Overview

The market continues to contemplate the impact of Trump’s first months in office while also monitoring the volatility of the 10YR Treasury. As multifamily investors, developers, lenders, and brokers try to map out a business plan for the remainder of 2025, one thing everyone is searching for is consistency.

Supply, Demand, & Operations (CLT)

Supply

• Charlotte multifamily quarterly supply has peaked as of Q1 2025, after 29% total inventory growth over the last 5 years (RealPage)

• Construction starts have slowed by more than 40%, but there are still 21k units under construction today (+9% existing inventory expansion) (RealPage)

• With the development spicket effectively off for the last 12 months, investors and operators alike are hoping this leads to outsized rent growth beginning in 2026

• WDIS Carolinas is consistently tracking development activity across all major markets in the Carolinas. Click below to request our latest Development Pipelines

Demand (Retention & Velocity)

• Raleigh & Charlotte ranked #1 and #2, respectively, for net absorption (defined as the sum of units occupied less units vacated) during Q1 2025. Raleigh absorbed 1.9% of total inventory (~2.6k units), the second highest record for the market. Charlotte absorbed 1.6% of total inventory (~3.9k units), marking the strongest quarter ever recorded surpassing Q1 2024 at ~2.6k units absorbed by 50% (CoStar) 

• Charlotte ranks #9 on RealPage’s 2024 Demand Leaders based on total units absorbed despite the other markets averaging ~2x the population size of Charlotte

• The table below represents our real-time view of this absorption/demand on assets we have valued over the past quarter – we observed an average lease up velocity of 21 move-ins per month as well as nearly 56% retention on all renewals. In short, “concession hopping” has remained relatively minimal and owners/operators have actually been able to push rents for existing residents, offsetting most of the negative new lease-trade outs.

• Charlotte (and Raleigh-Durham) rank as Top 6 fastest growing markets in the Sun Belt

• According to the 2024 U.S. Census Bureau, the Charlotte MSA grew by 61,000 people YoY, representing 167 new residents everyday

• RealPage recently analyzed several major metros below in which Charlotte is the only MSA to see continuous accelerating population growth over the last 4 years

Transaction Activity

• Sales volume was relatively quiet in Q1 relative to Q4 2024, however, we have seen a recent uptick in deals on the market.  

• There is a larger cap rate stratification today than there’s been in a decade with the tighter cap-rate trades involving a flight to quality, stable to improving rent trends, and/or major opportunistic upside. Everyone is looking for a story today.  

• The groups that have been able to buy (both on & off market) are those with rent growth conviction. The table below highlights buyer feedback from recent W&D sales (nationally). Interestingly, the winning buyer underwrote future rent growth, averaging +0.87% per annum above RealPage’s projections in 2026-2028. Said differently, those wanting to buy have belief beyond the third-party projections.  

Recent Buyer Questionnaire Rent Growth Responses

• Many anticipate the second half of 2025 to be a more active transaction environment. WDIS Carolinas conducted an analysis attempting to quantify this “backlog” of deals expected to explore a trade compared to historical sales volumes in CLT and RDU.

• Of the 133 deals backlogged in 2025, we determined ~50% of are merchant strategy deals approaching stabilization (75%+ occ.), and the remaining balance are split between 2023-24 marketed deals that didn’t transact as well as strategically planned dispositions (end of hold period/fund life, capital recycling, etc.)

• Unsurprisingly, there is a substantial backlog of deals. Do we believe there will be 133 trades in the next 6-12 months? No, but should the transaction environment improve (e.g., rate relief, outsized rent growth, operational improvements, etc.) we would expect a majority of these deals to explore a trade, ultimately flooding the market and diluting the attention of available capital. 

2010+ Vintage / 200+ Units Sales Volume (2015-Present)

Notable Carolinas Q1 Sales

1. The Linden (Jan 2025) – W&D sold and financed the 2016 Surface-parked midrise asset with ~6k SF of retail. This was an off-market transaction with a 1031 family office buyer. Please reach out to our team for specifics surrounding the sale

2. Axis Berewick (Jan 2025) – 2017 Garden asset sold to an all cash buyer (Healthcare REIT) out of Ohio

3. Peace Apartments (Feb 2025) - Kane Realty sells to Viessmann Family Office/Cortland for a $152M ($365k/unit), representing the highest conventional multifamily price per door sale in the RDU market since 2022

Click below to request our Carolinas Sales Comp Tracker

Capital Markets Update

Liquidity in the debt capital markets remains robust from virtually all types of lenders…

• Life companies are flush with capital in their general accounts to invest in mortgage loans and most of these lenders have increased production targets for 2025.  Floating rate loan appetite has rebounded this year from both bulge bracket life cos and some mid-sized lenders as well.

• Fannie and Freddie are similarly bullish on 2025 originations and continue to come up with new underwriting tools to help drive business. Both Agencies have become particularly aggressive in lowering spreads for longer-term loans, trying to extend the duration of their pools and offset all the 5yr borrowing the market has demanded.

• Balance sheet issues at the banks are mostly in the rearview mirror and while the larger money center and super regional banks are still mostly only focusing on existing borrowers, the mid-sized and smaller regionals have money to lend. Construction loan capacity with these lenders has also opened up as all are seeing payoffs with fewer opportunities to redeploy this capital back into new construction loans. 

• The most liquid segment of the market that has been bordering on the verge of feverishness is the private credit funds. A record number of funds are out in the market raising a record amount of equity for new and existing lending vehicles, but money isn’t going out the door nearly as fast as it’s being raised. The amount of dry powder held by credit funds jumped by 72.6% this year to a record $55.45 billion which is forcing these lenders to underwrite and bid more aggressively to win deals, an incredible market environment for borrowers.

Recent Volatility: We have heard some life companies mentioning 15-20bps, and spreads for 5yr Fannie Mae DUS loans were about 10bps wider as of yesterday (4/7).  Morgan Stanley pointed out in a research piece yesterday that credit spreads have substantial room to widen further given that they have been sitting at the tight end of the long-term range.  Floating rate bridge loan spreads are likely to widen as well, as financing costs for debt funds widen out and CLO bond buyers demand more yield in exchange for the increased risk in the system. Full leverage quotes from these lenders have consistently been in the S+240-250bps range, but as of this week are coming in 20bps wider, while the non-CLO credit funds have been able to maintain that S+240-250bps pricing as repo line financing rates remained stable. 

-WD Capital Markets

WDIS Carolinas - Marketed Deals

• WDIS Carolinas recently launched Mosby Steele Creek, a low-density, two-story garden asset in Steele Creek which boasts extremely high barriers-to-entry and a favorable supply story.

• WDIS Carolinas recently launched a The Ascent Portfolio in partnership with WDIS Nashville. The 5-pack portfolio includes one asset in Asheville, NC and four assets across Tennessee. In efforts to maximize value, these opportunities are being offered as a portfolio or individual asset execution. The Lofts at Reynolds Village (Asheville) poses an incredible value add story through upgraded unit interiors as well as light common area renovations. Additionally, the Property includes 65k SF of ground-floor retail (90% occupied) with a proven mark-to-market on the legacy leases from ~$10 to ~$21+ PSF NNN.

Please reach out to [email protected] for additional information on any of the opportunities above.