The winding, twisting road to overall apartment market improvement is typically marked with hiccups and false starts. But after overcoming some bumps along the way, Atlanta appears to be back on track. Though another large block of new multifamily units came out of the ground, the distribution between rentals and for-sale dwellings was atypical from the usual pattern, with condominiums continuing to be in vogue here. With greater focus placed on condos, metro Atlanta's apartment market was able to gain a little bit of traction.
Seemingly insulated from the market's sometimes erratic ups and downs, the neighborhoods inside the I-285 loop (locally referred to as the Perimeter) routinely log better-than-average results. This hasn't escaped the ever-watchful eye of multifamily home builders, who have gobbled up land in Atlanta's more central region. But with sites becoming increasingly harder to obtain, many developers are opting for infill projects, with greater emphasis placed on locations within close proximity to offices, retail, restaurants, and even mass transit. Atlantans, traditionally lukewarm to transit-oriented development, finally appear more willing to embrace the economic and environmental benefits that often go hand-in-hand with live/work/play neighborhoods built around public transportation.
Atlanta closed 2006 with apartment occupancy of 94.1 percent. That's pretty close to the metro's long-term norm, which is held down because there's usually so much new supply in initial lease-up. And, it reflects dramatic progress from the recent bottom point of 89.5 percent in late 2003. Tight occupancy rates as of December 2006 were seen in the metro's large supply of new, top-tier units built in the 1990s and after 2000. Meaningful rent growth returned in 2006, following a period of flat rates in 2005 and rent cuts from 2001 through 2004. Effective rates jumped a little more than 3 percent. Though still falling somewhat short of the national norm, this rent performance is a vast improvement from the rent cuts posted in late-2001 through late 2004. As of December 2006, overall rents in Atlanta averaged $780 per month, or 76.2 cents per square foot.
CONSTANT CONSTRUCTION Looking at the amount of new homes delivered to the greater Atlanta area, it's a bit surprising that the metro's apartment market is doing as well as it is. On the multifamily side, permit authorizations have green-lighted an average of 13,700 new units a year between 2000 and 2006. That's almost 100,000 new multifamily units since the turn of the century. This is in addition to the constant barrage of new single-family homes: The Atlanta area has led the nation in single-family permit authorizations for more than a decade.
Ordinarily, most of these multifamily residences would be for-rent apartments. However, in this era of condo coolness, apartments have taken a backseat. The metro area has been flooded with new, reasonably priced condominiums that have been devoured by the metro's thriving “young and restless” 20- and 30-something crowd. Though no longer as robust as they once were, condo sales in Atlanta haven't fallen off a cliff like they have in Florida.
With condos stealing the spotlight, apartment construction has cooled notably. In 2006, new completions added a little more than 5,900 apartment units to the marketplace, the smallest calendar-year tally since 1994.