Atlanta Apartment Sales Volume Up More Than 20% From 2017
Investor hunger for Atlanta multifamily doesn't appear to be satiating. But, this year, buyers are more often looking to invest their bucks in the most stabilized and premier of apartment properties in Metro Atlanta.
“It seems there is an appetite for better-quality product now,” Cushman & Wakefield Vice Chair Josh Goldfarb said. “We've seen no slowdown whatsoever.”
Apartment sales jumped 26% during the first quarter compared to the same period last year, according to Cushman & Wakefield. According to Colliers International, $1.6B in apartments sold in Atlanta during the first quarter of 2018.
“Currently, the multifamily transaction environment is showing resilience in the face of projected interest rate hikes,” Cushman & Wakefield officials said. Some $7.7B in apartments traded hands in 2017, according to Colliers.
Last year, though, investors swarmed to suburban, Class-B properties in a bid to capture rising apartment rents by refurbishing the older units. The gambit has worked, by and large. Rents have climbed nearly 5% since last year. Even more startling: Rents have grown more than 38% over the past five years, well outpacing the national average of about 18%, according to Cushman & Wakefield.
The flood of capital to the suburbs has pushed pricing up across the board. Atlanta's economic success with new and higher-paying jobs — which give renters more disposable income — is steering investors back to trophy apartments in core submarkets, Goldfarb said.
“If you're going to pay a lower return, you might as well get a better class of asset,” he said.
Investors are also banking on Atlanta's job growth to justify many of these apartment purchases.
“We think Atlanta has a good story, a good job growth story that seems to have life going forward as well,” StoneBridge Investments Director William Bateman said.
StoneBridge most recently shelled out more than $23M — $117,500 per unit — for Avia East Cobb, a 200-unit apartment complex in Marietta from Harbor Group International. In turn, StoneBridge is pumping another $3.2M into the property to renovate the common areas, amenities and unit interiors, and renaming the property Landry at East Cobb Apartments.
Bateman said The Battery at SunTrust Park, the Braves stadium mixed-use development nearby, was a big lure to the property. But StoneBridge has been shopping Atlanta for some time now and has made especially strong bets in the Central Perimeter market, where it owns three properties.
Last year, StoneBridge purchased Veridian at Sandy Springs and 550 Abernathy, both of which are in the city of Sandy Springs near the new Mercedes-Benz headquarters.
"We like Sandy Springs because we've seen pretty strong organic rent growth,” Bateman said, adding rents have jumped as much as 20% on some units.
An undisclosed buyer for Manchester at Mansell, a nearly 500-unit gated community in Roswell, also is banking on nearby job growth to fuel demand, CBRE Vice Chairman Kevin Geiger said. Geiger brokered the sale earlier this month.
“The community is surrounded by major employers such as General Motors, AT&T and Jackson Healthcare, which recently announced an expansion designed to accommodate 1,400 additional employees over the next five years,” Geiger said in a statement.
Prices, of course, get steeper the closer in the property is to the heart of Metro Atlanta. Recently TIAA/Nuveen paid nearly $70M — more than $250K/unit — for the Biltmore at Midtown apartments, CoStar reported. That per-square-foot price is the highest amount paid so far in 2018 and “verifies in-town Atlanta's continued appeal to institutional investors," Transwestern Managing Director Jon Kleinberg told CoStar.