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Atlanta Suburbs Eclipse The City As Region's Most Expensive Apartment Submarkets

Apartment rents in Atlanta's suburbs surged last year, outpacing its previously popular urban core as the multifamily market continues to shake out from the effects of the pandemic economy.

Veridian at Sandy Springs, recently acquired by California-based Investors Management Group.

Many of Metro Atlanta's suburban cities saw leaps in apartment rent growth year-over-year in January, while landlords in the city of Atlanta, which was the most expensive submarket this time last year, saw their rents stagnate, according to the latest data compiled by Zumper.

Atlanta's January year-over-year rent growth was under 1%, according to Zumper. At the same time, some of the metro area's more affluent suburban cities tallied double-digit rent growths, including Sandy Springs, Brookhaven, Roswell and Kennesaw.

Sandy Springs and Brookhaven overtook Atlanta as the most expensive rental submarkets in all of the metro area, according to Zumper, with average rents at $1,500/month and $1,470/month, respectively. Rents in the city of Atlanta averaged $1,430/month as of January.

These suburban gains mean that apartment pricing power has steered from the urban core to Atlanta's suburbs, experts say.

“One shift we have seen is kind of this shift from the dense urban centers in the city to the suburbs,” Zumper data analyst Neil Gerstein said.

California-based Investors Management Group recently purchased Veridian at Sandy Springs, a 272-unit garden-style property, for $42.9M, or $157,700/unit. It's the latest purchase by IMG in Metro Atlanta, where the firm now has 2,500 units in areas like Lawrenceville, Duluth, Marietta, Sandy Springs and Buckhead. 

IMG Director of Acquisitions Kevin Crook said the firm's investment focus will remain largely on suburban Atlanta because of this suburban flight taking shape, especially given the region's base of highly educated workers. 

“I think people, because of COVID ... are looking forward to a little more space,” Crook said.

Windsor Stevens partner Rod Mullice

For much of the real estate cycle since the Great Recession, apartment rents in Atlanta rose steadily, jumping from $1,250 in December of 2015 to $1,430 by the end of last year, according to Zumper.

But now, some expect that momentum may be stalled long-term.

Rod Mullice, a partner with multifamily developer Windsor Stevens, said the data demonstrates a generational megatrend at work in the metro area, driven by shifting preferences with millennials. As millennials now begin to marry and form families, they are moving back into the suburbs with plans to buy homes.

But until then, they're renting, Mullice said, and spending less on rent than what they were shelling out to live in urban high-rises.

At the same time, the work-from-home movement also has convinced some renters that they no longer need to live in the city. If they are working from home more often, suburban apartments offer more space at less rent than what can be found in high-rise apartment towers in the city.

“If only 22% of workers are back into the office, there's not a real need to be five or 10 minutes from the office,” he said.

Metro Atlanta has benefited from a population flight away from high-tax and high-cost regions on the West Coast and Northeast. Between 2019 and 2020, the 10-county Metro Atlanta region added 63,600 new residents, with the strongest growth tallied in Gwinnett County (15,500 new residents) and Fulton County (12,400 new residents), according to the Atlanta Regional Commission.

“Across the board, there's been a de-urbanization,” said Mikael Levey, the CEO of JEM Holdings, which owns and manages thousands of apartments. “So that has helped the suburban properties and created a glut of downtown apartments. I think it may take one to three years to fully recover."