ATLANTA MARKET OVERVIEW - July 2018 - Moran & Company
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July 2018
ATLANTA
MARKET
OVERVIEW
INTRODUCTION
The apartment transaction market appears to be cooling slightly across the country. The US
major metros are currently at a 12-month volume of $39.8B, down 24.6% from $52.8B in
the third quarter of 2016. Similarly, the NCREIF South has dropped 9.6% in just one quarter,
moving from $49.7B to just $44.9B. The Atlanta market has also dropped nearly 19% and
is transacting at $6.9B as opposed to the $8.5B seen in the third quarter of 2017. While the
overall volumes still reflect a very healthy market, this change in direction is important to note
at this late stage of the cycle.
The multifamily fundamentals in Atlanta have remained strong. Occupancies hold steady
between 94-94.5% while effective rents continue to grow in the 3% range. Deliveries of new
apartments in 2018 is anticipated to be 9,704 units, which is down from 11,711 units in
2017; however, absorption of new supply has been strong, meeting the new supply numbers.
In 2017, thirty-three new projects achieved stabilization, and on average it only took them
19 months.
TrendTracker
These strong fundamentals have led many investors to put Atlanta high on their target list,
Printed on 7/18/2018
which has led to several notable transactions already in 2018.
Atlanta Apartment Volume ($) Charlotte Apartment Volume ($) Nashville Apartment Volume ($)
Orlando Apartment Volume ($)
$8B
$6B
Volume in USD
$4B
$2B
$0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Price floor selections do not apply to Indices or Fundamentals data. Volume displayed as 12 Month Totals. Cap rates and PPU displayed as a 12 Month Average.
Includes property or portfolio sales $2.5 million or greater. Q2 2018 preliminary data..
SOURCE: REAL CAPITAL ANALYTICS
ATLA NTA MA RK E T U P D AT E 2
RENT GROWTH
3.1% Y-O-Y EFFECTIVE RENT
GROWTH
94.3% OCCUPANCY RATE AS OF
SECOND QUARTER
8,331 NEW MULTIFAMILY PERMITS
(DOWN 19.67%)
484,554 INVENTORY (TOTAL RENTAL
UNITS)
POPULATION GROWTH
7.8%+ POPULATION GROWTH
2010-2016
5.75M ATLANTA, GA MSA
POPULATION
JOB GROWTH
5.8% WEEKLY SALARY INCREASE
(THROUGH MAY)
ANNUAL JOB GROWTH,
46,000 ROLLING 12 MONTHS
THROUGH MAY
INVESTED IN VENUTRE
$480M CAPITAL ENDEAVORS IN
ATLANTA UP SINCE 2016
HOSPITAL AND MEDICAL
$2B OFFICE EXPANSION
UNDERWAY
SOURCE: AXIOMETRICS AND YARDI MATRIX
ATLA NTA MA RK E T U P D AT E 3
NOTABLE TRANSACTIONS
Anthem on Ashley Juncture I & II
Sale Price $74, 963, 000 Sale Price $141, 700, 000
Price Per Unit $307, 225 Price Per Unit $253, 036
Price/SF $369 Price/SF $207
Sale Date June 2018 Sale Date March 2018
Number of Units 244 Number of Units 560
Address 720 Ralph McGill Blvd NE Address 910 Deerfield Crossing
Atlanta, GA 30308 Alpharetta, GA 30004
Year Built 2018 Year Built 2017
Total SF 203, 008 Total SF 685, 440
Owner/Buyer Invesco Owner/Buyer Carter Haston JV KKR
Seller North American Properties Seller JLB Partners
Lender N/A Lender Mesa West Capital
Avg Rent/Unit $1, 837 Avg Rent/Unit $1, 699
Avg Rent/SF $2.21 Avg Rent/SF $1.39
ATLA NTA MA RK E T U P D AT E 4
Modera Morningside Jefferson at Perimeter
Sale Price $110, 000, 000 Sale Price $102, 800, 000
Price Per Unit $366, 666 Price Per Unit $203, 968
Price/SF $368.72 Price/SF $192
Sale Date February 2018 Sale Date June 2018
Number of Units 300 Number of Units 504
Address 1845 Piedmont Ave NE Address 4867 Ashford Dunwoody Road
Atlanta, GA 30324 Dunwoody, GA 30338
Year Built 2016 Year Built 1996
Total SF 282, 000 Total SF 536, 256
Owner/Buyer GID Owner/Buyer Steadfast Apartment REIT
Seller Mill Creek Residential JV Fuqua Seller LivCor
Development Lender Fannie Mae
Lender N/A Avg Rent/Unit $1, 368
Avg Rent/Unit $1, 845 Avg Rent/SF $1.23
Avg Rent/SF $1.97
*Prices include retail space
SOURCE: REAL CAPITAL ANALYTICS
ATLA NTA MA RK E T U P D AT E 5
DEALS TO WATCH
AMLI Northwinds Azure on the Park
Address 32000 Gardner Drive Address 1020 Piedmont Avenue NE
Alpharetta, GA 30009 Atlanta, GA 30309
Number of Units 800 Number of Units 329
Year Built 1997 (I)/ 1999 (II) Year Built 2017
Total SF 827, 940 Total SF 310, 247
Owner AMLI Residential Owner Atlantic Realty Partners
Comments AMLI Northwinds is a large value-add Comments Azure on the Park is the first luxury
play in the wonderful submarket of core project to sell arms-length in
Alpharetta. The interiors are mostly midtown in the past two years. It is
untouched, and it should trade at a estimated to trade for over $400,000
very aggressive cap rate for a large per unit.
deal. It is estimated to be over $160M.
SOURCE: AXIOMETRICS
ATLA NTA MA RK E T U P D AT E 6
WHAT DO BUYERS AND
SELLERS WANT?
BUYERS WANT A DEAL WITH A LITTLE MORE YIELD. SELLERS WANT THEIR PRICE AND TERMS MET.
The majority of deliveries in the Atlanta market off market offer was able to meet the seller’s
are Inside the Perimeter (ITP); however, both goals while the deal represents a new pricing
buyers and developers are actively seeking level for a project with non-structured parking.
properties Outside the Perimeter (OTP) in Another example of OTP activity can be
order to achieve better rent growth in the highlighted by the fact that a local developer
short term. Despite increased OTP interest, has decided to build one of their first frame
there does appear to be more interest in the construction deals in Gwinnett County after
ITP submarkets Buckhead and Midtown than a number of high-rise projects. This reflects
there was at this time last year. Since supply the increased construction costs for high rise
is slowing in late 2018, there have been an projects ITP as opposed to suburban product.
increased number of off market offers made to
sellers. That being said, many sellers remain
on the sidelines waiting to fully stabilize to
achieve maximum value.
The recent sale of The Juncture in Alpharetta
is an example of an OTP off market deal. The
ATLA NTA MA RK E T U P D AT E 7
ATLANTA SUBMARKET PIPELINE
PLANNED, PROSPECTIVE, UNDER CONSTRUCTION
Perimeter
Property Count:
12
Unit Count:
5,005
Cumberland
Property Count:
11 Buckhead
Unit Count: Property Count:
2,943 35
Unit Count:
9,739
Midtown
Property Count: DeKalb
51 Property Count:
Unit Count: 25
14,930 Unit Count:
5,165
Downtown
Property Count:
27
Unit Count:
5,974
SOURCE: YARDI MATRIX
ATLA NTA MA RK E T U P D AT E 8
BUCKHEAD DELIVERIES
MIDTOWN DELIVERIES
SOURCE: AXIOMETRICS AND YARDI MATRIX
ATLA NTA MA RK E T U P D AT E 9
SINGLE FAMILY PIPELINE
The Atlanta multifamily market is a subset of the overall Atlanta housing market; therefore, the single-
family market and the multifamily markets can be tracked collectively to understand overall market
supply and demand.
There is an overall trend of increasing housing permits, as illustrated in the graph below. While the
number of multifamily permits has been on an uptrend in 2017, reaching 7,884, it is still only roughly
half of the number of permits that were issued in 2004, when it reached 16,232. On the single-family
side, it is clear that 2017 was also on the upswing at 24,849 permits, but this is still well below the
61,231 permits in 2005. While there has been a clear trend of increased permit activity over the last
ten years, it is still significantly below the previous cycle levels.
Demand for multifamily can be summarized by the physical occupancy rate, which, according to
Axiometrics, has remained in the 94% range since the beginning of 2014. As for single-family, the
best indicator of demand is monthly inventory, which is the total active listings divided by the total
sales. Both FMLS and Case-Shiller are reporting inventory in Atlanta to be between 2 and 3 months.
Since a six-month supply inventory is considered normal, the Atlanta inventory is very tight suggesting
that single family demand is very high as well.
The Atlanta housing market as a whole is very healthy in 2018, and the demand demonstrates that
neither the single family or multifamily markets are close to overbuilding. Future job growth and net
migration will continue to drive single family pricing and multifamily rental rates up.
SOURCE: REAL CAPITAL ANALYTICS
ATLA NTA MA RK E T U P D AT E 1 0CIVIC PROJECTS
MERCEDES-BENZ STADIUM
Mercedes-Benz stadium opened in the Fall of Hotel, over 500 residential units, and extensive
2017 and not only serves as the home of the shopping and dining. In addition, The Battery
Atlanta Falcons and Atlanta United FC, but it is includes an office tower that houses Comcast’s
also the current home of the SEC Championship Southeast regional headquarters.
Football Game. After hosting the 2018 National Philips Arena, home to the Atlanta Hawks, is
Championship Football Game, Mercedes-Benz currently undergoing a $192M renovation. All
will host Super Bowl LIII in 2019 and the Men’s office space is being removed from the venue and
College Basketball Final Four in 2020. Soccer is
the new renovation will repurpose the now empty
increasingly popular in Atlanta, and in a recent space so that it can be used for social experiences
home game at Mercedes-Benz Atlanta United, in for fans. In addition to sporting events, Philips
only their second season in the league, broke the Arena is a popular concert destination for Atlanta.
MLS single-game attendance record. The renovation project has entered its final phase
SunTrust Park, located 10 miles north of and is expected to be completed by Fall 2018.
downtown Atlanta, opened in the Spring of 2017
and is home to the Atlanta Braves. The park is
surrounded by The Battery Atlanta, a mixed-use
entertainment district that features an Omni
ATLA NTA MA RK E T U P D AT E 1 1ECONOMIC GROWTH
SOURCE: BUREAU OF LABOR STATISTICS
ATLA NTA MA RK E T U P D AT E 1 2FORTUNE COMPANIES IN ATLANTA
FORTUNE 500 FORTUNE 1000
NATIONAL NATIONAL
RANK RANK
23 565
44 605
75 665
87 679
126 681
177 685
194 687
303 871
341 896
346 983
347 996
430
432
434
477
SOURCE: METRO ATLANTA CHAMBER OF COMMERCE
ATLA NTA MA RK E T U P D AT E 1 3EAST PARTNERS
NATIONAL PARTNERS
ATL A NTA | CHICA GO | DALLA S | DENVE R | H O U ST O N | IRVIN E | PH O EN IX | SEAT T L E | WA S H I N G T O N D C
ATLA NTA MA RK E T U P D AT E 1 4EAST TEAM
Amory Lenahan Robert Yates
ASSOCIATE ASSOCIATE
Bill Edwards Jjana Valentiner
SENIOR ASSOCIATE MARKETING AND DUE
DILLIGENCE COORDINATOR
SOUTHEAST
3414 Peachtree Rd NE
Suite 475
Atlanta, Georgia 30326
404.841.4844
www.moranandco.com
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