"Continued job loss has occurred because of the economic slowdown and collapse of the tech cycle," Haddigan says. In fact, he doesn't foresee any significant gains in employment figures within the next six months.
As a result, demand for residential units, especially high-end luxury product in Atlanta's more affluent suburbs, continues to dwindle. "We had an occupancy rate (intown) of 96% last year," Haddigan says. "That has dropped to 90% or 92%. It appears to have stabilized. But overall, Atlanta is looking pretty flat for the next 12 months."
Increased vacancies have placed downward pressure on rental rates, once again this year. Rent growth should remain stagnant, at an average of $768 per month. Some projects are offering two to three months of free rent, Haddigan says.
Luxury rentals have been hammered, while B and C assets have regained favor among tenants because of their cheaper rents, Haddigan says. People are having a difficult time affording class A units, which has caused an oversupply in some pockets of the metro area, such as Gwinnett County, he says.
At the same time, low mortgage rates have impacted the multifamily sector. With 30-year fixed rates dropping to the 4%-range, many people believe now is the right time to buy a new home or condominium, Haddigan says.
Despite the dismal short-term forecast, the broker predicts Atlanta's apartment market will grow over the long term.
Data from the 2000 Census indicates population growth will positively impact the entire Southeast region, according to a first-quarter Marcus & Millichap report. "Long-term, Atlanta and the Southeast in general, will see a lot of population growth, which will send demand for residential units on the rise again," Haddigan says.
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