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Asking Rents in Atlanta’s High-End Apartment Properties Are Surging in the New Year

Suburban Properties Outperforming, but Urban Buildings Are Starting To Recover As Well

By David Kahn CoStar Analytics March 19, 2021 | 4:04 P.M.

Atlanta’s high-end multifamily properties are raising rents again, marking a major turnaround compared to only a few months ago.

Atlanta four- and five-star asking rents were down roughly 2% on a year-over-year basis as of mid-year 2020, as the effects of the coronavirus pandemic were putting significant downward pressure on rents in the spring of last year. However, four- and five-star rents started recovering in the second half of 2020 and have surged over the first few months of 2021.

Annual rent growth is now about 4.4% for four- and five-star properties, and rents are up more than 2% year to date. This is the best performance for the four- and five-star slice in Atlanta since 2015, when the region was just hitting its stride in its recovery from the Great Recession.

Class A suburban properties are driving the recent rent growth rebound, but even urban properties have seen marked improvement over the past few months.

For this analysis, the CoStar daily rent series for four- and five-star properties in Atlanta was indexed to Jan. 1, 2020, in order to better observe the differing performance between geographical areas. Urban defined here is inside the Interstate 285 perimeter, while suburban properties are considered those outside the perimeter.

Suburban four- and five-star properties were hit just as hard as urban buildings in the initial months of the pandemic. But while urban rents remained flat, suburban rents trended upward starting in June.

Suburban properties have kicked it into a new gear in the new year as well, as rents in high-end suburban Atlanta buildings are up nearly 4% since the start of 2021.

Despite the clear underperformance, urban four- and five-star rents have recovered over the past few months. Rents in that slice are now nearly 1% above the levels seen at the beginning of 2020.

But let’s go a step further and look at how Atlanta’s newest apartment buildings have performed.

It’s been tougher for Atlanta’s newest four- and five-star properties to raise asking rents over the past few months, as rents at these properties already sit at the top of the market and compete directly with new supply. Even so, rents at stabilized suburban properties built since 2010 are up about 5% compared to the beginning of 2020.

Asking rents in new, stabilized urban apartments are right about where they were at the start of 2020, but that marks a significant turnaround compared to just a few months ago. Rents in this slice were 3% below where they were on Jan. 1, 2020, as recently as November 2020.

Continued strong performance in the four- and five-star cohort is not a given, and the slice faces some tangible challenges. Office-using employment is still well below pre-COVID levels, and the prospect of homeownership is a constant concern for high-end apartment demand.

However, Atlanta is about to add thousands of high-paying jobs from firms such as Microsoft, Google, Thyssenkrupp and Norfolk Southern over the next few months, which should provide a boost to high-end apartment demand. Furthermore, Atlanta’s multifamily construction pipeline has slowed considerably of late, so supply-side pressure should not be of much concern in the near term.

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