Top 5 areas for apartment growth include Charlotte, Mooresville

Two of the nation’s busiest submarkets for apartment development since 2012 are in the Charlotte area, including Uptown/South End and Mooresville.

Uptown/South End ranked first and Mooresville fifth, according to a recent report released by MPF Research in Texas. MPF researches multifamily market trends in the United States’ top 100 markets, and its clients range from developers and investment banks to government agencies and pension funds.

The report named the top 10 U.S. submarkets based on inventory growth rates since 2012, including new apartments and units under construction at the end of third quarter 2014.

During this time, 2,621 apartment units were built in uptown and South End, and 3,545 units were under construction in third quarter 2014, according to the report.

“The business fundamentals of supply-demand, rent rates, the pace of lease-up, were all very favorable,” said Ken Szymanski, executive director of the Greater Charlotte Apartment Association.

Mooresville’s inventory grew 44.8 percent, adding 759 apartment units since 2012 and bringing the total number of units up to 3,661. There were 541 units under construction in Mooresville in third quarter 2014.

Second on the list was the North San Jose/Milpitas, Calif. submarket, where the inventory growth was  15.3 percentage points lower than Uptown/South End’s 81.9 percent growth. Franklin/Williamson County, Tenn. came in third with an inventory growth of 48.1 percent.

Szymanski said that much like cities in Texas, which had four submarkets on MPF’s list, Charlotte is making a name for itself as a desirable place to live.

“The word gets out that that’s the place to locate to,” he said. “People say don’t live here, live there,” which he said has an effect on cities’ ability to growth.

But at an average rent rate of more than $1,300 a month, the Uptown/South End submarket is attracting a certain kind of city dweller.

Paul Hendershot, director of research at the Charlotte Chamber of Commerce, said young, educated workers are largely responsible for the continued apartment growth in Uptown/South End, which, despite such rapid apartment development, still had an occupancy rate of greater than 96 percent as of third quarter 2014.

He said the median age of residents in uptown is 30.5, and nearly 67 percent of those who live there have at least bachelor’s degree. The median age of residents in the rest of the Charlotte region is 36.1, and about 30 percent of those people at least a bachelor’s degree.

Hendershot referred to those being drawn to Charlotte’s uptown as the “young, affluent and educated.”

Of Charlotte’s 26,000 added jobs in 2014, more than 11,000 were in professional and business services, and those companies tend to pay higher wages and locate in urban settings, according to Hendershot.

MPF also reported that the median household income was $63,135 for the Uptown/South End submarket, which Szymanski said is “what you need to afford those $1,400 rents.”

MPF attributes Uptown/South End’s growth to the completion of the Lynx Blue Line, which carries passengers from the southern tip of the Charlotte city limits through South End into uptown. The Lynx Blue Line Extension, which will run from 7^th Street to UNC Charlotte, is expected to be completed by 2016.

Asked whether the apartment boom will remain strong, Szymanski said: “So then the next question is, ‘How deep is that pool?’”

“It’s not unlimited, but it is deeper than it historically has been.”