Charlotte

Charlotte is a fast-expanding market. The year-over-year rent growth is higher than the national average, with current rents in Charlotte averaging around $1,560 a month. Rents are relatively affordable compared to the other major metropolitan cities of the south. They are providing Charlotte with a significant appeal to post-college talent, making this an attractive market for investors. As city planners start to take a more conservative approach to rezoning to limit the stress on the current infrastructure, investors can expect to see an increase in demand for current inventory.

Current vacancy rates have increased to 8.8% due to new units becoming available as the demand started to slow at the end of 2022. Much of the deliveries in 2022 are high-end units leading to a higher vacancy rate, but demand remains higher than midrange units. The Midrange counterparts have a lower vacancy rate due to limited inventory. In comparison, the lower-cost units have seen negative absorption.

Investors have continued to bring in capital despite the increasing interest rates. The focus is on the high-end units compressing cap rates as low as 4.1%. There are plenty of opportunities to take on low-cost units, renovate to a higher-end product, and take advantage of the compressed cap rates.