"Atlanta's apartment market will remain subdued over the next 12 months, but encouraging economic news signals that the market is nearing bottom," says John M. Leonard, vice president and regional manger of M&M's local office. "An improving economy and decreasing new supply will slow the rise in vacancy and allow apartment owners to possibly experience rent growth in the second half of 2004."
The vacancy rate is expected to remain in double-digit territory in 2004 due to slow apartment demand, Leonard says. By the end of 2003, the Interstate 20-East submarket will have the highest vacancy mark in the region at 15%.
About 40% of the decreased construction volume for this year is attributed to abandoned projects. The majority of the postponed units are concentrated in DeKalb, Fulton and Gwinnett counties.
Asking rents are expected to remain flat or at about the same 2002 level--an average $798 per month for the rest of 2003. "The decrease in new construction will alleviate the need to lower rents further to stimulate demand," Leonard says. The Atlanta/Fulton County submarket continues to report the highest asking rents. Owners should be able to ask for an average $963 per month by year end, the M&M executive says.
On the investment side, deals are taking longer to close--from 60 days in 2002 to more than five months on some transactions in 2003. "Investors continue to buy properties in the Atlanta apartment market, but sales transactions slowed in the first half of 2003," Leonard says.
Thirty-four sales were recorded compared to 40 contracts in the same period last year. The median price per unit decreased slightly to $46,000.
On the bright side, Leonard notes the city's labor market is expected to expand by 1.6% in 2003 and 3.5% in 2004. Employers this year are expected to add a total 35,200 jobs and add another 76,300 positions in 2004.
"The return of hiring in the professional and business service sector, Atlanta's second-largest occupation category, indicates the local economy is strengthening," the M&M executive says.
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