53% of the US population lives within 650 miles of Charlotte. More than 100,000 people work in transportation and logistics related occupations and the industry is projected to grow 3% annually through 2022.

4. Many international businesses are investing in Charlotte as the area employs over 66,000 people from 1,018 internationally owned firms representing 45 countries.

5. Charlotte boasts a stable 3.3% average annual growth rate in employment since 2012.

6. CBRE ranked Charlotte the #1 Tech Momentum Market for tech-related job growth between 2011-2016. Technology startup companies are coming to Charlotte as well as renowned companies such as Microsoft, HP, and Cisco.

7. Headquarters for multiple Fortune 500 companies including Bank of America, Lowe’s, Duke Energy, NUCOR, Sonic Automotive, and Sealed Air.

8. The corporate income tax rate is only 3% which is one of the lowest in the country. Ranked #3 by Inc Magazine as the Top Overall City to Start A Business and ranked #2 with the highest average growth in number of small businesses in the country.

9. Charlotte is home to NFL’s Carolina Panthers, NBA’s Charlotte Hornets, NASCAR, AAA baseball’s Charlotte Knights, AHL’s Charlotte Hounds, and USL PRO soccer team – Charlotte Independence. The city hosted the 99th PGA Championship in 2017 and will host the NBA All-Star Game in 2019.

10. The unemployment rate is 4.5%, with a job growth of 3.5%. The future job growth over the next 10 years is predicted to be 42.49% which is 4.5% higher than the national job growth rate.

Any questions?