Charlotte's under-construction apartments could usher in lower rent

Driving the news: Charlotte is in the midst of one of the greatest apartment expansions in the country. That's mostly thanks to flexible, transit-oriented zoning around the light rail that allows for high-density construction.

• North Tryon, for instance, has become a row of timber towers with "leasing" banners.
• Average apartment rent is down to $1,566, compared to $1,601 last year, CoStar's director of market analytics Chuck McShane tells Axios. It's about a 2.1% drop.

By the numbers: Charlotte's apartment stock will increase by 13.2% over the next couple of years as construction finishes on 29,300 units, per CoStar data. Percentage-wise, it's the largest apartment expansion in the U.S., ahead of Austin and Miami.

• The last time Charlotte saw an across-the-board rent drop like this was after the Great Recession when people had lost their jobs and were consolidating households.

Yes, but: Rents are still about 20% higher than in 2020, McShane adds.

• "This is more of a correction of rents as that new competition comes online," he says.

What's happening: Demand for apartments spiked in 2021 and early 2022 as the population grew, as single residents sought their own spaces and as home buying slowed because of increasing interest rates.

• A projected 15,000 apartments are opening in 2024 — an all-time high for deliveries in one year, CoStar data shows.
• To compare, just 13,400 apartments opened in 2023. Pre-pandemic, between 2016 and 2021, an average of about 14,000 units came online annually.

Zoom in: In South End, about 5,900 units are underway — expanding the inventory by 50%, according to CoStar.

• Rent, currently averaging about $2,040, is down 3.3%. Plus, 36% of properties are offering concessions, like a month of free rent.
• LoSo has 2,800 units under construction — a roughly 73% addition to the existing market.

Zoom out: Nationally, regular (non-luxury) rents are rising. Charlotte, and the Triangle, are both bucking the trend.

• Nearly 11,000 new apartment units were expected in Raleigh last year.

My thought bubble: People often complain about the number of apartments going up and overlook the upside of lowering living costs for everyone.

What's next: The apartment boom could slow. Groundbreakings in 2023 were about half of 2022's numbers, McShane tells me.

• The Charlotte metro area gained 50,458 residents between 2022 and 2023, according to census figures.
• "There's really going to be a tightening of the pipeline come late 2025," McShane says. "And with that, you'll probably see a return to rent growth."