The coming apartment bust?

A lot of press releases cross my desk each day. Too many to write something about on each. But sometimes you'll get one where a sentence jumps out at you. That was the case with a release I received recently from Integra Realty Resources, which just released its mid-year report on Charlotte's commercial real estate market.

In discussing the apartment market, Integra says to expect "significant growth" to continue this year, but it will start slowing down at the end of 2014. The company "suspects it to flatten in 2015-2016 and start declining into the hypersupply market cycle," according to the release.

What would that mean for renters? Integra explains:

"It appears it will be a challenge for the Charlotte market to provide the necessary demand to absorb the amount of supply that has been added to the market. Because of the oversupply, vacancy rates will likely increase over the next few years, which in turn will keep rent growth most likely flat."

So, if Integra is correct, we could expect to see a lot more rent discounts and deals of the "one-month-free-with-one-year-lease" variety. Or, if the apartment developers are right, population growth among young single workers will keep spiraling upward so quickly that it will absorb the record-breaking pace of apartment-building we've been on.

Either way, time will tell. What do you think?

Second SkyHouse apartment tower planned in uptown Charlotte

Less than two months after developers broke ground for SkyHouse Uptown, a 24-story apartment tower going up at West 10th and North Tryon streets, plans are on the books for a second tower right next to it.

Real estate records show the second tower would go in at West 9th and North Tryon, a parcel currently occupied by the former Day's Inn motel. It would include an expansion of the parking structure planned for the original SkyHouse. The planning remains in its early stages.

The property that would house the second tower has long been one city leaders have hoped to redevelop. It is owned by the Dalton family and is being leased to Hospitality Corp. of America through the end of this year, records show. Thornton Kennedy, a spokesman for Novare, the Atlanta-based developer of the first SkyHouse project, said: "All we can say at this point is that we do have that property, which is the former Day's Inn ... under contract, and we are in (due) diligence on a possible second tower on that site."

The first Charlotte SkyHouse project was developed by Novare Group, Batson-Cook Development Co. and Grubb Properties. The $70 million project, with 336 units, marked the 11th SkyHouse tower Novare Group and Batson-Cook have handled around the Southeast. The SkyHouse concept aims to attract young urban office workers.

Charlotte developer Clay Grubb told me recently that given the growing number of apartment-loving millennials flocking to the Queen City, he could easily envision building a second SkyHouse in uptown. Grubb couldn't immediately be reached for comment on the latest SkyHouse project.

More urban apartments breaking ground beside Veterans Park

I'm starting to feel a bit like a broken record with the flood of new apartment communities cranking up these days, but here comes another one. Northwood Ravin LLC, which oversees the VUE and Catalyst apartment towers uptown, has broken ground for a $50 million, 403-unit project that will overlook Veterans Park, in the Commonwealth neighborhood. This one comes with a bit of a twist from the many other urban multifamily complexes going up. It's designed to be less dense, with 384 flats spread across a variety of two-, three- and four-story buildings. The 21-acre project will also include 17 two- and three-bedroom townhouse apartments and two for-sale single-family homes.

Morningside Village, as it's being called, will sit about a four-block walk along McClintock Road from the Harris Teeter at The Plaza and Central Avenue. It will include more green space than typical infill projects, the developers say. It will have inner courtyards, private gardens, dog parks, and even garden plots for residents. In a press release, David Ravin, president of Northwood Ravin, called the project "part of the next generation of apartment homes that will bring all the modern amenities in a convenient, urban location but will provide more living space within each apartment and the community as a whole."

The first of the apartments are expected to be completed in early spring of 2015.

Plaza-Midwood's Vyne apartments finishes second phase

Vyne on Central, a residential project that began as condos but got whacked by the housing meltdown, completes its resurrection as an apartment community this weekend. The community, located at 3220 Central Avenue, will celebrate the completion of its second phase Saturday with a 10 a.m. ribbon-cutting ceremony.

Developers unveiled plans for the project in the Plaza-Midwood neighborhood just before the recession hit. They'd conceived it as an environmentally conscious 33-unit condo project. By 2009, with the housing market decimated, its backers resorted to offering potential buyers a free overnight stay in hopes of convincing them to sign contracts. Development group 759 Ventures, which also owns Edgeline Flats in NoDa, acquired the project and converted it to rentals last year. The new phase includes 65 one- and two-bedroom apartments.  The developers say the new phase, with rents starting at just over $1,000, is one-third pre-leased.

Chris Needham, the local principal of 759 Ventures, said the group is pleased with how the project turned out, and added: "The success of the leasing shows people love living near the fun environment of Plaza-Midwood."

Charlotte rising on lists of top cities for millennials, new college grads

If you've been wondering what's up with the surge in apartment complex construction in Charlotte, particularly in and around uptown, a couple of new studies might help explain why developers have pushed apartment-building numbers locally to an all-time high.

Apartments.com is out this week with its Top 10 cities for recent college graduates, and Charlotte landed in the No. 2 spot, behind only Denver, Co. The list factored in both affordability of average rents for one-bedroom apartments, plus median income and unemployment rates. It also assessed whether a city had "a vibrant culture catering to active young professionals," according to a press release from the site.

Also out this week is Niche.com's analysis of best cities and neighborhoods for millennials. Niche.com, which grew out of the Collegeprowler.com college rating site, offers rankings and reviews of neighborhoods, schools and metro areas. Charlotte landed at No. 18 on its analysis of the 25 best cities for millennials. (Raleigh came in at No. 12).

Every time I ask a developer about the risk of an apartment bubble locally, they point to the kind of demographic trends animating both these reports. The young folks are coming in droves, the developers say, and they aren't ready to buy houses.

What do you think? Are enough young adults arriving in Charlotte to support the many new apartments going up around the city?

Apartment construction surges to all-time high in Charlotte

The newest report by multifamily research firm Real Data shows apartment construction has surged to an all-time high in Charlotte.

The new report, tracking activity in Charlotte's multifamily market over the past six months, shows 10,067 units under construction. Most of the new units are Class A properties in uptown and in neighborhoods such as the South End, SouthPark, NoDa and Elizabeth. Another 11,003 units have been proposed. Real Data's Charles Dalton says this is the most apartment development Charlotte has ever seen. The previous high came during the construction boom of 2000, when just under 8,000 units were under construction.

Officials broke ground last week for The Mint, one of the latest apartment complexes to begin construction uptown.

The city over the past five years has averaged 4,479 units under construction, so the latest figures show the multifamily development market has yet to cool down, despite concerns in some quarters that it might be getting overbuilt. The report says that as the newest units hit the market in the next year, vacancy rates that currently sit at 6.2 percent will rise to as much as 8 percent.

The average rent in Charlotte stands at $874 per month, with one-bedroom units going for about $781, two bedrooms going for $891 and three bedrooms renting for about $1029. Same-store rents are expected to grow between 2 percent to 3 percent during the next year, but Real Data says increased competition for renters could hinder that.

New luxury apartments headed to Park Road

The Stratford Apartments, located across Park Road from the Park Selwyn Terrace Shopping Center, are about to be bulldozed to make way for a 273-unit luxury apartment complex. Atlanta-based Pollack Shores Real Estate Group announced Thursday that it has bought the 6.75 acre property and plans to break ground on its new project in April. The firm said it expects delivery of the first units in the third quarter of 2015.

A Pollack Shores subsidiary bought the property Wednesday for $6.4 million, county property records show. Residents living at the Stratford Apartments, which front onto Park Road near Selwyn Avenue, were given 30-day notices, said Elyse Hammett, a spokeswoman for the developers.

The new community will include a path connecting it northward to Freedom Park and eventually southward to the Little Sugar Creek Greenway. It will feature interiors with designer finishes, granite and stone countertops, and a club room with a catering kitchen. Pollack Shores sees the property as "a unique opportunity for us to provide a high-design, high-quality multifamily community," said Michael Blair, managing director of development for the company.

More apartments coming to Dilworth

Carolinas AGC, a chapter of the Associated General Contractors of America, has sold its 2.6-acre headquarters site in the heart of Dilworth at Euclid and Templeton avenues. The buyer, Marsh Realty Co., has successfully rezoned the property for a future multifamily development. City engineering and land development records show plans for 182 residential units. The site plan approved by the city last year shows a pool deck and five-foot privacy wall going in along Euclid.

Carolinas AGC, which had nearly 40,000 square feet spread over three buildings at the site, will move to 7,300 square feet at Three South Executive Park in SouthPark, according to Merrifield Patrick Vermillion, the real estate firm that represented Carolinas AGC in the sale.

Real estate records show the property sold Dec. 10 for $4.2 million.

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Apartment complex going up on Morehead Street uptown

Ohio-based NRP Group is about to start construction on a 298-unit apartment complex on Morehead Street at Church Street. The five-story complex, called the Quarters at Morehead, will be located on a 2.4 acre tract bounded by Morehead, Church and Winnifred streets and Carson Boulevard. NRP closed on the property Tuesday. "We're so ready to start," NRP's Mark Tipton said. "If I could get out there tonight with a hammer I would."

He said the new apartments will be aimed at the growing cadre of young professionals working uptown, but added that he imagines professionals of all ages will like its proximity to major employers such as Duke Energy and the fact that Bank of America Stadium is just down the hill and around the corner. The complex will have one-and two-bedroom units, and also will feature some townhouse units and units with two-story mezzanines. Tipton said workers should be on the site within a week starting the project, with an eye on finishing it next spring.

It will be the latest in a rush of new apartments sprouting in and around uptown Charlotte. Some analysts say Charlotte could find itself with an over-supply of apartments this year, but Tipton, like others developing the newest apartment complexes, doesn't sound worried. "Multi-family living has come of age. People want to be close to their work and don't want to drive," he said.