ATLANTA—It's not a new story, but multifamilyremains the hottest trend in the Southeast. You can measure thetemperature of the multifamily market in theregion by drilling into the major metros. According toMarcus & Millichap, metrowide vacancy inAtlanta has improved nearly 500 basis points since 2009 to hit4.9%. In Miami, vacancy sits at 3.5%. Orlando sits at 6%.

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Kevin Finkel, executive vice president ofResource Real Estate, which focuses on themultifamily sector across 21 states, says rentgrowth is strong for class B and C apartment communities in theSoutheast, especially those that serve the US workforce renter.Rent growth, he continues, is slowing a bit for class A propertiesbut the overall multifamily market is stillhitting on all cylinders. But he does have one concern.

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“The vast majority of new apartment construction is urban andhigh-end—class A-plus construction—that targets rents at or above$2,000 per month. There is virtually no new apartment supply beingbuilt for the workforce,” Finkel says. He expects this to be along-term trend because there is no market or governmentalmechanisms that encourage developers to create new workforcehousing with rents at about $1,200 per month given the high cost ofland and construction.

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“We believe multifamily real estate firms withthe experience and capabilities to fully renovate the agedapartment inventory available today into upgraded rental optionsthat are in high demand by today's workforce offer a significantopportunity,” Finkel says.

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Meanwhile, there are plenty of new multifamily projects risingfrom Southeast dirt. The Related Group has beenespecially active, starting four multifamilyprojects in South Florida in the last quarter. And affordablehousing developers are targeting Miami, the nation's leastaffordable major city, according to the Center for HousingPolicy.

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Multifamily investors are snapping upopportunities in Southeast markets and lenders are betting on newmultifamily developments like Melody Tower, which recently won a$67 million construction loan from TotalBank.RADCO has been one of the most active Southeastmultifamily buyers. The firm now owns 26 multifamily communitieswith over 7,000 units in six Southeast and Midwest cities—andgrabbing most of them in the past two years and largely focusing onGeorgia.

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“We are intimately familiar with the Georgia marketplace andhave invested a significant amount of capital into the community,”says Norman J. Radow, CEO of RADCO. “Inparticular, Metro-Atlanta has enjoyed an improved job market, withrecent employment increases in construction, retail andhospitality. We expect to acquire additional properties in Georgiaover the coming months.” Click here to read more about major commercialreal estate trends in the Southeast.

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