📢 Good morning,
Charlotte’s multifamily market is back in play, with H1 2025 sales activity returning to pre-pandemic norms and investors re-engaging as supply peaks and rents firm.
After two choppy years, national vacancy fell again in Q2 as demand outpaced deliveries, and CBRE cut but reaffirmed a positive five-year rent-growth path. Capital is rotating toward growth markets like Charlotte where the construction wave is cresting, absorption is improving, and pricing has reset 10–20% from 2021 peaks.
4,700 units delivered in Q1 2025 in Charlotte; ~10,700 more slated for 2025. Supply is cresting.
National vacancy 4.1% (Q2 2025) with YoY rent growth back positive at ~1.2%. Inflection confirmed.
Five-year U.S. apartment rent growth forecast trimmed to 2.8%/yr. Cycle slower but intact.
Starts down ~50% YoY in Charlotte through late 2024; pipeline thins beyond current deliveries.
Inventory growth ~5.9% (yr-ending Q1’26) expected as final wave delivers; then moderates.
Metric | Charlotte (local) | U.S. (context) |
|---|---|---|
Q1’25 deliveries | 4,700 units | — |
2025 adds (plan) | ~10,700 units | — |
Vacancy (Q2’25) | Improving trend* | 4.1% |
YoY rent growth (Q2’25) | ~flat to modest + | 1.2% |
*Multiple sources show improvement amid heavy supply; exact level varies by dataset. institutionalpropertyadvisors.comCBRE
Returns / Performance Trends
Capital is re-entering Sunbelt apartments as pricing resets and rent growth stabilizes. CBRE confirms national rent growth turned positive in H1 and projects a slower, durable path forward. In Charlotte, concessions are burning off and effective rents are inching up as absorption improves despite heavy deliveries. Expect underwriting to anchor on mid-5s entry cap rates with modest growth.
Lending / Capital Conditions
Multifamily remains the most financeable property type. Agencies retained capacity and spreads are tightening as macro uncertainty eases. With national vacancy easing and rent growth back above 1%, lenders are more comfortable underwriting stabilized Sunbelt assets at conservative LTVs and DSCRs.
Transaction Activity & Investor Flows
H1 activity in Charlotte is consistent with late-2010s norms as buyers return for repriced opportunities. Rolling 4-quarter sales are sizeable, and private funds dominate deal counts. Sellers of lease-up product are increasingly negotiable, creating entry points for value-add capital.
Broader Implications
Peak supply is the near-term headwind and the mid-term tailwind. RealPage expects inventory growth to top out into early 2026, then fade as starts have already collapsed. This sets up a two-stage recovery: stabilization in 2025, firmer rent growth from 2026 as new starts undershoot demand.
📦 Key Takeaways (Box Format)
Supply crest: 4,700 units hit in Q1 and ~10,700 due in 2025; pace slows beyond this wave → better rent traction in 2026.
Demand holds: U.S. vacancy down to 4.1% and rent growth 1.2% YoY in Q2 → fundamentals turned the corner.
Pipeline thinning: ~50% drop in starts YoY through late 2024 → forward supply risk easing.
Repricing done: Bid-ask tightened; rolling $3.2B multifamily sales (4-qtr) signal liquidity’s back.
Out-year setup: Inventory growth ~5.9% into early 2026 then moderates → potential cap-rate stability and NOI growth.
Institutional Lens: Focus on submarkets with tapering deliveries and proven absorption. Underwrite modest rent growth, flat to slightly compressing exit caps by 2027, and stress test at today’s debt costs. Favor stabilized, suburban garden and well-located mid-rise with manageable lease-up risk; avoid head-to-head lease-ups in the heaviest delivery corridors.
Operator’s Lens: Push renewals and workback concessions now. For lease-ups, trade a short burst of incentives for faster stabilization, then burn off. Re-underwrite pending deals at today’s debt and cap stack; many that failed in 2023 pencil now with repriced bases and improving debt terms.
Watch absorption vs. deliveries in Uptown/South End and Southwest Charlotte where supply concentration is highest.
Expect flat-to-low-single-digit rent growth in 2025, improving in 2026 as starts slump feeds through.
More private-to-private trades and select portfolio pruning into year-end as buyers target stabilized assets and distressed lease-ups.
CBRE, Q2 2025 U.S. Multifamily Figures (vacancy 4.1%, rent +1.2% YoY). CBRE, 2025 U.S. Outlook Midyear Review (five-year rent growth cut to 2.8%). IPA/Marcus & Millichap, Charlotte Multifamily 2Q25 (Q1 deliveries, 2025 adds, rent/concession notes). Marcus & Millichap, Charlotte 2Q25 Market Report (supply surge detail). RealPage Analytics, Charlotte Inventory Growth to Peak in 2025 (5.9% inventory growth into early 2026). Yardi Matrix, Charlotte Multifamily Reports 2025 (starts down ~50% YoY, investment cadence).
Sunbelt vs. U.S. Rent Growth (2020–2025)
Charlotte Multifamily Sales Volume by Half-Year (2016–2025)
