Despite growing concerns about rent growth, AMLI Residential will move forward on at least two Atlanta-area apartment projects in the coming months. That's the word from AMLI president Phil Tague just days before our 2016 Multifamily Forum.
Phil confirms for us AMLI will break ground this year on both AMLI Decatur—a 325-unit apartment complex that's part of a larger $77M mixed-use redevelopment with Cousins Properties—and a site AMLI purchased earlier this year at Atlantic Station. Phil's got four other active construction projects in the pipeline and says the capital sources AMLI uses are feeling growing trepidation about the multifamily market. “We're fortunate where we don't need construction lenders,” Phil says. “But privately, I know a few people have chosen not to follow through with projects where they haven't spent a lot of money on yet.”
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So far, Phil is positive on rent growth in Atlanta this year, especially on its portfolio. That's despite some indication that top rents have tapped out in the market. But Phil says a projected 4% rent growth this year on AMLI's portfolio is “still pretty healthy.” If anything is worrying him, it's that 9% of AMLI's leases are co-signed by a third party. Phil believes most to be parents of young adults. At the highest before the Great Recession, that stat reached 4.5%, and surpassing that could signal that it'll be harder for rents to climb higher.
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Phil says more worrying to the apartment market, as well as the economy overall, is this presidential election cycle. “I think Trump scares the crap out of people,” Phil says, citing the presumed-Republican presidential nominee's controversial views on building a wall between the US and Mexico, statements on re-inking massive trade deals and banning Muslims from immigrating to the US. While Democratic hopeful Hillary Clinton would create uncertainty as to new taxes and progressive policies, Phil says a Trump presidency would be incredibly negative to business confidence in the US. “I think regardless of which one is elected, there is probably going to be a negative economic effect. But I think the worse economic effect will be if Trump is elected.” Hear more from Phil at our 2016 Multifamily Forum, 7:30am, Wednesday, June 8 at the Cobb Energy Performing Arts Centre. Register here.
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