Local Developer's Upper Westside Apartments Part Of Atlanta's Next Multifamily Wave
A Valdosta apartment builder is the latest to propose a new multifamily project in one of Atlanta's hotter submarkets. But this time, he has the funding to do it.
GJ Enterprises Acquisitions has captured more than $37M in construction financing to break ground on the Vue at the Quarter, a 271-unit apartment complex in Atlanta's Upper Westside area off Marietta Boulevard.
The Vue is the latest in new apartment projects being announced in Atlanta and is part of a group of developments still taking the chance on the metro area's renter appetite for new apartments. GJ landed a $32.8M senior loan from Ameris Bank and $5M in preferred equity from RSE Capital Partners.
Over the next 12 months, more than 8,000 units are slated to hit the market, representing a “high water-mark for in-town deliveries,” Haddow & Co. recently stated in a report. Since 2015, some 19,000 new apartment units delivered in Atlanta.
GJ Enterprises is the latest new developer to brave the Atlanta apartment market. Most recently, Bisnow first reported that PMRG is eyeing a high-rise project in Buckhead, although PMRG Chairman Rich Kirk said that development is early in the process.
This glut of new apartments is having its toll on rents. According to Haddow, developers are having to sweeten concession packages to attract renters. Rents at high-rise apartments fell nearly 5% from a year ago to $2.30/SF, and the average number of new units getting snapped up by renters also dropped to 15 per month from 20 per month in 2017.
Overall, Class-A rents within the Interstate 285 ring are an average of $1.88/SF, or $1,747/month, with occupancy at just over 95%. But rents varied depending on submarket, with Midtown and Brookwood commanding the highest rents in all of Atlanta at more than $2/SF and nearly $2K/month.
Unlike the core Midtown area, Upper Westside is proving to be a more affordable renter's market with less new product underway than elsewhere in Atlanta, Haddow & Co. Vice President Ladson Haddow said. The submarket's average rents were $1.66/SF with only about 250 new units underway, according to the latest Haddow report.
Developers can keep rents down better in the Upper Westside because they can often forgo parking decks, which are a disproportionate share of overall development costs.
“It just keeps the costs down, and it makes it so you don't have to have the same rents ... with something with structured parking,” he said.
GJ Enterprises plans to have surface parking at the Vue, Haddow said.
The affordability metric in Atlanta's Upper Westside community — roughly bounded by Northside Drive, Collier Road, Marietta Boulevard and West Marietta Street just west of both Atlantic Station and Georgia Tech's campus, and part of the larger Westside Atlanta — is catching the attention of prominent developers who have fronted plans for new apartment projects in the area. Toll Brothers is eyeing a 324-unit project at 980 Howell Mill Road, Trammell Crow Residential is looking to break ground on the 273-unit Alexan 8West, and The Allen Morris Co. is pushing for more than 400 units at its Star Metals development, according to Haddow.
Wood Partners is another developer pushing for a project on Atlanta's Westside at the intersection of West Marietta Street and Marietta Boulevard. Wood Partners Director Bennett Sands said not only does reducing the need for structured parking help on costs, the area also has been largely overlooked by apartment developers in recent years.
Wood is seeking to rezone 18 acres to develop an up-to-400-unit apartment project in the Upper Westside. That project will offer both a smaller parking deck and surface parking, Sands said.
While Sands said he does see some near-term struggles for apartment landlords in pushing up rents, most are focused on the longer term, and Atlanta's prospect for future population and job growth.
"The long-term growth story for Atlanta is fantastic. We are a jobs machine," Sands said. "And the Westside has a tremendous story with the [future Bellwood] Quarry park."
The key, though, is whether these developers can secure financing to break ground.
“It's becoming harder and harder to make a deal pencil out,” Haddow said. "With rents kind of flattening, financing is a factor of that. I think banks are aware of how much has been built."
CORRECTION, JUNE 11, 2:30 P.M. ET: A previous version of the story misstated the GJ Enterprises Acquisitions' headquarters location. The firm is based in Valdosta, Georgia. This has been updated.