Rent prices in Charlotte’s apartment market stumbled during the first months of the Covid-19 pandemic but have shown recent signs of a rebound, according to the latest report by ApartmentData.com.
Apartment rent averaged a monthly rate of $1,188 in the Charlotte metro area at the end of June, the data shows.
That rent amount is about $14 off from the start of March, right before the pandemic took hold across Charlotte and the rest of the country. But it’s up both from $1,182 in the previous month and from $1,180 at the same point a year ago.
Bruce McClenny, president of ApartmentData.com, said April and May, especially, have so far been the toughest months for local apartment operators. Those months are typically when leasing activity is at its strongest and rents increase, but the Charlotte area was operating under a stay-at-home order for much of that time.
The June report indicates the local apartment market could be moving toward more normal conditions, McClenny said.
ApartmentData.com tracks market activity across 21 submarkets it has defined for the Charlotte metro. Thirteen of those areas have seen rent drops of varying degrees from April to June. These five submarkets posted the biggest declines in rent prices during that time:
- Uptown/Bryant Park: down 5.4% to $1,538
- South End/Dilworth: down 4.7% to $1,529
- Park Road/Myers Park/SouthPark: down 3% to $1,443
- Pineville/Ballantyne/Providence: down 3% to $1,387
- Fort Mill/Rock Hill: down 2.8% to $1,074
McClenny said Charlotte follows the trend seen in other markets since the Covid-19 outbreak, in which rents are dropping the most within the priciest areas of a metro.
Another dynamic at play which could be driving rents down in more urban areas is that some short-term rental companies — those that take blocks of units to lease out for corporate housing — have gone under during the pandemic, McClenny said. He also pointed to college students leaving their apartments to go home as a contributing factor.
Areas where there are more lower-tier apartment communities, on the other hand, haven’t been as impacted by price decreases as residents there are typically renting by necessity and aren’t likely to move, McClenny said. Those who have lost their jobs have been buoyed by the additional unemployment benefits to help cover rent, he added. That extra federal financial aid is set to expire at the end of this month.
Figures run by ApartmentData.com show that eight local submarkets have experienced some kind of rent growth during the past three months. The five areas with the highest growth percentage are:
- West Charlotte/Freedom Drive/CLT Airport: up 4.5% to $833
- Druid Hills/NoDa/Hidden Valley: up 3.2% to $1,168
- Belmont/Mount Holly/Gastonia/Shelby: up 2.9% to $899
- Sheffield Park/Albemarle Road: up 2.9% to $929
- Concord/Kannapolis: up 1.8% to $1,062
The rent prices represent a blended rate based on one-, two- and three-bedroom units, and account for concessions and utility adjustments. Concessions typically include move-in and floor plan specials as well as discounts on monthly rates, such as a free month of rent.
About 30% of Charlotte apartments had some kind of rent concession attached to them at the end of June — up from 29% in the previous month. That percentage was 25% to start the year and 17% a year ago.
“They (apartment operators) respond with price changes, and concessions are the best way for them to do it,” McClenny said. “They can turn them on and turn them off really quick based upon what’s happening in the market. … The industry knows that price is going to drive traffic and interest.”
While indicators for June were more positive for the industry than in previous months of the pandemic, uncertainties remain for the future, McClenny said. Covid-19 cases, for instance, continue to rise in certain parts of the country, including the Carolinas, thwarting reopening plans.
Apartment properties under construction now would be most at risk if conditions worsen, he said. In the Charlotte area, ApartmentData.com counts 5,764 units in 24 communities currently being developed.
ApartmentData.com pulled information for its monthly report for the Charlotte metro from more than 150,000 units across 660-plus properties
Publication: Charlotte Business Journal