Atlanta Multifamily Market Spotlight
Market Overview
Atlanta, GA has asserted itself as one of the stronger markets in the nation, driven by outsized economic and demographic growth. Annual population growth of the metro within the last decade has more than doubled that of the national average (1.3% vs. 0.6% per annum). This is largely attributable to the influx of jobs, highlighted by Fortune 500 brands such as BlackRock, Facebook, Google, Microsoft, among others that are flocking to Atlanta to capitalize on the world’s busiest airport Hartsfield Jackson Airport, an increasingly educated and technologically advanced population, and a relatively low cost of living. These new jobs have resulted in household income growth that is outpacing the national average and has contracted unemployment levels to 3.1% as of November 2022.
Atlanta’s retail market is reflective of the metro’s greater economy, as retail fundamentals have never been stronger. 2022 net absorption totaled 4.3M square feet, compressing the metro’s vacancy rate to 3.8%, which is a historical low. Lack of vacant space has pushed market rents upward 27% over the last 5 years (T12 rent growth of 6.1% for the metro vs. national average of 4.0%). Investors have taken notice, as 2021 retail transactions totaled $4.2B with 2022 trending above $4B as well. It should be noted that 2021 was the first year Atlanta saw more than $4B in retail transactions.
Job Growth
Atlanta has long since recovered all jobs lost in the pandemic, and its metro economy was on the cusp of 3 million non-farm jobs as the fourth quarter of 2022 opened. Several large corporations are in the process of adding thousands of high-paying office jobs. For example, Microsoft, Google, FanDuel, Visa, Cisco, Micron, and Norfolk Southern are opening major offices in Midtown. In early 2022, Walmart announced it is opening a major tech hub in Atlanta. In other sizable recent moves, TK Elevator opened its North American headquarters at The Battery in Cumberland/ Galleria; FinTech firm Deluxe Corporation added 700 new jobs at an innovation center in Central Perimeter, Papa Johns relocated its headquarters to Cumberland/Galleria, Mailchimp is expanding its local presence on the Eastside, Carvana is opening a major office in Central Perimeter, while Airbnb and Nike are each establishing East Coast hubs in West Midtown. These expansions follow several Fortune 500 firms setting up technology-related operations locally, including BlackRock, Facebook, Anthem, and Honeywell.
SK Innovation’s new facility in Commerce, just northeast of the Atlanta metro, will employ thousands at full build-out and could eventually serve as one of the world’s largest hubs of electric vehicle battery manufacturing. And on the eastern fringe of the metro along I-20, Rivian announced it will build a new $5 billion
electric vehicle manufacturing plant, slated to employ 7,500 workers when fully staffed.
Hartsfield-Jackson Atlanta International Airport; Atlanta’s transportation and logistics hub status helped attract Norfolk Southern, which moved its corporate headquarters to Midtown in 2021. The firm is adding roughly 850 new jobs with an average salary north of $100,000. The airport, along with generous tax incentives, has also helped the region’s growing film and entertainment industry, which is responsible for $3 billion in annual direct spending in the state.
Atlanta boasts lower living and business costs than large East and West Coast metros, and this competitive advantage should continue to boost population and job growth in Atlanta.
Vacancy Rate
A near-record construction pipeline will continue to lift vacancies in the coming quarters. Roughly 33,000 units are under construction in Atlanta, representing a 6.9% expansion of inventory. Even if demand picks back up in the coming months, new supply will likely push Atlanta vacancies higher over the next few quarters, and competition from new units will make large rent hikes unfeasible.
New Developments/Net Absorption
New construction starts have diminished over the past few quarters, but Atlanta’s current apartment construction pipeline remains at near-record levels. Developers are collectively standing behind 33,000 units under construction, representing a expansion of Atlanta’s existing market-rate inventory. Following an average of 12,000 units delivered annually since 2019, supply side pressure will remain acute in the coming quarters.
