Local developers were bullish on the future of Charlotte’s apartment market at Bisnow’s Tuesday morning panel discussion on multifamily communities in Charlotte.
Dubbed “New Development and Rezoning for the Future: Charlotte’s Multifamily Boom,” the breakfast at The Westin had more than 200 attendees.
Panelists gave their views on topics that included trends in multifamily development, financing, and real estate investment trust’s effects on the industry.
The panelists were Grey Poole, partner at Selwyn Property Group; Debra Campbell, assistant Charlotte city manager and former Charlotte-Mecklenburg planning director; Steve McClure, president of Spectrum Residential; Ben Collins, vice president of Crescent Communities; Phil Payne, chief executive of Ginkgo Residential; John Porter, partner at Charter Properties; Tom Barker, division executive at Terwilliger Pappas; and Zac Vuncannon, director at USAA Real Estate Co.
Asked where developers were investing in new properties, Campbell said Charlotte is fortunate to have multifamily projects all over the city and that development is consistent with the city’s growth strategy. She cited apartment communities in Ballantyne and SouthPark, as well as those in corridors with major thoroughfares.
An example of new development along the corridors is Fountains Southend, a 208-unit community that was completed last year. The Class A urban transit-oriented property is near the New Bern station on Charlotte’s light rail system, and is about three miles from uptown. Fountains Southend has one, two and three bedroom apartments with upscale amenities including private balconies, stainless steel appliances, granite countertops and wood-style flooring.
Campbell went on to say that the city sees an average density of 10 to 12 units per acre in the outskirts of the city, and 20 to 40 units per acre in the corridors.
“Citizens are concerned about density and compatibility,” she said, leading Barker to add that multifamily development’s impact on schools was also a hot topic.
The subject changed to the importance of gathering neighborhood input on a proposed project. Poole said Selwyn Property Group has face-to-face meetings along with the required
neighborhood meetings prior to rezoning.
“There is no shortage of neighborhood input in the Charlotte-Mecklenburg rezoning process,” he quipped. Barker added that City Council members were a great asset in bringing developers, community members and zoning committee members under one roof.
Said Campbell, “It is vitally important that we develop a partnership relation rather than an adversarial one.”
Asked about the length of the rezoning process, Campbell said it is designed to take four months, but can take longer depending upon necessary revisions. Poole pointed out that as much as six months’ worth of details and engineering can go into a plan even before it is submitted for rezoning.
Panelists also spoke about trends and demand in the industry. Barker cited the fact that costs are continually rising.
“You have to be realistic if you’re going to start a project nine months from now,” he said. He said two-bedroom apartments had overtaken one bedrooms in rental demand, and that developers are seeing a push for added finishes, including cabinetry, flooring and countertops. Poole said he sees an eventual migration towards for-sale housing from rentals and the subsequent building of infill town homes and condominiums.
Campbell said she sees a new trend toward building student housing, including a proposal for construction along Central Avenue.
“We’re not sure how to regulate it,” she said. “But there certainly is a big demand.”
Campbell also said that as more infill apartments are built, the city is concerned about the quality of the exteriors of multifamily development, and how they fit into the neighborhood.
“Exterior modifications make a more viable development in the long term,” she said. She urged developers to make this choice for all incomes and ages, as opposed to building something that is now trendy but will be dated as trends change.
The panelists had similar responses to a question about the prospects for continued investment flowing into the market.
“As long as the Fed holds rates low, there will be significant capital,” said Porter. McClure mentioned that he saw an “incredible influx of foreign capital” into multifamily development.
Payne had a different take on the reasons the market would stay healthy. He believes the percentage of people owning their home will decline because younger individuals want to be
mobile and rent, while more senior people “are trapped” because all their money is invested in their homes and they may look to rent. Moreover, he said, mortgages are still problematic to get. “It takes so much capital to buy and own a home,” he said.
The topic changed to real estate investment trusts and the unprecedented number of single-family homes they have bought in recent years. Collins said Charlotte hasn’t seen as much of a buying spree as other markets and that he hasn’t seen much of an impact on the multifamily sector from REITs.
McClure said rentals were winning out over homeownership. “Baby boomers are getting tired of cutting the grass,” he said, adding that demographics such as individuals getting married later in life were good for the market. Collins said renting a single-family home here is very problematic because of the lack of supply.
The event ended on a positive note regarding what’s ahead for the sector.
“There is still a huge demand in Charlotte (for apartments),” McClure said. Collins agreed. “Young people continue to want to move to Charlotte,” he said, citing the influx of retail in South End. “Charlotte is very poised for future growth.”
Bisnow is an online and event provider specializing in commercial real estate.