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ATLANTA-Steady renter demand and investment interest are keeping the local apartment market healthy, even though transaction velocity is not at last year’s record levels it was last year, say market professionals. According to Marcus & Millichap’s 2008 National Apartment Report, 41,000 employment positions will be added in the Atlanta area this year, which, along with continued foreclosures in the single family market, are keeping the apartment market stable.

“We’re seeing reduced turnover at all our properties, and a commensurate increase in occupancy as a result of more people entering the rental pool versus the homeowner pool,” says Brand Inlow, chief investment officer of McCann Realty, which owns four rental properties in the Atlanta metro area. “Generally Atlanta, like Dallas and Houston, leads the country in job growth and household formation, which are the drivers for the apartment industry.”

McCann Realty, in a partnership with Silver Capital LLC, recently acquired Villas at South Point Apartments, a 284-unit, garden-style community located in the McDonough submarket of metro Atlanta. Silver-McCann Apartment Group II LP plans to make one more acquisition before closing the fund, bringing its total acquisitions to $150 million in less than two years.

Elliott Hollander, director with the national multi-housing group of Marcus & Millichap, says that despite a recognizable slowdown in apartment transactions, the market in Atlanta is actually just stabilizing after a boom in 2006 and 2007. “One of the major reasons for both a shift in transaction velocity as well as pricing has been the capital markets,” Hollander tells GlobeSt.com.

“With the collapse of the CMBS market, it’s been back-to-basics, fundamental underwriting for these properties. Luckily, multifamily properties are really the favorite asset type of lenders right now,” he says. He notes that it’s easier to make a sensible acquisition with an apartment properties rather than a retail or office product.

The transaction slowdown also has to do with a pricing expectation gap between buyers and sellers in the apartment market, Hollander says. “The gap is slowly starting to diminish as people are understanding what it takes to get a property sold,” he adds.

Despite the challenges, brokers agree that deals are getting done at a healthy pace. For example, an affiliate of Norfolk, VA-based Harbor Group International LLC recently sold the 280-unit Creekside Crossing apartment community to an affiliate of Grubb & Ellis Realty Investors LLC for $25.4 million.

The property, which is currently 98% occupied, is located just off Interstate 20 at 100 Cavalier Crossing in the Lithonia submarket of Atlanta. Rental rates at the community range from $780 to $1,195 per month for one- to three-bedroom floor plans.

While the Silver-McCann group expects to build its portfolio in the area over the next few months, Harbor Group is selling assets. “We have decided to make a number of dispositions on our Atlanta properties,” says T. Richard Litton, Jr., president of Harbor Group, which claims worldwide assets valued at $2 billion. “This is the second disposition over the last year,” he explains, stating that the company had met investment objectives with both sold properties.

The company has purchased six apartment communities in the metro area since 2004, when it was working on increasing investment presence in the area, says Litton. Harbor Group sold the Veranda Apartments at 2383 Akers Mill Road in Cobb County in February for $32 million, according to CB Richard Ellis, which brokered the transaction. “We don’t have anything else listed right now, but we’ll continue to explore opportunities that we think make sense,” Litton says.

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