Apartment Rentals, Sales in High Gear

ATLANTA-These are the best of times for Atlanta apartment owners and investors, according to a new industry analysis by locally based Bullock Mannelly Partners Inc., a full-service brokerage house that tracks the area's multifamily markets.

For the third quarter, Bullock Mannelly finds vacancies, concessions and new construction are down. Rents and sales prices are up. And tenants are moving into the central business district in record numbers.

"The impact of having some of the worst traffic in the nation, combined with an increase in urban amenities, have led people to move into the Atlanta city limits at levels not seen for decades," says Bullock Mannelly research director Erik Pawloski.

Over the past 12 months, an increase of 25,626 new residents, combined with lower than average deliveries of new product, have resulted in the city's overall vacancy rate to improve to 8.4% at mid-year 2005 from 9.6% at the same time last year. Seventeen of the 21 submarkets had either no change or showed an improvement in their vacancy rates.

"For the near future, expect vacancy levels to continue their decline and rents to increase as relatively few projects are delivered," Pawloski predicts. Additionally, "expect new high-density infill projects to be announced as the growing demand within the urban submarkets persists."

Concessions continue to fall, decreasing more than 24% over the past 12 months due to a decline in new starts and delivers. Class A properties reported the highest concessions at about $98 per unit, followed by class B at $86 per unit and class C at $44 per unit. The corresponding rental rates at mid-year at $969 for class; $826 for class B; and $721 for class C.

"After three years of declining asking rents, the slide appears to have bottomed, as average rents have held steady at $806 over the past 12 months," Pawloski notes. "A more significant indicator is the 4.7% increase in effective rents from mid-year 2004 to mid-year 2005." Three intown submarkets are the leaders in effective rents. Central is at $939 per month; Buckhead, $931; and Midtown, 764.

On the sales side, nearly $1.7 billion in transactional volume was recorded during the eight months of 2005, Pawloski says, as "an abundance of equity continues to be infused into the Atlanta apartment market." The number of transactions, although slightly down from 2004, "persist at a level higher than the historical average," the researcher finds.

The average sales price per unit has increased to $66,324 from $65,641 over the past eight months. A new trend shows "for-rent product continuing to be removed from the intown apartment market as two of the top four sales, 1280 Oakwood and the Georgian Terrace, will be added to the Midtown condo market," Pawloski says. "As the newer, most desirable properties continue to be converted to condos or are no longer being marketed, the average age for properties traded continues to rise to an average of greater than 29 years."

The largest sale this year to date was Rreef's purchase from Post Properties of five separate communities called the Post Village complex. The combined communities contain 1,738 units and were sold for $132.5 million or $76,237 per unit, as GlobeSt.com previously reported. The 48-building, Cobb County property was built in phases between 1983 and 1987. Post Village is west of Interstate 75, northwest of Interstate 285 and south of Windy Hill Road.