Record-Setting Year in Atlanta for Multifamily

Research &
Forecast Report
ATLANTA
Year-End 2015 | Multifamily
>> Annual Effective Rent Growth: 6.8% (Top Five in USA)
>> Average Vacancy Rate: 5% (lowest level since 1Q 2001)
>> Annual Demand: 12,484 units (2nd Highest in Five Years)
>> Annual Supply Growth: 9,076 units
>> Annual Inventory Change: 1.7% (1.2% over past three years)
>> Highest Annual Rent Growth by Submarket: Smyrna (14.6%),
West Marietta (11.9%), Southeast Marietta (11.2%), Doraville
(11.1%), Norcross (10.6%)
Relative to prior period
ATL
Q4 2015
VACANCY
RENTS
CONCESSIONS
TRANSACTIONS
PRICE PER UNIT
-
CAP RATES
*Projected
Historical Apartment Occupancy & Rents
97%
96%
95%
94%
93%
92%
91%
90%
89%
>> Transaction volume at $5.7 billion, 4th nationally behind NYC, LA,
and DC
>> Average Cap Rate of 6.44%, down 43 basis points year-over-year
2015
2014
2013
Atlanta Multifamily Market
$1,400
$1,200
$1,000
$800
$600
US
SOUTH
2015
2014
$400
2013
Atlanta has all of the fundamentals of a robust multifamily market,
and 2015 marked a record performing year in the sector. Demand,
the paramount factor in any real estate market, remained strong
throughout 2015 with annual absorption of 12,484 units. This
marked the second-highest annual total in 5 years. Occupancy ended
at 95%, the highest level since 2006, with developments near full
even in high-supply submarkets such as Buckhead, Midtown, and
West Atlanta. On the transaction side, Atlanta posted apartment
deal volume of $5.7 billion which puts it 4th nationally behind only
New York, Los Angeles, and Washington D.C. Atlanta strengths
include a thriving economy, low cost of doing business, and an
educated, relatively young workforce. This has allowed Atlanta to
achieve sustained rent growth, and its multifamily market to thrive.
ATL
Q1 2016*
Occupancy %
Key Takeaways
Market Indicators
AVG Monthly Rent
Record-Setting Year in
Atlanta for Multifamily
ATLANTA
Source: MPF Research
Atlanta Multifamily Market (continued)
DEMAND
Sustained demand is at the crux of the success of Atlanta’s multifamily
market, and proved to be strong in 2015. Annual absorption ended at
12,484 units, which is the 2nd highest annual total in the past five years.
Demand drivers include a young demographic with over 60% of Atlanta
population below the age of 45. Atlanta possesses a large well-educated
millennial population which feeds well into the economy and multifamily
market. With corporate relocations and expansions omnipresent in
the city, this has sustained high rental demand and growth in the city.
Another factor to watch is the 55+ age cohort which is the fastestgrowing demographic in the region. This is sure to fuel future demand
as older generations are attracted to the appeal of low maintenance and
convenience that apartments offer.
SUPPLY
A total of 9,076 units were added in 2015 which equates to 1.7% of the
inventory. Supply in Atlanta has expanded at a manageable rate of 1.2%
over the past three years. 2016 is poised to be a year of development
for Atlanta region with 9,800 units expecting to be completed. Most
of this development is centered in Midtown, Buckhead, and Northern
submarkets. Midtown alone has over 30 residential projects that have
recently been completed or are under development as of the end of 2015
(Curbed Atlanta). Most of these developments are Class A product, and
this is expected to put some pressure occupancies of this product type
in 2016.
OUTLOOK FOR 2016
2016 looks to be another positive year for multifamily and Atlanta
should enjoy similar success in terms of rent demand and growth as
2015. Atlanta has solid fundamentals in its demographics, geography,
and economy that bode well for multifamily. Atlanta’s rent growth
consistently outpaces the national average and can be expected to
continue to do so in the future. Rent increases are most pronounced in
the Class A and B product types, but Class C product can be expected to
gain momentum in 2016 as supply catches up with demand for uppertier product. Rent growth in 2016 can also expected to be driven by
northern and central submarkets near the employment hubs of the
city. Some risks include the uptick in supply which we can expect to
keep occupancy near 95%. With 11,603 units planned over the next two
years, household growth is expected to remain close to 3% facilitating
an absorption rate of 4,094 units a year. Asking rents are expected to
grow at an average of 4.1% in the region for 2016 and 2017 (REIS).
Overall, demand should remain strong as long as Atlanta continues
to attract companies and jobs due to its favorable business climate.
UPDATE - Recent Transactions in the Market
Notable Sales Activity
PROPERTY
SUBMARKET
SALES DATE
SALE PRICE
SIZE (UNITS)
PRICE / UNIT
BUYER
The Bricks at Perimeter
Central Perimeter
11/19/2015
$93,000,000
448
$207,589
Clark Ventures, LLC
The Brooke
Decatur
1/19/2016
$73,500,000
537
$136,872
Irinda Capital Mgmt. LLC
4867 Ashford Dunwoody Rd.
Central Perimeter
12/15/2015
$69,150,713
504
$137,203
The Blackstone Group
Highlands at Sugarloaf
Northeast Atlanta
10/30/2015
$68,640,000
390
$176,000
Olen Commercial Realty
NorthPark Estates
North Fulton
12/22/2015
$54,000,000
356
$151,685
Inwood Holdings, LLC
Century Park
Northeast Atlanta
12/14/2015
$53,900,000
440
$122,500
Cortland Partners
Creekside at White Oaks
South Atlanta
11/10/2015
$53,014,500
561
$94,500
The RADCO Companies
5375 Sugarloaf Pkwy.
Northeast Atlanta
12/17/2015
$52,125,000
406
$128,387
Cortland Partners
Park Valley
Northwest Atlanta
12/14/2015
$51,400,000
496
$103,629
Steadfast Apartment REIT
Park at Abernathy
Central Perimeter
12/3/2015
$50,107,000
484
$103,527
Clark Ventures, LLC
Source: CoStar Comps
Billions
Historical Investment Volume & Cap Rates
7
8.0%
6
7.5%
5
7.0%
4
6.5%
3
6.0%
2
Sales Volume
2015
2014
2013
2012
2011
2010
2009
2008
5.0%
2007
0
2006
5.5%
2005
1
ATLANTA MULTIFAMILY
Atlanta apartment investment
volume in 2015 reached its
highest level ever at a total of
$6.5 billion.
Around 268
properties with a total of
69,848 units sold in the year.
According to Real Capital
Analytics, the average price
per unit in Atlanta remained
relatively unchanged yearover-year at $94,201. The
average
cap
rate
for
apartments in the Atlanta
market is down slightly from
last year at 6.4%.
AVG Cap Rate
Source: Real Capital Analytics
2
Research & Forecast Report | Year-End 2015 | Atlanta Multifamily | Colliers International
CO
BB
FU
CO
LT
.
O
N
CO
.
Multifamily Pipeline | Urban Atlanta
Sources: CoStar Property, MPF Research
14
10
DORAVILLE
11
34
9
32
13
33
31
35
SMYRNA
14
13
7
e
8
R
iv
1
GW
I
DE NN
KA
LB
5 6
4
5
6
4
16
7
22
3 1
15
ATLANTA
12
9
36
r
Norcross
CHAMBLEE
DEKALB CO.
FULTON CO.
he
RIETTA
37
8
Clarkston
3
40 43
41
42
e
15
23
25 30
27 24
12 29
28 26
10
21
DECATUR
22
39
38
20
11
19
17
18
16
LEASE UP
#
Name
Developer/Owner
Address
Market
1
Gables Brookhaven
Clarion Partners
2925 Hermance Dr NE
Brookhaven
2
The Monroe
222 Colonial Homes Dr NW
Brookwood
59
3
The Jane at Colonial Homes
240 Colonial Homes Dr NW
Brookwood
280
3091 Maple Dr
Buckhead
250
3380 Peachtree Rd NE
Buckhead
327
4
5
6
7
EAST Pollack Shores Real Estate Group
POINT Pollack Shores Real Estate Group
Broadstone Court
Alliance Residential Company
COLLEGE
Cyan on Peachtree
Atlantic Realty Partners
PARK HAPEVILLE
The High Rise at Post Alexander
Post Properties, Inc.
SkyHouse Buckhead
Novare Group
3390 Stratford Rd
DEKALB
Buckhead
Buckhead
69
CO.
CO.
143
362
Haynes House
Hartsfield-Jackson
9 International
The Reserve at the Ballpark
Airport
Alliance Residential Company
Atlantic Realty Partners
HENRYBuckhead
2420 Peachtree Rd NW
675Pky
2875 Crescent
Northwest Atlanta
10
The Office Apartments
DeBartolo Development LLC
250 Piedmont Ave NE
Downtown
327
11
Alexan on Krog
Trammell Crow Residential Company
112 Krog St NE
Inman Park
222
12
University House Midtown
930 Spring St NW
Midtown
268
13
Indigo House
FOREST
Inland Real Estate Corporation
PARK
South City Partners
111 Glenridge Point Pky NE
Central Perimeter
181
14
The Collection
JLB Partners, LP
4600 Roswell Rd
Central Perimeter
128
15
1824 Defoor
RAM Partners, LLC
1824 Defoor Ave NW
West Atlanta
236
16
Solis Downwood
Terwilliger Pappas
3201 Downwood Cir NW
8
CLAYTON CO.
City
600 Phipps Blvd NE
Units
Riverdale
Northwest Atlanta
TOTAL
Stockbridge
Over
50 Multifamily Developments currently Proposed for the Urban Atlanta Area.
O.
C
N
O
FULT
O.
3 ET
Research
TE C & Forecast Report | Year-End 2015 | Atlanta Multifamily | Colliers International
FAY
186
89
280
3,407
Sto
Mou
Multifamily Pipeline | Urban Atlanta (cont.)
Sources: CoStar Property, MPF Research
UNDER CONSTRUCTION
4
#
Name
Developer/Owner
Address
Market
Units
1
Brookwood Square
Grayco Partners
2140 Peachtree Rd
Buckhead
250
2
The Monroe - Phase II
Pollack Shores Real Estate Group
222 Colonial Homes Dr NW
Buckhead
158
3
Ardmore & 28th
Cocke Finkelstein, Inc.
306 Ardmore Cir NW
Buckhead
165
4
AMLI City Place
AMLI Residential Properties, LP
3464 Roxboro Rd NE
Buckhead
640
5
Domain at Phipps Plaza
Columbus Realty Partners, Ltd.
705 Phipps Plz NE
Buckhead
319
6
Hanover Park Place
The Hanover Company
475 Buckhead Ave NE
Buckhead
375
7
AMLI Piedmont Heights
AMLI Residential Properties, LP
2323 Piedmont Rd NE
Buckhead
375
8
Elan Lindbergh - Phase II
Greystar Real Estate Partners
741 Morosgo Dr NE
Buckhead
263
9
Gables Brookhaven - Phase II
Gables Residential
2925 Hermance Dr NE
Central Perimeter
300
10
Broadstone Sandy Springs
Alliance Residential Company
6558 Roswell Rd NE
Central Perimeter
230
11
One City Walk
George S. Morgan Development Co., Inc.
6050 Roswell Rd NE
Central Perimeter
203
12
The Olmsted Chamblee
Cocke Finkelstein, Inc.
5193 Peachtree Blvd
Central Perimeter
277
13
The Collection - Phase II
JLB Partners, LP
4600 Roswell Rd
Central Perimeter
188
14
Somerby of Sandy Springs
Brasfield & Gorrie
25 Glenlake Pkwy
Central Perimeter
200
15
The Reserve at Decatur
Atlantic Realty Partners
2600 Milscott Dr
Downtown
330
16
Alexan Village Flats
Trammell Crow Residential Company
1205 Metropolitan Ave SE
Downtown
120
17
Alexan Glenwood
Trammell Crow Residential Company
860 Glenwood Ave SE
Downtown
216
18
Elan Inman Station
Crim & Associates
144 Moreland Ave NE
Downtown
285
19
841 Memorial
Enfold Properties
841 Memorial Dr SE
Downtown
80
20
200 Edgewood
Sanctuary Residential LLC
200 Edgewood Ave NE
East Atlanta
144
21
Alexan 1133
Trammell Crow Residential Company
1133 Commerce Dr
East Atlanta
167
22
Trinity Triangle
Centro Development LLC
245 E Trinity Pl
East Atlanta
210
23
33 Peachtree Place
Wood Partners
60 Peachtree Cir NE
Midtown
369
24
60 11th St
Selig Enterprises, Inc.
60 11th St NE
Midtown
320
25
Atlantic House
Novare Group
1163 W Peachtree St NW
Midtown
407
26
Broadstone Terraces
Alliance Residential Company
811 Juniper St
Midtown
218
27
Modera Midtown
Mill Creek Residential Trust LLC
90 Peachtree Pl NW
Midtown
450
28
Peachtree Apartments
JLB Partners, LP
782 Peachtree St NE
Midtown
294
29
Post Midtown Millennium
Post Properties, Inc.
33 11th St
Midtown
356
30
Yoo on The Park
Trillist Company
207 13th St NE
Midtown
245
31
The Encore
Oxford Properties
3290 Cobb Galleria Pky
Northwest Atlanta
339
32
Alta Belmont - Phase II
Wood Partners
400 Belmont Pl
Northwest Atlanta
223
33
The Metro
Audubon Communities
1500 Parkwood Cir SE
Northwest Atlanta
200
34
The Reserve at the Ballpark Phase II
Atlantic Realty Partners
2875 Crescent Pky
Northwest Atlanta
232
35
Alexan City View
Trammell Crow Residential Company
3300 Riverwood Pky SE
Northwest Atlanta
232
36
Atlanta Braves Stadium Dvmt
Pollack Shores Real Estate Group
I 75 S & I 285 W
Northwest Atlanta
600
37
Accent North Druid Hills
Westplan Investors
7 Executive Park Dr NE
Northwest Atlanta
310
38
City Lights
Wingate Companies
420 Boulevard
Old Fourth Ward
80
39
675 N. Highland
Abraham Properties & Builders
675 North Highland Ave NE
Poncey-Highland
124
40
Aspire West Midtown
Westplan Investors
1390 Northside Dr
West Midtown
133
Research & Forecast Report | Year-End 2015 | Atlanta Multifamily | Colliers International
Multifamily Pipeline | Urban Atlanta (cont.)
Sources: CoStar Property, MPF Research
UNDER CONSTRUCTION (cont.)
#
Name
Developer/Owner
Address
Market
Units
41
Westside Heights
WSE Property Management LLC
903 Huff Rd NW
West Midtown
282
42
455 Fourteenth
Pollack Shores Real Estate Group
455 14th St NW
West Midtown
361
43
The Heights at West Midtown
WSE Property Management LLC
507 Bishop St NW
West Midtown
240
TOTAL
11,510
Metro Atlanta Employment Overview
100.0
88.7 85.4
Jobs Added/Lost (thousands)
69.4 66.2
59.7
48.9
50.0
35.6
30.1
41.6
10.8
‐
‐22.9
(50.0)
‐20.2
‐26.8
‐42.3
(100.0)
‐136.9
(150.0)
Source: US Dept. of Labor Statistics/Moody’s Analytics
Metro Atlanta Employment Comparison
RANK
Y-O-Y
EMPLOYMENT
Y-O-Y
PERCENT
UNEMPLOYMENT
RATE
New York/NNJ
1
156,400
2.3%
4.4%
Los Angeles/OC
2
135,100
1.7%
5.4%
Dallas-Fort Worth
3
98,900
2.9%
3.7%
Atlanta
4
77,800
3.0%
4.9%
DC-Arlington
5
68,500
2.2%
3.8%
San Francisco
6
66,300
3.0%
3.9%
Seattle
7
56,800
3.0%
5.0%
Phoenix
8
55,300
2.9%
4.7%
Miami
9
55,300
2.2%
5.0%
Riverside/San Bern.
10
47,800
3.6%
5.9%
San Jose
11
46,100
4.4%
3.8%
Boston
12
METRO AREA
U.S. Total
45,800
1.7%
4.1%
2,462,200
1.7%
4.8%
Source: Bureau of Labor Statistics; Metro Level Data December 2015(p) Average, not Seasonally Adjusted
5
Notable Atlanta Job
Relocations
>> Alcon Laboratories, a Texas-based lens
maker, plans to invest $250 million to
increase its production in the Johns
Creek area of Atlanta. The company
plans to expand their production
footprint by 70,000 square feet and yield
approximately 300 additional jobs.
>> Norfolk Southern plans to relocate 253
employees from Virginia to Midtown
Atlanta. The roles are primarily back
office and functional roles with an
average wage of $86,000.
>> CareSource, a Dayton, Ohio-based
managed care provide plans to add
200 jobs in Atlanta by July 2016. The
expansion is to support new business
and establish a southern regional
headquarters.
>> Kaiser Permanente plans to add 900
Information Technology jobs in Atlanta
by 2019 establishing a new IT campus
in Midtown Atlanta at 1375 Peachtree
Street.
Research & Forecast Report | Year-End 2015 | Atlanta Multifamily | Colliers International
Metro Atlanta Population Overview
Metro Atlanta Housing Permit Activity
18,000
6
16,000
5
Multifamily Permits Issued
Total Population (millions)
14,000
4
3
2
12,000
10,000
8,000
6,000
4,000
1
2,000
0
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2002
2003
2004
2005
2006
2007
2008
Source: U.S. Census Bureau, Moody’s Analytics
2009
2010
2011
2012
2013
>> MERCEDES-BENZ STADIUM: The new state-of-the art $1.4
billion stadium to serve as the new home for the Atlanta
Falcons and United FC is projected to be opened in 2017.
This stadium will also serve as the host to the 2018 College
Football National Championship and the SEC Championship
until 2027. Arthur Blank, philanthropist and owner of the
Atlanta Falcons, has pledged $15 million for projects to
improve the surrounding community of the new stadium
with another $15 million pledged by Invest Atlanta through
TAD funding.
>> SUNTRUST STADIUM: A new $672 million baseball stadium
under construction for the Atlanta Braves (SunTrust Park).
This stadium, slated to be completed by Opening Day 2017,
includes an entertainment and retail district along with an
office tower of which Comcast is already confirmed as an
anchor tenant. The development will continue to spur new
growth and apartment demand in the Cumberland region
for 2016.
>> TURNER FIELD REDEVELOPMENT: Georgia State University
and Carter real estate firm have been awarded a bid for the
redevelopment of the current home of the Atlanta Braves.
Redevelopment plans include converting the stadium into
a new sports facility, along with the building of student
housing, retail, and single-family homes in the surrounding
area. This is poised to stimulate much needed demand and
growth in the neighborhoods surrounding the stadium.
6
Research & Forecast Report | Year-End 2015 | Atlanta Multifamily | Colliers International
2015
Source: U.S. Census Bureau
Stadium Development Projects to Reshape Atlanta
As 2015 comes to an end, 2016 is poised to be a pivotal
year with many high impactful sports stadium development
projects in the works throughout the Atlanta region. These
projects have some mixed-use or neighborhood development
component that should impact multifamily demand in the
region. Some notable projects include:
2014
Atlanta Submarkets
50
MORE THAN
Dedicated Multifamily
Professionals & Advisors
14
TRANSACTING IN
STATES
Expansive geographic footprint
27,500
MORE THAN
Units sold since 2011
$1.7B
Group gross transaction
value since 2011
FOR MORE INFORMATION
Ron Cameron
Senior Vice President | Atlanta
+1 404 877 9287
[email protected]
CONTRIBUTORS
Will Mathews
Vice President | Atlanta
+1 404 877 9285
[email protected]
Copyright © 2016 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
7
Scott Amoson
Director of Research | Atlanta
Jaime Slocumb
Project Manager | Atlanta
Michael Henry
Financial Analyst | Atlanta
Southeast Multifamily
Investment Services
Colliers International | Atlanta
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Atlanta, Georgia | USA
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