One of the most visible signs of Charlotte’s tremendous growth over the past decade has been the thousands of new apartments springing up. It has seemed like an endless stream of construction stretching from Ballantyne to Lake Norman. But that pace appears to be slowing. For more, we turn now to Tony Mecia of the Charlotte Ledger business newsletter for our segment, "Biz Worthy".
Marshall Terry: So, Tony, what is happening here? Why are things slowing down?
Tony: Mecia: Well, Marshall, it's sort of an extension of what's going on in the residential real estate market and on single-family homes. I mean, I think we all know the housing market is slowing because interest rates are rising. The same thing is happening on the commercial side.
With interest rates higher, developers tell me that a lot of these deals are slowing down. They're getting more expensive. At the same time, construction costs are also high, and they're not certain as they look out into the future that they're going to be able to pass those along in the form of higher rents. So that's slowing down some of these deals and construction timelines for building new apartment complexes, which does seem a little odd.
But if people have moved here recently, you know, it seems like there's a never-ending cycle of apartment complexes being built. But if you look at the numbers, the numbers in the fourth quarter of this year, four starts on apartments and townhomes in the Charlotte region. It's about one-quarter of what it was in the same period in 2021.
Terry: But people are still moving here. Right. And there's already a housing shortage in Charlotte. So what does this mean for all that?
Mecia: Well, that's a very good question. There are still apartments being built. The ones that have started construction are still under construction. There are new apartment complexes that are going to start construction. It hasn't ground to zero. But the effect on rents, I think it doesn't take much to imagine that if you're not building as many right now, that in two years you're going to have fewer apartments that are ready. And so if the region keeps growing and your supply is decreasing, that would indicate that there would be an increase in rents in the future.
Now, I will say there are currently a lot of apartment complexes under construction. I think we reported in July that there are about 20,000 apartments in the Charlotte region under construction. That will lead, when those are finished, to a lot coming on the market that could move rents downwards.
Terry: Now, one of those complexes that is being built right now is one that is a new kind to Charlotte. It won't have parking for its residents. Tony, where is this complex and what's behind that decision to not have parking?
Mecia: You might remember we talked about this a couple of years ago. This was the subject of a rezoning hearing a couple of years ago. Grubb Properties is planning a 104 unit apartment development that it's calling CYKEL Apartments. C-y-k-e-l apartments. It's in the neighborhood that's near Blue Blaze Brewing. It will only have six parking places. And so residents are going to have to sign a pledge that they will not own a car. And the thinking is that it's close to a greenway. It's not that far from uptown that people can get around by walking and biking.
Terry: And are we likely to see more of these car-free apartment complexes?
Mecia: I think so. I mean, if something does well in a market, it tends to be replicated. There is another complex in the Optimist Park area called the Joinery, which is a little bit different. There is no dedicated parking for residents. They can choose to have their cars off site. That's been up and running for a number of months. So I think, you know, a lot of people are hoping we're going to see more of these, you know, that don't require dependence on an automobile.
Terry: All right. Well, shifting gears now to alcohol. The Ledger reports that sales at Mecklenburg ABC stores are surging. Tony, we have been talking about a liquor shortage earlier this year. So is that over now?
Mecia: I talked to Keva Walton, who's the CEO of the Mecklenburg County ABC Board. He said that the shortage problems are not completely over, but that they have more bottles on the shelves than they did at this time last year. December is traditionally a big time for liquor purchases with the holidays. But, you know, in the end of 2021, they were having some problems because of supply chain disruptions and increased demand, and problems with new software ordering system. You know, that they were having trouble keeping those bottles on the shelves. He said it's gotten a lot better. And sales have surged by double-digit numbers for the last several months.
Terry: Finally, you report that Charlotte is a top market on the app Sniffspot, which connects dog owners looking for a place to let their pets play off leash to people with a yard. So how does that work? Do you just rent the yard by the hour?
Mecia: That's correct. There are a lot of things in this sharing economy that we have. You know, you got to think about Airbnb that connects people who want to rent a house up for a short-term basis with the owner of the house. You think of Uber, which connects people who want rides. This is an app that connects dog owners with people who have big backyards where dogs can roam.
The company behind this app says that in cities, a lot of times you have people with big dogs in small apartments and that they need places where they can run, and they might not be the most sociable. Maybe they're a little hostile to other dogs. They need private places for that. This app connects people to places where those dogs can run and have a good time. There are 100 listings within the I-485 loop in Charlotte. There are listings that rent the spaces for between $4 and $18 per hour.
Terry: Well, what is going to be next in the rent by the hour or a rent by the night app landscape, I wonder.
Mecia: That's a very good question. If I, if we knew that, we'd probably both be millionaires.
Terry: Probably. All right, Tony. Well, thank you for that.
Mecia: Thanks, Marshall.
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