The state of Charlotte's development market in 2024

• A record number of apartments are opening, and the need for office space post-pandemic remains low. Developers will hesitate to start construction projects until all these new buildings fill up.

State of play: 2024 was a slow year for groundbreaking as developers steered clear of high interest rates and cautiously watched inflation.

• In 2025 and 2026, McShane predicts that a few developments that started in 2023 or earlier will be "delivered" (development talk for when a project is completed).

Yes, but: The market is expected to swing back up in the coming year. McShane, who is based in Charlotte, expects projects in pre-development start to "pencil" as interest rates fall.

What they're saying: Charlotte's Northwood Ravin is one developer that continues to build multifamily projects despite economic uncertainty. It's starting construction on a residential tower in midtown and making progress on boutique apartments in South End.

• President and CEO David Ravin calls this a "calculated risk." He expects Northwood Ravin will reap the benefits of being one of the few developers to offer the latest and greatest products on the market once those are complete.
• "We're going to deliver into that perfect window where the supply is nonexistent and demand should continue to be escalating," Ravin says.

Zoom out: Office construction is essentially on hold. It's unlikely for a new office project to start unless tenants commit to buildings, McShane says.

• Nearly a quarter of the Charlotte metro's offices are vacant, according to commercial real estate firm CBRE.
• The Labor Department reported slow job creation through the fall, although November's report was more optimistic.
• "At the end of the day, job growth is what's going to drive demand for office space, for apartment space, for retail space, for industrial space, for everything," McShane says.
• Plus, more than one in five Charlotte employees works from home, according to one recent report, making the city one of the metros with the greatest percentage of remote workers nationwide.

Zoom in: Carson & Tryon, a long-planned tower where the Enterprise Rent-A-Car is in South End, could be the next major office project to break ground.

• Charlotte developer Crescent Communities hasn't confirmed a timeline but says interest in pre-leasing is growing.
• "Fortunately, as the capital markets seem to be improving, and this momentum picks up, I think we're in a really good position for next year," Crescent's Sagar Rathie tells Axios.

• Rathie says companies are searching for workplaces that motivate people to return to the office. Some tenants who downsized during the pandemic have experienced growth, Rathies says, and are now "bursting at the seams."

Between the lines: Boston developer The Fallon Company is investing in areas like Charlotte and Nashville. Most recently it broke ground on 234 Cotswold apartments. It hopes to start this year on the first 329 apartments at Centre South, a larger mixed-use project in Dilworth that's been stalled. The developer is searching for an anchor tenant for the planned office.

• CEO Michael Fallon says the market has bottomed out and will now start to come back up.
• "It's probably going to be pretty slow, but for certain sectors and for certain geographies, it's going to be fast," Fallon says.
• Those areas include Charlotte, he adds, because people are still migrating to the Sun Belt since the pandemic and it has a temperate climate. The latter is becoming more attractive as insurance rates rise.

What's next: In the coming year, expect apartments to fill up and office owners to celebrate new companies moving in. At that point, demand will again begin to outpace supply.

• Rents may rise again, which will motivate developers to build again.
• But the impact of all that may not be apparent until the latter part of the year, or maybe into 2026.