Atlanta Multifamily Market Remains Strong

Research &
Forecast Report
Atlanta
Q2 2015 | Multifamily
>> Effective rents have increased 2.7% 2Q15 vs. 1Q15, and 7.3% annually.
>> Highest 2nd Quarter rent growth was in these submarkets: South
Atlanta suburbs (9.2%), Duluth (5.3%), Smyrna (5.0%), Southeast
Marietta (4.9%), and West Marietta (4.4%).
>> Continued job growth of 3% annually in the region has brought the
unemployment rate down to 5.9%.
>> Mid-Year 2015 occupancy rates have remained high at 94.2%
amongst increasing inventory. These high occupancy rates are
driven by sustained demand particularly for middle and top-tier
product in the northern and central parts of the city.
Relative to prior period
ATL
Q2 2015
ATL
Q3 2015*
-
-
VACANCY
RENTS
CONCESSIONS
TRANSACTIONS
PRICE PER UNIT
CAP RATES
*Projected
Historical Apartment Occupancy & Rents
97%
96%
95%
94%
93%
92%
91%
90%
89%
>> Expansion continues in Atlanta at a rate of 1.4% YoY with
7,997 units added in 2Q15.
2015
2014
$1,200
$1,000
$800
$600
US
2015
$400
2014
Demand has remained solid in the Atlanta metro due to continuous
employment growth and corporate expansions. Atlanta ranked number
4 nationally for job growth in the 12-month period ending in June,
adding over 77,000 jobs. The locations of these jobs tend to be
centered around the city lending more desirability for apartments in
urban settings. Notable for the quarter, Porsche has opened its new
North American headquarters near Hartsfield-Jackson International
Airport which will have 400+ employees. Other corporate expansions
announced in the quarter include Kaiser Permanente, Sage Group,
Courion, and Google. High demand has kept occupancy rates at 94.2%
for the quarter even amongst new units being added to the region.
$1,400
2013
Atlanta’s multifamily market has remained strong with a continued rent
growth of 2.7% in the 2nd quarter of 2015. Year-over-year rent growth
is at 7.3% putting Atlanta in the top ten of all major metros and number
one in the Southern region. The foundation to this growth is a strong,
robust economy along with limited new construction in the market.
2013
Atlanta Multifamily Market
Occupancy %
Key Takeaways
Market Indicators
AVG Monthly Rent
Atlanta Multifamily Market
Remains Strong
SOUTH
ATLANTA
Source: MPF Research
Atlanta Multifamily Market (continued)
Another factor in the strong multifamily market is generational.
Millennials, whose ages range from 18 to 34, are not buying homes at
the same rate as previous generations. The average first time home
buyer today rents for six years before buying a home compared
to two and half years in the early 1970s. This is largely due to the
fact millennials do not have the financial savings to afford the down
payment on many of the homes in the market. Rental growth rates
across the country have grown at twice the pace of wage growth. In
Atlanta, wages have grown at 2% in the twelve month period ending
June 2015, compared to a 7.3% increase in rental rates during that same
period. This has created further demand for multifamily rental housing.
While demand remains strong, Atlanta’s supply of apartments is
certainly on the upswing albeit at a manageable pace. Inventory
growth has remained under 2% for the past three years with
7,997 units added in 2Q15. Absorption in the market for 2Q15 was
4,552 units.
Approximately 13,000 units were under construction
in 2Q15 with 85% being located in Downtown, Midtown, and
Buckhead submarkets. This is largely due to high demand for
product in these submarkets which has allowed many completed
developments to command rents north of $2.50 per square foot.
To sum, we can expect rents to continue to increase in the future
with strong demand prospects and limited new inventory entering the
market. Another trend to watch for the future is the growth of baby
boomers in the apartment marketplace. The population ages 65 and
older will grow to over 50 million by 2019 up from around 30 million
in 1989. This is expected to fuel future rent demand as many empty
nesters will seek to downsize their household and enjoy many of
the conveniences renting an apartment vs. owning a home provides.
UPDATE - Recent Transactions in the Market
Notable Sales Activity
Property
Submarket
Sales Date
Sale Price
Size (Units)
Price / Unit
Buyer
Brookleigh Flats
Northlake
5/14/2015
$84,950,000
332
$253,582
LaSalle Investment Mgmt.
Steelworks
Midtown
6/18/2015
$80,400,000
329
$244,377
Heitman LLC
Dunwoody Place
Central Perimeter
7/16/2015
$77,200,000
400
$193,000
Crow Holdings
Avana Lenox
Buckhead
6/29/2015
$71,600,000
423
$169,267
Greystar Real Estate Prtnrs
ARIUM Johns Creek
North Fulton
7/1/2015
$64,500,000
396
$162,879
Goldman Sachs Asset Mgmt
The Jane Atlanta Apartments
Midtown
4/30/2015
$63,600,000
280
$227,143
CWS Capital Partners
Anderson at Clairmont
Northlake
6/23/2015
$60,050,000
408
$147,181
Eaton Vance Corp.
Berkshire Howell Mill
Midtown
5/13/2015
$51,500,000
257
$200,389
Berkshire Group
Inman Quarter
Downtown
5/29/2015
$50,000,000
200
$250,000
TriBridge Residential/Coro
Manchester at Mansell Apts.
North Fulton
5/8/2015
$48,500,000
468
$103,632
Titan Real Estate Investment
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
YTD15
2014
2013
2012
2011
2010
2009
2008
5.0%
2007
0
2006
5.5%
2005
1
AVG Cap Rate
Atlanta Multifamily
Apartment investment volume
as of mid-year 2015 in Atlanta
is almost half of the amount in
all of 2014.
Around 87
properties with a total of
19,784 units have sold to date.
According to Real Capital
Analytics, the average price
per unit in Atlanta decreased
to $95,984 which is lower
than last quarter, but still 24%
higher than a year ago. The
average
cap
rate
for
apartments in the Atlanta
market
has
remained
practically unchanged from
last quarter at 6.6%.
Source: Real Capital Analytics
2
Research & Forecast Report | Q2 2015 | Atlanta Multifamily | Colliers International
CO
B
FU B C
O
LT
O
N
CO
.
Sources: CoStar Property, MPF Research
40
41
34
42
15
17
16
7
19
e
31
26
r
2 7
12
6
10 27
28
9
ATLANTA
e
1
1
9
Norcross
CHAMBLEE
13
18
R
iv
DORAVILLE
14
35
SMYRNA
16 6
DEKALB CO.
FULTON CO.
e
Multifamily Pipeline | Urban Atlanta
4
3 5
14
29
13
GW
I
DE NN
KA
LB
15
32
11
30
Clarkston
12
22 21
23
8 11
20 4 5
8
10
17
39
33
2
37
36DECATUR
38
3
24
25
Under Construction
#
Name
Developer/Owner
Address
Market
1
Broadstone Court
Alliance Residential Company
3091 Maple Dr
Buckhead
250
2
(not yet named)
Abraham Properties & Builders
675 North Highland Ave NE
Midtown
124
144 Moreland Ave NE
Downtown
285
848 Spring St NW
Midtown
220
782 Peachtree St NE
Midtown
294
306 Ardmore Cir NW
Midtown
165
7
EAST
Elan Inman Station
Crim & Associates
POINT
Square on Fifth
Gateway Development Services
Peachtree
Apartments
COLLEGE
Ardmore & 28th
Cocke Finkelstein, Inc.
PARK HAPEVILLE
The Monroe
Pollack Shores Real Estate Group
8
33 Peachtree Place
3
4
5
6
Perennial Properties, Inc.
DEKALB
CO.
222 Colonial Homes Dr NW
Buckhead
CO.
33 Peachtree Pl NE HENRY
Midtown
930 Howell
Mill Rd
Midtown
675
230
218
Hartsfield-Jackson
9
The Brady
International
Airport
Wood Partners
10
Aspire West Midtown
Westplan Investors
1390 Northside Dr
Midtown
133
11
Elan Lindbergh
Greystar Real Estate Partners
369
741 Morosgo Dr NE
Buckhead
258
12
Modera Morningside
13
Domain at Phipps Plaza
14
AMLI City Place
15
The Reserve at the Ballpark
16
The Collection
17
200 Edgewood
18
Camden Paces - Phase II
FOREST
Mill Creek Residential Trust LLC
Columbus Realty Partners, Ltd. PARK
1845 Piedmont Ave NE
Buckhead
300
705 Phipps Plz NE
Buckhead
319
AMLI Residential Properties, LP
3464 Roxboro Rd NE
Buckhead
640
Atlantic Realty Partners
2875 Crescent Pky
Northwest Atlanta
318
JLB Partners, LP
4600 Roswell Rd
Central Perimeter
316
Sanctuary Residential LLC
200 Edgewood Ave NE
Camden Realty Inc
77 E Andrews Dr NW
Buckhead
152
475 Buckhead Ave NE
Buckhead
375
CLAYTON CO.
City
Units
Riverdale
.
COPark
19
Hanover
Place
Trammell Crow Residential Company
N
O
.
FULT
O
TE C
T
E
Y
F3A Research & Forecast Report | Q2 2015 | Atlanta Multifamily
| Colliers International
Stockbridge
Downtown
144
Sto
Mou
Multifamily Pipeline | Urban Atlanta (cont.)
Sources: CoStar Property, MPF Research
20
The Office Apartments
DeBartolo Development LLC
250 Piedmont Ave NE
Downtown
324
21
Yoo on The Park
Trillist Company
207 13th St NE
Midtown
245
22
Atlantic House
Novare Group
1163 W Peachtree St NW
Midtown
407
23
60 11th St
Selig Enterprises, Inc.
60 11th St NE
Midtown
320
24
Alexan Glenwood
Trammell Crow Residential Company
860 Glenwood Ave SE
Downtown
216
25
Alexan Village Flats
Trammell Crow Residential Company
1205 Metropolitan Ave SE
Downtown
120
26
1824 Defoor Westside
1824 Defoor Ave NW
Midtown
236
27
The Heights at West Midtown
The Worthing Companies
507 Bishop St NW
Midtown
224
28
455 Fourteenth
Pollack Shores Real Estate Group
455 14th St NW
Midtown
361
29
Gables Oglethorpe
Clarion
2925 Hermance Dr NE
Buckhead
369
30
AMLI Piedmont Heights
AMLI Residential Properties, LP
737 Lindbergh Dr NE
Buckhead
375
31
Solis Downwood
Terwilliger Pappas
3201 Downwood Cir NW
Buckhead
280
32
Aspire North Druid Hills
Westplan Investors
7 Executive Park Dr NE
Buckhead
310
33
Gables Emory Point Phase II
Clarion
1627 Clifton Rd NE
East Atlanta
307
34
The Metro
Audubon Communities
1500 Parkwood Cir SE
Northwest Atlanta
200
35
The Encore
Oxford Properties
3290 Cobb Galleria Pky
Northwest Atlanta
339
36
The Place on Ponce - Phase II
Carter USA
315 W Ponce de Leon Ave
East Atlanta
206
37
Alexan Decatur
Trammell Crow Residential Company
160 Clairemont Ave
East Atlanta
167
38
Trinity Triangle
Centro Development LLC
245 E Trinity Pl
East Atlanta
210
39
The Reserve at Decatur
Atlantic Realty Partners
2600 Milscott Dr
East Atlanta
330
40
One City Walk
George S. Morgan Development Co., Inc.
6038 Roswell Rd NE
Central Perimeter
203
41
Alta Belmont
Wood Partners
400 Belmont Pl
Northwest Atlanta
274
42
Avonlea Square - Phase II
Quintus Corporation
1836 Roswell St SE
Northwest Atlanta
159
Total
11,292
Lease Up
#
Name
Developer/Owner
Address
Market
Units
1
Haynes House
Alliance Residential Company
2420 Peachtree Rd NW
Midtown
186
2
The Jane Atlanta Apartment Homes
Pollack Shores Real Estate Group
214 Colonial Homes Dr NW
Buckhead
280
3
Cyan on Peachtree
Atlantic Realty Partners
3380 Peachtree Rd NE
Buckhead
327
4
The High Rise at Post Alexander
Post Properties, Inc.
600 Phipps Blvd NE
Buckhead
143
5
SkyHouse Buckhead
Novare Group
3390 Stratford Rd
Buckhead
362
6
Citizen Perimeter
Pollack Shores Real Estate Group
1125 Hammond Dr NE
Central Perimeter
341
7
Overton Rise Apartments
Newport Development, LLC
3695 Cumberland Blvd
Northwest Atlanta
294
8
Daily World Apartments
Gene Kansas Commercial Real Estate
145 Auburn Ave NE
Downtown
5
9
Berkshire Terminus
Crescent Communities, LLC
3280 Peachtree Rd NE
Buckhead
355
10
Alexan on Krog
Trammell Crow Residential Company
112 Krog St NE
Downtown
222
11
131 Ponce
Sereo Group, Inc.
131 Ponce de Leon Ave NE
Midtown
280
12
Crescent Howell Mill
Crescent Communities, LLC
1950 Howell Mill Rd NW
Midtown
256
Fairfield Residential
13
1105 Town Brookhaven Apartments
14
Indigo House
1105 Town Blvd
Buckhead
299
111 Glenridge Point Pky NE
Central Perimeter
181
15
Alta Brookhaven
Wood Partners
1295 Dresden Dr NE
Buckhead
230
16
1160 Hammond
Northwood Ravin
1160 Hammond Dr NE
Central Perimeter
349
17
Avonlea Square
Quintus Corporation
1836 Roswell St SE
Northwest Atlanta
159
Total
4
Research & Forecast Report | Q2 2015 | Atlanta Multifamily | Colliers International
4,269
Metro Atlanta Employment Overview
100.0
88.2
69.4 66.2
Jobs Added/Lost (thousands)
61.3
59.8
48.9
50.0
35.6
30.1
42.4
10.8
‐
‐22.9
(50.0)
‐20.9
‐26.8
‐42.3
(100.0)
‐136.6
(150.0)
Source: US Dept. of Labor Statistics/Moody’s Analytics
Metro Atlanta Housing Permit Activity
18,000
16,000
Multifamily Permits Issued
14,000
12,000
10,000
Atlanta News
8,000
Kaiser Permanente eyes Alpharetta for
new business unit, could employ several
hundred
6,000
4,000
>> Atlanta Business Chronicle - July 2015
2,000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
YTD15
Source: U.S. Census Bureau
Lincoln Financial adding hundreds of
jobs, moving to RiverEdge Summit
>> Bisnow Atlanta - July 2015
Metro Atlanta Employment Comparison
Rank
Y-o-Y
Employment
Y-O-Y
Percent
Unemployment
Rate
Los Angeles/OC
1
144,300
2.5%
6.6%
New York/NNJ
2
140,900
1.5%
5.6%
Dallas-Fort Worth
3
111,700
3.4%
3.8%
Atlanta
4
79,200
3.2%
5.9%
Miami-Ft. Lauderdale
5
76,800
3.2%
5.7%
Seattle
6
67,100
3.7%
4.3%
San Francisco
7
65,100
3.0%
4.1%
Houston
8
59,700
1.8%
4.2%
DC-Arlington
9
59,100
1.9%
4.6%
Chicago
10
57,600
1.3%
5.8%
San Jose
11
55,000
5.5%
4.0%
Detroit
12
Metro Area
U.S. Total
51,400
2.7%
6.6%
3,068,000
2.2%
5.5%
Coke moving 500 people to city, leaving
Cobb County
>> Atlanta Business Chronicle - June 2015
Sage Software confirms plans to create
400 jobs in Midtown
>> Atlanta Business Chronicle - June 2015
Kaiser Permanente to put IT campus in
Midtown Atlanta and create 900 new
jobs
>> Atlanta Business Chronicle - April 2015
Mercedes-Benz relocates headquarters
to Atlanta bringing 400 existing
employees to the state and creating
600 new jobs
>> Atlanta Business Chronicle - February 2015
Source: Bureau of Labor Statistics; Metro Level Data May 2015 Average, not Seasonally Adjusted
5
Research & Forecast Report | Q2 2015 | Atlanta Multifamily | Colliers International
Atlanta Submarkets
50
More than
Dedicated Multifamily
Professionals & Advisors
14
Transacting in
States
Expansive geographic footprint
27,000
More than
Units transacted through
2014
$1.7B
Group gross transaction value
in 2014, $4.5B national company
transaction value
FOR MORE INFORMATION
Ron Cameron
Senior Vice President | Atlanta
+1 404 888 9000
[email protected]
CONTRIBUTORS
Will Mathews
Vice President | Atlanta
+1 404 888 9000
[email protected]
Copyright © 2015 Colliers International.
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6
Scott Amoson
Director of Research | Atlanta
Jaime Slocumb
Project Manager | Atlanta
Michael Henry
Financial Analyst | Atlanta
Southeast Multifamily
Investment Services
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