Third-quarter occupancy of 94% compares with 95.1% in the second quarter and 97.3% in September 2000. Annual demand averages 700 units but 17,800 new units are waiting to surface from an ongoing pipeline.

"The largest chunk of future supply in the nation," Greg Willett, M/PF's research director, notes in his company's quarterly Atlanta Apartment Report. "Apartment demand will not be able to keep up with these new deliveries, further dampening apartment occupancy."

Apartments are being completed at the rate of 12,597 units per year. In the third quarter alone, 3,640 new units were completed. Property managers and owners at many complexes are cutting rents and offering a mix of concessions to retain residents and attract new tenants, Willett says.

Occupancy dropped more than five percentage points this year in west and east Gwinnett County and the Chamblee/Dunwoody submarket.

Monthly rents in metro Atlanta average $805, up .2% in buildings that have been renting for at least the past year. In newer properties built in the last 10 years, the average monthly rent is $920. Annual rent growth previously was between 4% and 5% from late 1998 through early 2000, before trending downward in recent months.

"For the first time in several years, Atlanta rent growth now falls markedly below the metro's overall consumer price inflation rate," reported by the Bureau of Labor Statistics at 2.7% in August, Willett says.

The highest rents are in the North Atlanta/Buckhead submarket where the average is $1,072 per month. Typical rents for projects built since 1990 top $1,000 across Intown/Midtown, Northwest Atlanta and Chamblee/Dunwoody.

"Today's leasing environment is the most competitive seen in Atlanta throughout recent years," Willett says.

"With large volumes of new product completing at a time when there is not much net additional demand, property owners and managers are scrambling to retain existing residents with expiring leases."

The northeastern suburbs especially are struggling.