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The appetite for apartment living continues to thrive in Atlanta. But that does not mean developers will be able to grow rents much further in the near future.
Haddow & Co., an Atlanta-based multifamily analysis firm, concludes in a recent report that existing apartment rents will stagnate in as little as two years. Class-A apartment rents now average $1.80/SF, according to Haddow & Co.
While rents may stall, concessions such as free rent will remain prevalent in the market, especially with more than 10,000 new units underway as of 2017, according to Haddow & Co.
“Healthy demand should help absorb the current wave of deliveries, although there will be short-term pain in certain pockets,” Haddow & Co. officials said in the report.
Rising construction costs and tighter financing may shrink the pipeline of future new apartments inside the city as well, Haddow & Co. also reported.
The report, an August presentation to the Atlanta Apartment Association titled “Intown Atlanta Apartment Market Update: A Soft Landing?”, also surveyed a host of developers, lenders and investors for some noteworthy conclusions. Among the survey findings:
More than half of the 70 respondents say Midtown is the submarket with the greatest risk of overbuilding, with another 42% saying Buckhead was at greater risk.
About 58% of respondents say construction costs will continue to go up this year.
Some 90% of respondents said it was more difficult to obtain debt financing than a year ago, and another 67% say equity financing is harder to get.
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