July 30, 2025

Sustained Multifamily Demand in Charlotte Keeps Pace with Elevated Deliveries

Q2 2025

Operating conditions in the Charlotte multifamily market are continuing to stabilize as flat rental trends over the past two years have spurred heightened demand and declining vacancy conditions. For the first time since the fourth quarter of 2021, the year-over-year vacancy rate declined. Strong demand is driving the recent vacancy improvement, with absorption hitting seasonal highs in each of the last two quarters. During the first half, apartments recorded net move-ins exceeding 7,700 units, outpacing the previous peak in 2021 by 15% and more than double the region’s trailing 10-year average. Vacancy has stabilized in the larger Charlotte submarkets, including South Charlotte, North Charlotte, West Charlotte, University, and East Charlotte. Rent growth in each of these submarkets was slightly negative year over year, as landlords prioritize occupancy amid elevated supply growth.

Transaction volume in the Charlotte multifamily investment market trended lower in recent months, as sales velocity was down 13% from the first quarter to the second quarter. Sales activity to this point in 2025 lags levels recorded in the same period last year by nearly 30%. Pricing rose in recent periods after bottoming in 2024. The median price during the past six months was $210,700 per unit, up 19% from last year. Despite the recent uptick, the median price to this point in the year is down 22% from peak levels recorded in 2022. Investors have acquired assets across vintages; properties built in the 1980s accounted for 40% of sales during the first half of 2025, while one-third of transactions involved assets delivered in the 2020s. Recent sales velocity has been prominent in the traditionally active submarkets, with East Charlotte and South Charlotte leading in volume so far in 2025, a trend that also held true last year.

Looking ahead

Inventory growth is projected to continue, with annual completions slated to roughly match the peak levels recorded last year. Trends recorded during the first half of the year will likely continue in the coming months, with rents forecast to remain within current ranges and strong absorption keeping vacancy increases suppressed. Vacancy may inch higher through the end of the year due to continued inventory expansion, but the rate will likely close the year below levels recorded at the end of 2024. The LoSo-Lower South End submarket is positioned for strong performance in the coming months. Since early 2023, apartment inventory has nearly doubled in this submarket. The development pipeline contracted sharply in recent months, while the vacancy rate has fallen by 140 basis points year over year. Vacancy is expected to remain stable in the near term, with rents projected to rise in the years ahead.

Sales velocity in the Charlotte multifamily market is expected to accelerate in the coming months, though total transaction volume for the full year will likely trail 2024 levels. Newer builds should continue to represent a significant share of sales through year end, driven by rapid supply growth and record-high demand for top-tier units over the past 18 months. The LoSo-Lower South End submarket is poised for increased sales activity in the coming years, supported by improving fundamentals and a slowing pace of new inventory. Since 2020, more than a dozen Class A properties have come online in this area, but only a few have sold. Strong demand and rapid lease-ups in the Lower South End signal promising investment potential. Meanwhile, traditional investment strongholds like South Charlotte, East Charlotte, and University submarkets are expected to remain primary drivers of sales in the near term.