Analysis: Atlanta Apartment Rents To Stagnate
The appetite for apartment living continues to thrive in Atlanta. But that does not mean developers will be able to grow rents much further in the near future.
Haddow & Co., an Atlanta-based multifamily analysis firm, concludes in a recent report that existing apartment rents will stagnate in as little as two years. Class-A apartment rents now average $1.80/SF, according to Haddow & Co.
While rents may stall, concessions such as free rent will remain prevalent in the market, especially with more than 10,000 new units underway as of 2017, according to Haddow & Co.
“Healthy demand should help absorb the current wave of deliveries, although there will be short-term pain in certain pockets,” Haddow & Co. officials said in the report.
Rising construction costs and tighter financing may shrink the pipeline of future new apartments inside the city as well, Haddow & Co. also reported.
The report, an August presentation to the Atlanta Apartment Association titled “Intown Atlanta Apartment Market Update: A Soft Landing?”, also surveyed a host of developers, lenders and investors for some noteworthy conclusions. Among the survey findings:
- More than half of the 70 respondents say Midtown is the submarket with the greatest risk of overbuilding, with another 42% saying Buckhead was at greater risk.
- About 58% of respondents say construction costs will continue to go up this year.
- Some 90% of respondents said it was more difficult to obtain debt financing than a year ago, and another 67% say equity financing is harder to get.