ATLANTA-660 Apartments, a 301-unit, class AA multi-housing development in Atlanta’s Old Fourth Ward neighborhood, has sold for $42.75 million. At $142,000 per unit, the transaction represents the highest price paid for a rental community in Atlanta during this cycle. 

HFF’s senior marketing director Jason Nettles and director Megan Thompson marketed the property on behalf of Southeast Capital Partners and The Integral Group. AMLI Residential Properties Trust purchased 660 Apartments in an all-cash transaction.

“This transaction is a function of Atlanta catching up to the core markets with regards to institutional interest,” Nettles, tells GlobeSt.com. “This is a bullet-proof core location and the asset quality is pure condo finishes with 10-foot ceilings and all of the bells and whistles. The high quality is reflected in the interest level from the institutional world.”

Completed in 2009, 660 Apts. has received several design awards including MHN’s, “2010 Best New Development” and Building of America’s “2010 Gold Medal Winner.” The asset is the submarket leader in effective rental rates.

As Nettles sees it, the sale of 660 Apartments is a sign of things to come in Atlanta’s multifamily market. He figures the sale price is very close to replacement cost, if not slightly over replacement cost—and he expects to see pricing north of replacement cost in Atlanta multifamily by the third or fourth quarter of 2011.

Atlanta is getting attention, in part, due to the constrained supply of multifamily in core markets like New York, D.C. and Los Angeles. Core money is moving into second tier markets, and Nettles says any core product that hits the market will find tremendous institutional interest.

“We’re seeing the precursor to development in Atlanta,” Nettles says. “Pricing is hitting 25 percent or more over replacement cost in New York and D.C. and L.A. That starts the construction pipeline again. Atlanta is clearly going to lag the rest of the market in terms of deliveries and new construction, but I think as we move into 2012 the construction pipeline will kick back up.”