Overview

• Where’s The Rent Growth?!

  • Significant decline in deliveries paired with record absorption sets the stage

• A Shift In Sentiment

  • Q2 transaction activity may signal the long-awaited recovery cycle

• In Case You Missed It

  • Charlotte recorded the highest employment growth in the country

  • North Carolina ranked the No. 1 state for business by CNBC

  • Recent headlines concerning demand drivers, news, highlights, etc. in the Carolinas

• WDIS Carolinas Personal News

  • 1 new dad, 1 repeat dad, and a dreaded men’s league injury…

Where’s The Rent Growth?!

As of Q3 2025, peak supply is in the rearview mirror (see Exhibit 1) and demand has outpaced supply for four consecutive quarters (see Exhibit 2) so what gives? While the majority of new inventory has delivered, it typically takes 12 to 18 months for this supply to be fully absorbed. As a result, the Carolinas are currently experiencing peak lease-up activity following a historic wave of deliveries.

The elevated volume of new product hitting the market within a compressed timeframe has intensified competition amongst lease-ups, leading to heightened levels of concession as operators continue to prioritize occupancy over growing rents. In the most supply-heavy submarkets, concessions have neared three months of free rent at newly constructed assets, creating uncertainty for prospective buyers around where stabilized rents will ultimately settle once this supply imbalance is resolved.

So what does this mean for the outlook of the Carolinas? Although it sounds bleak, the forward-looking picture is far more optimistic. As demonstrated in Exhibit 3, if demand holds constant with the historical 5-year average (which may be too conservative of an assumption given absorption doubled in 2024 relative to 2020-23 average) with supply forecasted to taper from delivering 27.7k units/year (2020-25 average) to 16.1k units/year (2026-28E) the stage is set for occupancy to exceed 95% in 2026. In practice, that likely means properties stabilize at 95% occupancy followed by a combination of rent growth and tapered concessions.

To further support this theory, demand appears to be increasingly robust underscored by i) the aforementioned acceleration in absorption, ii) sustained job and wage growth throughout the Carolinas, iii) above-national-average population growth in the Carolinas’ key markets, iv) North Carolina’s favorable business climate, v) relatively affordable cost of living, vi) temperate climate, and vii) abundant lifestyle amenities. Should this momentum continue, operations in the Carolinas may improve sooner than forecasted.

For recent regional demand drivers/news/highlights, refer to the “In Case You Missed It” section below.

_{Note: The analysis above sampled the five largest markets in NC/SC for which RealPage reports Supply & Demand data (CLT, RDU, ILM, CHS, & GVL)}

A Shift In Sentiment

The end of Q2 marks what feels like a sentiment shift in the multifamily space. In Q2 2025, Walker & Dunlop reported quarterly transaction volume of $13.8B ($11.5B in debt financing + $2.3B in property sales) demonstrating a 98% increase over Q1 2025 and a 68% increase over Q2 2024.

Specifically pertaining to investment sales, WD reported a 54% increase in property sales during H1 2025 as compared to H1 2024; furthermore, the national WD Investment Sales platform awarded more deals in the month of June than all of Q1 2025.

From a “boots on the ground” perspective, June and July have been the busiest months of the year for the WDIS Carolinas team as we experienced a sharp increase in BOV activity, mandates won, and marketing activity.

We expect this momentum to sustain through the end of the year and into 2026 driven by a handful of factors:

1. The aforementioned supply and demand dynamics which are expected to positively influence operational performance throughout the Sunbelt.

2. Reduced volatility in the yield curve and a broader acceptance of structurally higher interest rates. Since May, the 5 yr UST and the 10 yr UST have traded within a spread of 30 bps and 40 bps, respectively, a welcomed change from the violent swings experienced in 2024. In short, 4.25-4.50% 10 yr UST seems to be an accepted range for market participants to transact.

3. Risk-on sentiment from the agencies

   1. Since the recent change in leadership, the agencies have been aggressively deploying capital and fully intend to continue increasing their volume. Freddie Mac has communicated to W&D leadership that it intends to “blow through its annual cap” signaling a risk-on sentiment from one of the nation’s largest lenders. Over the past few months we’ve seen this sentiment apparent through the increased use of:

      1. 35-year amortization structures previously capped at 65% LTV and now pushing to 70% LTV

      2. Razor thin spreads pricing at 1.00% -1.15% over USTs with a buydown

      3. Hybrid financing structures based on asset and sponsor (i.e. forward-looking NOIs)

4. Leading investment managers (e.g., Blackstone, PGIM, Brookfield) calling the beginning of the recovery cycle

5. Asset managers/developers/investors communicating a need to recycle capital due to:

   1. Fund lives expiring

   2. Increasingly burdensome carry costs (e.g., floating rate debt, preferred equity, junior debt, etc.)

   3. Opportunity cost (i.e., investors see opportunity and choose to “take a base hit” in order to redeploy capital elsewhere)

With a rate cut looming as a result of revised employment data and dovish tone from Powell’s Jackson Hole speech (swap markets currently pricing in a ~85% chance of a 25 bps cut in September), H2 2025 looks like it may be the beginning of the long-awaited CRE recovery cycle.

For more national market analysis and commentary please reach out to the WDIS Carolinas team to request Walker & Dunlop’s August 2025 Market Intelligence Deck.

In Case You Missed It

• CNBC ranked North Carolina the No. 1 best state for business (NCDOC)

• According to July BLS data, Charlotte reported the nation’s highest employment growth rate at 2.8% (Forbes)

• Charlotte’s average daily movers increases 34% YoY to 157 per day (Axios)

• Raleigh ranked No. 1 best city for jobs and earnings (TBJ)

• Carolina Hurricane’s owner, Tom Dundon, seeks approval for a Raleigh Whitewater Center (TBJ)

• Aerospace start-up, JetZero, pledges $4.7B investment in Greensboro to build state-of-the-art manufacturing facility creating up to 14.5k high-tech jobs (NCDOC)

• Amazon announces $10B investment in Richmond county to build an AWS data center creating 500 new jobs (BNC)

• Greenville, Monck’s Corner (North CHS), and York County (CLT MSA) among fastest growing towns in South Carolina (P&C)

• Charlotte job announcements:

  • Citibank pledges to invest $16M to create 510 jobs over the next 3 years (TCO)

  • Coinbase signs 59k SF office lease bringing 130 jobs to South End (Axios)

  • ATL-based financial services firm, Trimont, inks a 68k SF office lease in One South tower bringing 300 jobs to Uptown (CBJ)

  • PSA Airlines moves HQ to Charlotte creating 870 new jobs (CBJ)

  • Daimler Truck relocates HQ to 60k SF site in Ballantyne bringing 276 jobs to the Charlotte suburb (TCO)

  • California-based wealth management firm, AssetMark, signs 61k SF lease in South End spec-office development creating 252 jobs (CBJ)

  • City National Bank signs 22k SF office lease bringing 115 jobs to Uptown (CBJ)

WDIS Carolinas Personal News

Our team has had a very eventful few months…

On Wednesday August 6th, Associate Director Teddy Szyperski and his wife welcomed their daughter (and first child). Just five days later on August 11th, Director Devin Bryan and his wife gave birth to their second child (and first girl). Congratulations to both the Szyperski and Bryan families!

At the end of June, Senior Analyst Trevor Tarring suffered a fractured fibula and dislocated left ankle during a men’s recreational lacrosse game leading to surgery the following day. Eight weeks following the injury, Trevor has ditched the scooter and is back on his feet expecting to make a full recovery and setting his sights on a return to the lacrosse field next season.

Have a great Labor Day weekend!

Please reach out to [email protected] for any inquiries on the information above or to hear about our available opportunities throughout the Carolinas.