Abodo: ATL Multifamily Rents On The Decline
Have Atlanta's ever-growing apartment rents finally tapped out? One apartment listing website's research could indicate that perhaps a top has been reached.
Abodo is reporting average apartment rents in Atlanta fell 2% from March to April to $1,305/month. Yet that is just the latest drop. Rents fell from a peak of $1,424/month in January. A year ago this month, rents were only tallying $1,180/month. And the supply looks to continue to grow.
Most recently Mill Creek Residential filed permits with the City of Atlanta to start construction on its Modera Buckhead, a 22-story, 400-unit project in the heart of the Buckhead Village (here).
"With construction at its highest level since the 1980s, we believe that a steady decline in rent prices in metro areas might be on the way," Abodo's Sam Radbil tells us.
Nationally, developers delivered 250,000 units last year, and another 285,000 are expected this year, he says. "Another big reason we anticipate the rent growth might slow in cities like Atlanta that have experienced rapid recent growth is the huge boom in multifamily construction...[which] is going to help slow the rapid increase in rent pricing."
While fundamentals have been resilient despite the influx of new units in Atlanta, many banks have been pressing the brakes on further multifamily lending, some executives told our audience at a recent Bisnow event. “Every time we think we have a handle on the 25,000 [apartment] units coming into the market in Atlanta, oh, here's another deal we didn't know about,” said Wells Fargo's Melissa Frawley (here) during our 2016 Capital Market Update at the JW Marriott in Buckhead earlier this month. “In the past month or so, it feels that the construction lending has tightened, especially for multifamily lending.”
But Sam falls short of saying rents will collapse. "The city also boasts a very favorable business climate, which is attracting new businesses and residents at a very high rate," he says. "That said, we don't anticipate a huge spike in rents prices in Atlanta because the supply is continually growing."