INVESTMENT FORECAST

MULTIFAMILY 2022
Atlanta Metro Area

Atlanta Apartments Bolstered by Solid Household Employment Trends

Growth; Capital Migration into Area Consistent Employment Y-O-Y Percent Change

3.0 6%

Total Employment (Millions)

Tailwinds build in Atlanta. Following the largest annual absorption of apartments in more than

Y-O-Y Percent Change

two decades, the metro is poised to record another strong year. Renters leased more than 16,000 2.8 3%

units for the second consecutive year in 2021 as in-migration and job growth facilitated household
2.6 0%
formation. The pace of renter demand gains will ease from 3.3 percent in 2021 to 2.2 percent in
2022, largely due to the lack of available apartments. Vacancy improvement is projected to be the 2.4 -3%
most robust in Midtown and Buckhead, which have the most empty units. White-collar workers are
moving back into the densely populated areas following the distribution of vaccines and reopening 2.2 -6%
13 14 15 16 17 18 19 20 21* 22**
of offices. Companies are also expanding operations in those locations, generating additional renter
demand. Google, Cisco and Microsoft, among others, are adding thousands of jobs in the area this
year. Suburban properties, meanwhile, will also continue to perform well as remote workers from Supply and Demand
the Northeast and West Coast remain in the market long term. Completions Net Absorption Vacancy Rate

Completions/Absorption (000s)
20 8.0%
Out-of-area investors form foundation of buyer demand. Much of the capital flowing into
Atlanta apartments is coming from the Northeast, and to a lesser extent California, as portfolio ex- 15 6.5%

Vacancy Rate
pansion and arbitrage plays are frequent. The improving fundamentals and inexpensive financing
resulted in double-digit valuation gains last year, and upward pressure will remain on pricing en- 10 5.0%

tering 2022. However, the rapid increase in prices is generating a bid-ask gap between buyers and
5 3.5%
sellers as some owners overshoot listing values and investors entering the metro underestimate
the recent rise in prices. As long as interest rates remain low, buyers will likely need to move more 0 2.0%
13 14 15 16 17 18 19 20 21* 22**
than sellers to close that gap. Despite low vacancy across all property classes, some value-add deals
can be found around the metro. Improving suburban Class B assets to provide remote professionals
more options will be the most frequent target for these investors. Entering the year, cap rates range
Rent Trends
from sub-4 percent for core Class A assets to 7 percent for suburban Class C properties.
Average Rent Y-O-Y Percent Change

2022 Market Forecast

$2,000 20%
Average Effective Rent

Y-O-Y Percent Change

$1,625 15%
Employment Payrolls surpass the pre-recession level this year as companies add 89,000
up 3.1% workers, representing a 3.1 percent increase. $1,250 10%

Construction Deliveries in 2022 will match 2021 as 10,500 units come online, lifting invento- $875 5%

10,500 units ry by 2.0 percent. Over the past five years, builders have completed approxi-
$500 0%
mately 11,000 apartments annually. 13 14 15 16 17 18 19 20 21* 22**

* Estimate; ** Forecast
Vacancy Renter demand supports a 20-basis-point decline in apartment vacancy to 3.0 Sources: CoStar Group, Inc.; Real Capital Analytics; RealPage, Inc.

down 20 bps percent this year. In 2021, the average rate declined 120 basis points. Sales Trends
Average Price Average Cap Rate
$200 10%
Average Price per Unit (000s)

Rent Following an 18.4 percent rise last year, the average effective rent is projected
Atlanta Office:
up 6.7% to advance 6.7 percent this year to $1,644 per month in 2022.
Average Cap Rate

$150 8%
John Leonard First Vice President/Regional Manager
1100 Abernathy Road N.E., Bldg. 500, Suite 600
Investment Institutional capital is chasing Class A and Class B-plus properties in suburban $100
Atlanta, GA 30328
6%

areas where many white-collar workers are putting down roots. (678) 808-2700 | john.leonard@marcusmillichap.com
$50 4%

$0 2%
12 13 14 15 16 17 18 19 20 21*
Metro-level employment, vacancy and effective rents are year-end figures and are based on the most up-to-date information available as of December 2021. Effective rent is equal to asking rent less concessions. Average prices and cap rates are a function of
the age, class and geographic area of the properties trading and therefore may not be representative of the market as a whole. Sales data includes transactions valued at $1,000,000 and greater unless otherwise noted. Forecasts for employment and apartment
data are made during the fourth quarter and represent estimates of future performance. No representation, warranty or guarantee, express or implied may be made as to the accuracy or reliability of the information contained herein. This is not intended to be a
forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice.

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