While employment trends in the Gate City remain erratic, vacancy continues to plummet to levels not seen in nearly a decade. Hendricks-Berkadia reports that overall vacancy fell 90 basis points between 2011 and 2012—to 7 percent. Meanwhile, rents across the metro rose between 1 to 2 percentage points.
However, much of this current occupancy trend stems from the fact that construction levels are at historic lows across the city, with only 700 units delivered in 2012. This is compared to nearly 8,000 units delivered in 2009—at the height of the recession. Hendricks-Berkadia notes that deliveries will remain below 3,000 units per year for the foreseeable future, yet will increase slightly in 2013 and 2014 from last year’s lows.
Meanwhile, the jobs picture in the metro remains mixed, as certain industries have cut back on positions while others resumed hiring. The sectors shrinking their workforce include construction, information, government and hospitality, while those that added jobs include trade, transportation and professional and business services. The gains in the latter sectors ultimately outweighed the losses in the former, with an overall net gain of 18,500 positions in Atlanta in 2012.
Average rents across the metro grew from $857 per month to $873 per month, an increase of 1.9 percent year over year. The most expensive submarket, by far, is the Midtown/Buckhead—an affluent suburb north of the central business district. However, the downtown area also posted significant prices, with rents jumping 3.1 percent from $893 to $921 per month.
Submarkets that are still struggling, however, include the Southeast Atlanta area—with a vacancy rate of 9.4 percent and average rent of $747 per month—and South DeKalb area, with a staggering 20.9 percent vacancy rate and average rent of $665 per month. The latter region is primarily single-family-oriented and located more than 10 miles from the city center, and much of the multifamily inventory is aged.
Going forward, Hendricks-Berkadia expects more than 20,000 jobs to be added to the Atlanta metro in 2013, with many of these concentrated in the recreational, retail and restaurant sectors. Furthermore, overall vacancy is expected to fall even further—to 6.1 percent in 2013 and 5.1 percent in 2014—bringing the Atlanta metro in line with other major multifamily markets across the country.
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