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Rents Up

WASHINGTON DC 03.16.2017

CAPITAL MARKETS AND REAL ESTATE FINANCE

Investing in 2017, Hot Markets, and the Ever-Changing Capital Stack

Mark Hertz -- AIG Global Real Estate
Sujan Patel -- Colony NorthStar
Joe Carter -- Wells Fargo
Rents Up

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booming job market coupled with  shrinking vacancies has Atlanta landlords seeing big  boosts in apartment rental rates. That has investors hungry for multifamily here. We spoke with Marcus & Millichap's Paul Vetter  and  Mike Fasano, who say average rents will rise 3% by the end of 2013  to $860/month. They already have climbed 3.4% during the past year to $840/month now. (It's a small price to pay to avoid sleeping on your parent's couch.) And this despite an influx of new inventory coming to market.
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It's these fundamentals that have been attracting capital into Atlanta for the past year, including agency and life companies. "I think it's  all about yield," Mike says. Already core urban Class-A product has seen huge price increases, now around a 5% cap, Paul says. But even Class-B and C apartments have been gaining pricing ground. For instance, a portfolio of nine apartments complexes on Buford Highway we reported here (including Cross Keys Cabana above) was acquired by the seller last year for $37M (it went for $50M), Paul says. "Atlanta is back on a lot of people's radar." (We're back in the spotlight, everybody. Nobody do anything embarrassing.)
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Paul sent us this pic; he's second from right, with Wilkinson Real Estate's George Waymire (who sold the aforementioned Buford Highway portfolio), Marcus & Millichap's  John McCalla and Deloitte & Touche's  Richard Harvey at Mount Shasta in California. The crew raised $10k for LUKE Project Summer Camp and  scaled the 14,000-foot mountain this past Saturday. This isn't the first time, either. With George leading the pack, Paul says they've climbed Mount Ranier, Mount Adams, and Gilbert Peak.