North Gwinnett County and the Roswell/Alpharetta submarkets will lead the recovery as tenant demand returns and wide-spread concessions gradually disappear, the Encino, CA-based brokerage and investment house predicts. "After enduring three years of deteriorating apartment market fundamentals, Atlanta-area apartment owners will welcome the return of positive momentum" in 2004, says Hessam Nadji, managing director, research services at Marcus & Millichap.
Nadji says "continued improvement in the local economy, especially in the hard-hit sectors of information technology and professional and business services, will enable owners in some submarkets, particularly in the northern suburbs, to benefit from falling vacancy and improving net operating incomes."
Nadji's optimism is based on the city's improving labor picture. "Atlanta's employment market ended two years of job losses in 2003 as an estimated 53,000 workers were hired," the researcher says. "Local employers will hire even more aggressively in 2004, when approximately 62,000 positions are expected to be created."
Effective rent is expect to climb 1.3%, to $714 per month, by year end, while asking rents register growth of 1%, to an average of $806 per month. Nadji feels North Gwinnett County and the Roswell/Alpharetta submarkets will be the first areas to experience positive gains.
"Sales activity in these submarkets is likely to increase as investors comb the area for upside opportunities," the researcher says. But owners of in-town properties "will need to wait another year before improvement in multifamily conditions appear," he says.
Construction activity in 2004 is expected to be modest, with 3,750 units slated for delivery by year end, down from 6,300 units in 2003. But "a flurry of construction activity will keep vacancy from recovering in the Atlanta/Fulton submarket, which is prompting owners to continue offering costly concessions to fill units before additional luxury apartments become available at competing properties, including Atlantic Station," Nadji says.
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