New apartment construction follows low vacancy rates, higher rents
Construction began in December on an approximately $35 million project to build a 202-unit apartment complex on Swift Avenue near Duke University’s East Campus.
The construction phase of Charlotte-based real estate investment firm Faison’s project is expected to be complete in 18 months. Leasing is expected to start in the second quarter of next year.
A rezoning of the property was approved in November, and a residential complex with approximately 21-units was demolished to pave the way for the project.
The company is targeting rental rates on the higher-end of the rent-per-square-foot spectrum for the complex, said Kris Fetter, project manager for Faison for the 300 Swift complex.
“The rents in that market have been increasing steadily,” he said, adding that that’s been attractive feature for developers, including Faison.
Faison’s 300 Swift project is part of a wave of new apartment construction proposed or already under way here.
According to January data from the Charlotte-based apartment market research firm Real Data, more than 6,100 new units were started in the past six months in the Triangle, bringing the total number of new units under construction to 9,200. Another 6,400 units have been proposed, according to the firm.
“It’s a hot market,” said Ken Szymanski, executive director of the Apartment Association of North Carolina, a nonprofit trade association. “And of course what drives those are vacancies on the business side.”
Citing Real Data’s numbers, he said the vacancy rate in the Triangle fell from 6.6 percent in January of last year to 5.5 percent in the month this year.
Brian Reece, managing director of the apartment market research firm Karnes Research, said the driver of that trend now is financing.
“Right now, apartments are the only area that the lending environment is providing money (for),” he said.
Reece said the demand for apartments is there because of the housing industry, which he said is just now recovering. The lending environment for mortgages has become strenuous for buyers, he added.
Fetter said believes the new construction is following a lull that occurred in 2008-2010.
He added that there’s been a demographic shift –younger people aren’t as interested in homeownership as they once were, and are interested in the amenities complexes offer.
He said in an email that 300 Swift’s planned amenities include two large courtyards, a fitness area with a spin and a yoga room, a salt-water pool, display kitchen, club space and study areas.
Fetter cited activity in the Ninth Street district as well as Duke University, the Duke University Medical Center and the downtown area as reasons the company was interested in the Durham market.
“We see that as an area for young professionals to migrate between,” he said.