Published on June 16th, 2016 |0
Buckhead’s new apartment market predicted to ease back by analyst
Speaking to some 300 real estate professionals at the Bisnow 2016 Multifamily Forum at Cobb Energy Center recently, Denton said top-line apartment rent growth is slowing down in Atlanta and across the country. “We can’t sustain this level of growth–6 percent, 7 percent. Things are tremendous.”
But Denton told the audience, “Just be aware at some point, we’ll ease back to 3 percent to 4 percent rent growth.”
Brooks Castellaw, executive vice president of CFLane agreed with Denton, saying even in hot submarkets like Midtown or Buckhead, there’s little chance every new development will hit the coveted $2.50/square foot to $2.75/square foot range. Most will be around $2.10/square foot.
Castellaw said his firm delivered the first urban surface park product on Collier Road in Buckhead–“Not a perfect location but it works for millennials who want to live in urban areas.” That project has rents in the $1,300 per month range.
On the other hand, his firm’s project at Ardmore and 28th Street in south Buckhead has already signed a lease at $4,500 per month rent for a four-bedroom townhome.
Everyone appreciates a speaker with a sense of humor when the meeting starts at 7:30 a.m., and Amli Residential President Philip Tague was that person during the two-panel Bisnow forum.
Tague pointed out that there are “still plenty of Millennials living in their parents’ basements.” “That could continue to feed the demand for apartments for the foreseeable future,”
he added. “We’re just praying that the parents kick them out and guarantee their leases,” he quipped.
Tague said there are a lot of multifamily units being built. “Demand has been robust in Atlanta.” He said 14 percent of the renters are 55 and older. Before the recession, he said that was 6 percent.
Peter says apartments in suburbia have been getting activity from families who still see suburban schools as better than urban public schools. “I think that public schools still really matter a lot,” he says. He also said 9 percent of the rentals have guarantors of the leases.
Tague pointed out there are 22 million millennials who are still relying on their parents for help.
“Rents might moderate, but I don’t see a big drop,” he told the audience.
RADCO Partner Peter Fitzgerald predicted the long-term apartment market in Atlanta will remain strong. He said there is an increased interest in multifamily further out in the suburbs. “Quality public schools are still a major driver,” he added.
Fitzgerald also predicted affordable housing is going to be a major issue in the next five years, a thought that was shared by several of the panelists. “Portable vouchers that go with the person from
property to property need to be a reality,” he added.
“You look around any of these cities, including Atlanta, and gentrification is simply pushing out many of the people who were renting,” says AMLI’s Tague. Integral’s Vicki Lundy Wilbon said cities need to consider solutions such as inclusionary zoning clauses or public/private partnerships.
Noel Khalil, founder, chairman and CEO of Columbia Residential, said senior living communities are over-subscribed in all projects—sometimes by 100 people. “I encourage our industry to work out the opportunities. I fear a Manhattan-ization of Atlanta.”
(Read BuckheadView’s earlier story on the predicted rise of condo developments here.)