Multifamily Market Report | Atlanta, GA
Market Overview
In 2023, Atlanta’s multifamily market experienced a resurgence in demand, showcasing resilience in the face of macroeconomic challenges and a surge in new developments. Despite the increase in absorption, vacancy rates rose, primarily in high-end properties, due to extensive construction activity. While the market is saturated with upscale offerings, there’s a positive outlook for the future, as the resumption of student loan repayments may spur further demand among young professionals. Owners and operators of Class A and B properties have navigated these challenges and maintained modest rent growth despite concerns about eviction rates. Recent regulatory measures implemented in Q1 2024 aim to address these concerns, signaling a proactive approach to market stability. Looking ahead, Atlanta’s multifamily sector is expected to stabilize, with vacancy rates gradually returning to historical averages and rent growth projected to rebound by year-end as supply and demand dynamics align. Investors remain optimistic about Atlanta’s long-term potential for population and job growth, driving continued investment in the market.
Job Growth YOY
Atlanta’s job market has rebounded impressively since the pandemic, with a 5% increase in total jobs compared to pre-pandemic levels. Office-using sectors like finance, professional services, and technology have experienced robust growth, expanding by over 10% over the past four years. Atlanta remains an appealing destination for corporate relocations, evidenced by Microsoft’s commitment to Atlantic Station and the establishment of offices by tech giants like Google, Cisco, and others in Midtown. Additionally, significant expansions by companies like TK Elevator, Truist Securities, Deluxe Corporation, Papa Johns, Mailchimp, Airbnb, and Nike further emphasize the city’s attractiveness for business development. Despite a lower concentration of education and health services employment, this sector has seen substantial growth, with multiple healthcare facilities undergoing expansions to meet the needs of the growing population. While industrial sectors have faced challenges from slower consumer spending and automation, blue-collar job growth has been supported by hiring from companies like Amazon, Home Depot, and others. Despite pausing construction, Rivian, the electric vehicle manufacturer, remains committed to establishing its $5-billion manufacturing campus in Georgia while prioritizing cost efficiency and long-term growth. The city’s status as a transportation and logistics hub, along with its lower living and business costs compared to coastal metros, continues to attract residents and corporations alike, fostering sustained population and job growth.
Federal investments have positioned Atlanta as a key hub for electric vehicle manufacturing, with major facilities from SK Innovation expected to create thousands of jobs.
Population Growth
Atlanta’s lower living and business costs compared to major East and West Coast metros continue to attract individuals and businesses. This, coupled with its strong in-migration and appeal to cost-conscious employers seeking high-quality labor, is expected to drive population and job growth in the city.
Vacancy Rate & Net Absorption
Atlanta’s multifamily market saw a turnaround in 2023 with nearly 7,000 net units absorbed, yet the influx of new supply continued to push vacancy rates upwards, reaching 12.1%. The construction pipeline remains strong, with roughly 28,000 units under construction, signaling a 5.5% expansion in inventory. Absorption primarily favored higher-end units, while lower-rated properties experienced negative absorption, suggesting that rising living costs might be inhibiting household formation, particularly among low- and middle-income groups. Recent measures, such as a Standing Order issued by Fulton County’s Chief Magistrate on February 29, 2024, enforcing rent payments during waiting periods, aim to address the concerns of Atlanta’s eviction backlog. Despite short-term challenges, Atlanta’s multifamily market maintains a positive long-term outlook, driven by factors like robust population growth, a growing technology sector, and strong demand for workforce housing, particularly in suburban submarkets.
Rent Growth
Modest rent gains are forecasted later in the year for Atlanta’s multifamily market. Outlying metro Atlanta counties, characterized by discounted rental rates and lower construction levels, are witnessing year-over-year rent growth, contrasting with decreases seen across all submarkets with 10,000 or more units. Particularly noteworthy are West Midtown, Midtown, and Buckhead, each experiencing declines of 5% or more. High-end properties in development hubs are anticipated to face continued competition from new units in the coming quarters. Despite negative absorption, mid-tier properties, particularly those in nonsubsidized or rent-restricted workforce housing, retain more pricing leverage due to limited development in this segment.
Deliveries & Demolitions
Atlanta’s multifamily construction pipeline remains robust, with developers currently working on 28,000 units, marking a 5.5% expansion of the existing market-rate inventory. Despite this slowdown, supply-side pressures are expected to persist, especially among higher-end properties, as about 85% of the under-construction pipeline consists of Class A and B units. Major submarkets like Midtown, West Midtown, and the Eastside continue to be active, with Midtown leading in under-construction units and West Midtown ranking highly in terms of the percentage of inventory under construction. Additionally, South Atlanta has emerged as a growing construction hub, particularly along the South Side BeltLine trail and in the Summerhill neighborhood. Suburban areas like Outlying Gwinnett County and North Gwinnett County are attractive due to factors like available land, affordability, strong employment sectors, and highly rated public schools, contributing to solid household growth in recent years. Specifically, Outlying Gwinnett County has seen nearly 3,000 units delivered in the past 12 months, highlighting its ongoing development momentum.
Takeaways
Despite challenges, Atlanta’s multifamily market retains a positive long-term outlook. The city’s robust population growth and expanding technology sector continue to drive demand, particularly in suburban submarkets. While high-end properties face competition from new developments, midtier properties, especially those in workforce housing, maintain pricing leverage, indicating resilience amid market fluctuations. With construction activity showing a notable decline but remaining robust, Atlanta’s multifamily market reflects a dynamic landscape poised for continued growth and investment.
