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Atlanta's Apartment Market to Continue to Grow in 2015

Tuesday, February 03, 2015

After recovering later than most major U.S. metros, Atlanta’s multi-housing buildings and apartment market fundamentals made substantial strides in the past 18 months. Wide-ranging employment has sparked a demand for multi-housing buildings for sale in Atlanta. Though developers are taking advantage of the increased demand, supply is not expected to affect occupancy, which is projected to remain above the long-term average.

Employment and Population Totals

Half of the market’s new supply is concentrated in the Buckhead, Midtown and Downtown submarkets, but it has not slowed performance. As noted by Axiometrics, “Even though the pace of deliveries ramped up in 2014, those areas experienced some of the best annual rent growth (8 percent) and occupancy rates (95 percent) in the market, displaying the overall imbalance of supply and demand in Atlanta. We expect demand to continue to outpace supply, and for Atlanta to be a much stronger apartment market than in the past.”

Multi-Housing Development in Atlanta

According to Axiometrics, close to 7,000 multi-housing buildings were delivered in the Atlanta metro in 2014. Another 9,600 units are expected to be delivered in 2015, but with a projected employment gain of more than 70,000 jobs (2.8 percent growth), the new supply is not expected to be a major detriment to the performance of existing assets. Overall residential construction, including single-family housing, remains muted. According to Census data, total residential supply is just one-third of the peak levels from last decade.

Multi-Housing Building Occupancy and Absorption

Atlanta’s multi-housing buildings occupancy rate is expected to rise from 94 percent in 2014 to 94.7 percent in 2015, the highest since 2000 and well above the long-term average of 93.2 percent. More than 10,000 units are expected to be absorbed in 2015, but the bulk of the absorption will occur in new deliveries and Class C properties. Existing Class A and B assets have very few vacancies to fill, as they averaged an occupancy rate greater than 95 percent during 2014.

Atlanta Occupancy Atlanta Completions and Net Absorption

Rental Rates for Multi-Housing Buildings

Atlanta’s annual rent growth of 7 percent in 2014 was one of the strongest in the nation. The market is projected to remain a top performer for rent growth in 2015, but the pace is expected to moderate closer to 4 percent. Expect areas with limited new supply to outpace the metro average.

Atlanta Rental Rates Atlanta Annual Rental Rate Growth

Contact HFF Atlanta for more information regarding multi-housing properties on the market in this area.

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