Luxury apartments may not be best for University Area

CHARLOTTE — Developers say the key to a successful project is taking advantage of an underserved niche in the market.

For Jim Sullivan, that niche is luxury apartments in the university area of Charlotte. And he plans to occupy that niche by building the $21.2 million, 176-unit Belle Haven apartment complex off Old Concord Road at W.T Harris Boulevard.

Sullivan, vice president of Washington, D.C.-based Fore Properties, said that there aren’t really any luxury apartments to serve young professionals in the area.

But Charles Dalton said there is a simple reason for the lack of luxury product around the university — it’s not needed.

Dalton, principal of Charlotte-based Real Data, a Charlotte-based apartment analytics firm, said the residential rental market east of Interstate 85 around the University of North Carolina at Charlotte is focused mainly on student housing, not on upwardly-mobile young professionals.

“I would say the university area has its share of Class A communities, but that market isn’t at the level that the incomes demand the highest-end luxury,” Dalton said.

But high-end luxury is what Fore Properties plans to bring to the university area. Sullivan said that Belle Haven will be a mix of one-, two- and three-bedroom apartments with an average of 1,100 square feet and an average rent of $1,040. The average rent in that submarket, according to Real Data, is $964, which Dalton said is enough of a difference to push potential tenants away.

The Belle Haven marketing campaign will target the 25-35 demographic, and the developers hope to attract people who work at the university and at Innovation Park, a large business park in the area, with features like granite countertops and stainless steel appliances. These features, Sullivan said, aren’t typical for the university market.

“We’re trying to bring the features of downtown that aren’t available in that submarket,” Sullivan said. “If you’re 30 years old, working at Innovation Park or at the university, you are missing a high-end product. The stuff out there is old and dated.”

But, Dalton said, Fore might have chosen the wrong location in trying to appeal to the higher-income tenants in that submarket. The east side of I-85, where Belle Haven will be, hasn’t traditionally been for the wealthy workforce, he said.

“The higher-end product is on the other side of (Interstate) 85, the (University) Research Park area,” he said. “Old Concord Road and Tryon Street and Harris Boulevard are somewhat into the student population.

“There aren’t many high-income residents in that area and, conversely, there aren’t many high-end apartments.”

One factor that both Dalton and Ken Syzmanski agree on is that the plethora of older apartment stock in the university area is one reason why there hasn’t been a lot of luxury development in that market.

Szymanski, president of the Greater Charlotte Apartment Association, said that the glut of older apartments has made it difficult for developers to come in and expect to generate high rents.

“There was so much built in the ’90s and that’s a fair amount of the product in the Harris (Boulevard) corridor,” Szymanski said. “(Developers) will look at South End, Ballantyne and mall locations, such as Northlake, and that’s what guides them in terms of growing rents.

Sullivan, though, said he knows that Fore  is setting itself apart from the rest of the market. And he’s OK with that.

“We were trying to find a niche, a product that there wasn’t much of in that market,” he said. “There were many developers in the early 2000s, and they decided to build the same old thing. We’re coming in and offering something a little different.”

In this case, though, different might not be the best thing to be, Dalton said.

“You have to provide the amenities and floor plans that will attract that renter that’s willing to pay that price,” Dalton said. “But if your rents are $100 higher than everyone else’s, that’s an uphill struggle. You’re going to really have to have something to distinguish yourself.”

Szymanski, while hesitant to say that Belle Haven would be a runaway success, wouldn’t rule out the possibility that luxury could work in northeast Charlotte.

“That company is likely taking a bet that they’ll be the first to provide luxury and that it will work, but I’m sure they’ve done their homework,” he said. “The marketplace will be the final decider.”

GUION can be reached at [email protected], (704) 817-1344 or on Twitter at @paytonguion.