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Atlanta Multifamily Performance Holds Strong as Conditions Cool

2/20/2020
The Atlanta multifamily market remains healthy and demonstrates continued demand of national investors. While growth nationally has begun to taper, Atlanta still posted $8.1 billion in sales volume in 2019 and greatly surpassed investment expectations at this point in the cycle.

Investor attraction continues to grow in Atlanta’s evolving suburban submarkets, with CoStar reporting nearly 44% of transactions in 2019 occurring outside of the market’s urban core. Private capital accounted for a majority of Atlanta’s buyer pool in fourth quarter 2019; however, foreign investors grew its share in the Atlanta multifamily space at a rate that is 17% faster than fourth quarter 2018 trends.

Pricing expectations in Atlanta continue to climb higher as the Atlanta multifamily market grows in national attraction. The average price per unit in Atlanta increased 17.0% in 2019—keeping on trend with four consecutive years of appreciation—with 32% growth in the Class C space driving gains.

464 Bishop Atlanta

464 Bishop in Atlanta sold in the fourth quarter of 2019 for $54.25 million

The market’s high-performing rent growth trends have driven pricing as the average effective rent in Atlanta grew at a rate of 5.8% year over year as of fourth quarter 2019, inching towards the $1,300 threshold. A heavy infusion of high-end deliveries into Atlanta’s in-town submarkets has largely fueled rent gains over the last few years. Although construction is projected to slow down from the market’s peak in 2017, the ongoing stabilization of Class A assets will continue to buoy overall rent growth once lease up concessions burn off.

Looking ahead, rents in the metro are projected to increase by 18.6% from 2019 to 2024 or 3.7% annually, beating national projections. With forecasts predicting Atlanta will need 61,111 new units by 2023 to support future market demand, supply pressure will give rents more room to run going forward.

Eastside Atlanta is Atlanta’s fourth busiest submarket in terms of its development pipeline, with CoStar recording nearly 1,500 units currently under construction across institutional and infill developments as of fourth quarter 2019. Rental rates soared across the submarket, growing by 20.2% over the last five years and reaching the third-highest average effective rental rate of Atlanta’s submarkets at $1,665. With approximately 1,200 renter households projected to be added in the submarket by 2024, Eastside Atlanta will continue to lap the rest of the market in terms of overall multifamily performance.

For more, check out the infographic below. 

Atlanta Multifamily Q4

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