Apartment Prices Becoming Issue in Midtown
Is Midtown getting too pricey for the average Millennial, the main demographic multifamily and retail owners are courting? That's a concern raised during our 2nd Annual Future of Midtown event this morning at TWELVE Hotel in Atlantic Station. With construction costs up anywhere from 22% from last year to 40% from 2010, members of our panel say affordability is becoming an issue in Midtown. With high-rise apartment rents topping $2/SF, “that's not going to be the most affordable product for Millennials,” says Novare's Jim Borders. (Even on a steady diet of ramen.) “For the kid out of college working for a Big Three accounting firm, if that young person can't afford to live in Midtown, that's a problem.”
Jim was part of our panel lineup that included AMLI Residential's Philip Tague, North American Properties' Mark Toro, Daniel Corp's Steve Baile, Integral's Chris Martorella, AGH's Wes Hudson (who moderated), and Midtown Alliance's Shannon Powell. One solution is that developers are creating smaller apartment units to counter rising costs, especially in light of new efficiencies, Chris says. “And that's not new. That's just new to our market,” Steve adds.
And condos may be the next thing to hit the Midtown market, especially given that the apartments being built today don't lend themselves for conversion. (Some apartments are so stubborn.) “Atlanta has kind of lagged coming out of the recession. I foresee shortly this year… the announcement of a condo building, probably in the Midtown area. There is demand from a large number of affluent young people,” Philip says. He notes that of the nine major metro areas AMLI is involved in, Atlanta is the last to see condo product reemerge.
Speaking of AMLI and Midtown, the company has the former Trump site tied up for a project. Philip tells us that the mulitfamily developer is eyeing a 28-story, 350-unit apartment tower (rendered here) for the land. AMLI purchased the 1.5-acre site at 15th and West Peachtree streets last year for $7M after plans for a Trump residential complex fell apart during the recession.