No barriers are blocking growth in Atlanta apartment market, say InterFace panelists


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The panel included (left to right): Jason Nettles, Managing Director, Northmarq; Patrick Chesser, Managing Director, Mill Creek Residential Trust; Bianca Tabourn, Managing Director, Stockbridge; Chad DeFoor, senior manager of multi-family sales, Franklin Street; Seth Greenberg, CEO, ECI Group; and Steve Baile, director of development and operations, Selig Enterprises.

ATLANTA – Multi-family investors increasingly view Atlanta as a top market.

Panelists at France Media’s InterFace Multifamily Southeast, held in Atlanta on December 2, highlight several reasons why the region is the right place, right now, to build, buy and sell. all kinds of apartment assets.

“In Atlanta, you have an incredible diversity and strength of employers,” said Chad DeFoor, senior director of multi-family sales for Franklin Street.

DeFoor was joined by Bianca Tabourn, Managing Director of Stockbridge; Steve Baile, director of development and operations at Selig Enterprises; Patrick Chesser, Managing Director of Mill Creek Residential Trust; Seth Greenberg, CEO of the ECI Group; and panel moderator Jason Nettles, CEO of Northmarq.

Speakers at the session, titled “Atlanta Market Update: An In-Depth Look at Leasing, Investment and Development,” all noted that job growth and the prominent employers relocating to the region are contributing in party to gain the favor of investors. .

In both the public and private sectors, interest is growing in the Atlanta apartment market and most other major subways. Tabourn reports that Stockbridge is seeing increased interest from national and international groups. “In 2022, we expect to see further allocation to the private market, including real estate,” she said.

On the public side, Nettles pointed out that CalPERS, the California Public Employees’ Retirement System and one of the largest pension plans in the United States, announced that it was increasing its real estate allowance from 13% to 15%.

“Two percentage points doesn’t seem like a lot, but that equates to $ 10 billion in additional capital that will be deployed in our space over the next four years,” Nettles said.

On the jobs front, Google’s announcement earlier this year that it will expand to Midtown Atlanta could be a catalyst in attracting other tech companies. Google will take over 19 floors of 1105 West Peachtree Tower, part of the company’s larger plan to expand its offices and data centers across the United States by 2025.

“All of these tech companies are an ecosystem,” Chesser said. “They want to be where their friends are, and that’s an incredible dynamic.”

Baile said the number one indicator to monitor when it comes to supply and demand is job growth.

Skyhouse South

SkyHouse South is a 23 story apartment tower located at 100 6th St. in Atlanta.

“Atlanta is more than just a development opportunity,” Baile said. “Those [tech] businesses are moving here for a reason.

“Our friends at Google are sitting in Mountain View, Calif., And it’s not a very diverse culture there. In Atlanta, you have access to a lot more diversity available to these employer bases, and I think we will benefit from the multi-family side of what this job growth does for us.

A more sophisticated tenant profile is also driving demand in the region. “Is the average renter’s credit rating different today than it was 10 years ago? Nettles asked the panel.

“People’s credit may not be different from what it was compared to the average renter several years ago,” Baile replied, “but people have more to spend. Before, in Atlanta, you spent 25% of your income on your rent. People coming from Mountain View, Chicago, or Manhattan are used to spending 30-35% of their income on rent, so higher rental rates aren’t as “offensive”, so to speak. “

Additionally, the competitive nature of the single-family home sales market favors tenant demand in Atlanta.

“We are seeing a change, psychologically,” Tabourn said. “When you think about choosing to rent years ago, it was a bit of a stigma. Whereas now we are seeing far more renters by choice than renters by necessity.

“Our portfolio is mainly made up of class A assets, and we are blown away by the average household income. We are talking about six digits. We sit down and wonder why would you choose to rent over buying a house? But it boils down to the inability to buy a home due to the competitive nature. “

Tabourn reports that Stockbridge is forecasting sharp rent increases in 2022.

“What puts me at ease is the tightness of the job market. In the past, we haven’t seen income growth and inflation keep pace with rent inflation, so we’re concerned that it might become too large a percentage of someone’s household income. But now, with the tight labor market, wages are rising year on year, making us feel better about the ability to continue paying the highest rates. “

Renter demand isn’t just driven by six-figure white-collar job growth. DeFoor, which specializes in listing and selling Class B and C assets for private investors, pointed out that jobs in shipping, logistics, industry and manufacturing are also on the rise in the region. from Atlanta.

“There are macro changes underway of which Atlanta is a huge beneficiary,” DeFoor said. “With jobs coming here in droves, people coming here in droves, capital coming in here in droves, this will be the perfect time to see Atlanta take another step into the investment world as a real leading investment market. “

– Lynn Peisner

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