Atlanta Multifamily Market Report – September 2023

Chris Nebenzahl

September 28, 2023

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Category: Atlanta

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Supply Drives Multifamily Fundamentals Downward in Atlanta

Atlanta’s apartment market is struggling as new supply weighs heavily on performance from the property level all the way to the market level. The local economy continues to flourish as job growth and population growth remain among the best in the country, however the onslaught of new apartment construction has outpaced demand. Suburban properties are outperforming urban properties, especially in locations with less supply, yet operating fundamentals are down in all submarkets. This current wave of supply will eventually dissipate and the strong demand drivers that endure will bring apartment performance in Atlanta back to its historical trend, but it will be a challenging market to operate in for the next 12 to 18 months.

Rent and Operating Trends

Demand fundamentals remain above the national average in most submarkets across Atlanta as traffic and leasing remain strong. Yet occupancy and rent performance both on an absolute basis and a year-over-year growth basis trail the nation by a significant margin.

Traffic and Leasing

Atlanta’s traffic has remained above average for the past few years, and properties across the metro see an average of 8.9 tours per week.
Not only has traffic exceeded the national average, but over the past twelve months, traffic has increased modestly as well.
Buckhead leads all submarkets, averaging 11 tours per week. However, Buckhead is one of the submarkets seeing the most new supply, so while traffic and leasing are strong, new supply has pushed rent and occupancy lower in the submarket.
As of mid-September, 11 of Atlanta’s 18 submarkets tracked by Radix Research are exceeding national traffic averages.
Leasing is also strong across the metro, as seven submarkets are averaging three or more new leases signed per week.
The I-20 East, South Gwinnett, and Smyrna submarkets lead the metro for new leases signed.
I-20 East is performing especially well, as the 3.9 new leases signed per week are coming with only 5.5 tours per week. The conversion ratio of 71% is among the best in the nation.

Occupancy and ATR

Occupancy has been the one metric most impacted by the glut of new supply hitting Atlanta. Over the past 12 months occupancy rates across the metro are down 1.9%, more than doubling the national average for occupancy decline.
Only one submarket, Forsyth County, has experienced rising occupancy in the last year, and all but three submarkets have seen occupancy fall by at least one percent.
Atlanta now has the lowest average occupancy rate of any market tracked by Radix Research.
Buckhead, Sandy Springs/Dunwoody, and Roswell/Alpharetta, three submarkets with major supply pressure, all have occupancy rates below 93%. Midtown is not far behind, with average occupancy in the submarket falling to 93.1%.
ATR has been holding its own and the average apartment in Atlanta has 15 units available to rent over the next 60 days. However, with more supply coming online and lease ups taking longer than expected, that number is likely to increase in the coming months.

Net Effective Rent and Concessions

The average net effective rent in Atlanta is down 4.4% compared to a year ago, one of the steepest declines in the nation. For context, the national average net effective rent has fallen 1.6% year-over-year.
The largest drops were in the I-20 West, Central I-75 West, Buckhead and North DeKalb submarkets. NER in each submarket fell at least 5.5% since last September.
There are two outliers however, as Clarkston/Stone Mountain and Coweta County have both registered annual increases in NER. The suburban submarkets have seen less development this cycle compared to submarkets inside the perimeter.
As expected with so much new supply and pressure on rents and occupancy, concessions have more than doubled in the past year. The average concession across Atlanta is $25 per unit per month.
In more expensive submarkets like Midtown, the average concession is more than $50 per month.
While concessions are still below peer markets like Nashville, I expect concessions will continue to increase as we move away from the prime leasing season. Property operators will be fighting for tenants in the fall and winter and will likely drive concessions as a way of getting people in the door.

Employment Trends

While the apartment fundamentals are bleak in Atlanta, economic activity and thus housing demand remain strong.
The Atlanta employment market is very tight, having added 8,000 new jobs in August alone. The unemployment rate across the metro is 3.2% and has been under 5% since early 2021.
As one of the largest metropolitan areas in the South, Atlanta has a highly diversified economy, with major corporations relocating and adding jobs from across the nation. Professional and Business Services, Trade, Transportation and Utilities, and Education and Health Services make up the largest portion of the Atlanta workforce.

New Supply Pipeline

The combination of strong job growth, domestic migration, and exceptional apartment performance in 2021 pushed developers to expand the construction pipeline across the Atlanta metro. Georgia was a top 5 state for population growth last year, another factor supporting elevated demand for housing.
Yet the new supply pipeline currently includes more than 850 multifamily projects. Some of the projects in planning may fall out of the pipeline given the current state of Atlanta’s apartment performance, but even looking at only projects currently under construction, nearly 38,000 units will be added to Atlanta’s apartment stock in the coming years.
Most of the existing construction is concentrated in the Downtown and Midtown areas as well as the northern suburbs. When adding in planned projects, the pipeline expands to the south and east, especially along the I-75 and I-20 corridors.
There is some hope for a moderating pipeline, as the number of units being cancelled has steadily increased through the summer, but even if a small portion of the planned units come to fruition, Atlanta’s downcycle may be extended.
Atlanta apartment performance will regain its strength at some point, however as the national supply wave continues Atlanta remains at the eye of the storm. It may take years to absorb the new deliveries before demand and supply return to equilibrium.

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About the author

Chris Nebenzahl

Chris Nebenzahl is the Director of Economic Research at Radix, where he oversees all macroeconomic and multifamily market analysis. Chris has 15 years of multifamily experience in data analytics, research, asset management and acquisitions. Prior to his time in the multifamily industry Chris was a portfolio manager at Bank of New York, focusing in the government and commercial fixed income sectors.

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Atlanta Multifamily Market Report – September 2023

Chris Nebenzahl

Want the audio recording of this week’s Market Report? Listen now on Spotify.

Share This Post

Rent and Operating Trends

Occupancy and ATR

Net Effective Rent and Concessions

Employment Trends

New Supply Pipeline

Streamline Your Market Analysis with Radix Research and ProForma

About the author

Chris Nebenzahl

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