Less Expensive Areas Gaining Lion’s Share of Demand
Although multifamily demand slowed in metropolitan Atlanta due to the first several months of the coronavirus pandemic, net absorption remained positive in the region. There were 3,500 units absorbed in the first half of 2020 for the Atlanta multifamily market, one of the top marks in the country.
But some areas of the region performed better than others in attracting new renters. Typically, the lion’s share of multifamily demand flows to areas with a large number of new properties in lease up. However, less expensive suburban locales with minimal supply pipelines have garnered an unusually large share of rental demand since the coronavirus pandemic first hit.
Clayton County, Southeast DeKalb, Westside Atlanta and South Fulton all posted some of the strongest gains in the first half of the year. These areas contain a substantial amount of mid-tier apartment product, and post lower asking rents compared to the Atlanta average. A large number of units have also recently received renovations, potentially bringing renters who are moving down from higher-quality units to less expensive options in the midst of a downturn.
Exurban Cherokee County also garnered a large share of net absorption in the first half of 2020. The county is one of the fastest growing areas in Atlanta, and average asking rents there come in below other northern suburbs such as Cumberland/Galleria and North Fulton.
While supply-heavy Buckhead still ranked among the top areas for net absorption last quarter, other developer hotspots like Midtown, the Eastside and West Midtown struggled to attract new renters amid the pandemic.
Areas of the market with more upscale and high-end apartments are more dependent on in-migration from renters moving away from more-expensive coastal states and are willing to pay Atlanta’s top prices. While lease up for new properties rebounded in July, stagnation in net migration due to the coronavirus pandemic and seasonality in the market will likely cause lease-up to slow.
Further improvement in mid-tier demand will be predicated on a timely extension of the benefits and protections provided by the CARES act. But, with the addition of thousands of new blue-collar jobs from Amazon, Lidl, Purple and others, hiring by these corporations will likely help offset any delay in the enhanced unemployment benefits extension.