"Continued job loss has occurred because of the economic slowdown and collapse of the tech cycle," Haddigan says in a first-quarter market report. 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 notes. "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 Gwynett County, he says.

At the same time, low mortgage rates have impacted the multifamily sector, Haddigan says. 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, he says.

Despite the dismal short-term forecast, Haddigan predicts that Atlanta's apartment market will experience growth over the long term. Data from the 2000 Census indicates population growth will positively impact the entire Southeast region. "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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