Ah Charlotte. She’s been miss popularity for a number of years now. Although 22nd in rank for population, Charlotte is one of the fastest growing cities in the nation. Over the past 10 years the population has grown almost 60%! In 2010 the population rank was only 33… Affordable housing and lower cost of living paired with rapid economic growth and a hot job market has generated a population magnet. I have several family members who have moved to Charlotte for jobs and after several visits found myself drawn to what seems to be an endless list of appealing attributes. (Craft beer, anyone?) Of course, this all leads to a greater demand for healthcare and the providers in the area certainly have been rising to the occasion. Two systems dominate in the Charlotte Market – Atrium Health (Formerly Carolinas Healthcare) and Novant Health. Both are very active building and expanding to accommodate the ever-growing demand. 1.1 million square feet of outpatient space is currently under way putting Charlotte at #4 for total MOB construction in progress, just behind three much larger markets: New York, Dallas and Houston. Cancer care has been a high priority for both Novant and Atrium. Atrium just opened a 260,000 SF expansion to the Levine Cancer Institute and Novant has two cancer centers under way and scheduled to open in 2020. Not only is Charlotte at the top of the charts with population growth and construction, but also investor appetite. In the past year Charlotte is also just behind New York, Dallas and Houston on sales transaction volume. $394M in MOBs have traded hands between 2Q18 and the close of the first quarter of 2019. Welltower has acquired a number of properties in Charlotte in the last year including two MOBs under development by Pappas Properties and 100% leased by Atrium. The good news keeps coming. If you own a MOB in Charlotte, you most likely have a better ability to raise rents than in other markets. Charlotte comes in 6th for year over year rent growth at 3%.
Flagship Healthcare Properties is based out of Charlotte and own quite a bit of inventory in the market. Russell Brown, SVP of Investments says, “Charlotte’s healthcare real estate demand continues to grow along with our population growth at all age brackets – young college graduates, growing families, and retirees (who want to be near grandkids) – which combined with our expanding healthcare systems and practices makes for an excellent operating and investment environment for our firm and REIT investors. However, the challenge to investing here is that this view of the market is widely held by investors, so the cost of capital competition is tough!”
Want to find out more about Charlotte…or where YOUR market ranks? You know what to do.
*SF Under Construction as of May 2019
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