"By year-end 2005, metro apartment owners are likely to report an improvement in net operating income, thanks to positive gains in occupancies and rents," Leonard says. He predicts the city's vacancy rate will drop by 100 basis points to 10% this year. "Owners in the northern suburbs will report improvement of at least 50 basis points this year, as local companies increase payrolls."
"The city's urban core will remain a top destination for investment," Leonard says. "The Midtown area is fast becoming a prime residential neighborhood, with developments under way on a number of high-rise and luxury condominium towers." He says condo converters "are expected to drive up apartment values as they attempt to gain a foothold in this submarket."
Leonard is confident the area's employment gains will translate to a stronger apartment market. Atlanta-area firms are expected to hire an additional 65,830 workers in 2005, bringing the total employment base to 2.3 million. "Growth in higher-paying jobs, such as financial activities and professional and business services, will help boost demand for class A units," the broker says.
Also expected to help the apartment market is limited supply of new product. Developers are forecast to complete 4,500 units this year, down from 5,700 units in 2004. Prime neighborhoods, such as Buckhead and Midtown, will received additional high-rise and luxury properties.
Leonard predicts investors unable to buy properties in central Atlanta will find more upside opportunities in the suburbs, along the Perimeter. "For example, buyers will be searching in College Park and East Point, where prices tend to be less expensive than the urban core, and residents are close to Downtown and the airport," Leonard says.
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