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The Outlook for Atlanta's Multifamily Real Estate Market

Updated: Jan 9, 2023


We all know how strong the Sun Belt has been for multifamily real estate over the past few years, and there's probably not a more important market in the Sun Belt than Atlanta.


Here at Blue Lake Capital, we've historically been active in Atlanta and continue to keep our deal flow active in the market. We were recently there visiting our Parc 85 property, and I took the opportunity to sit down with Kevin Geiger, Vice Chairman of CBRE and get his thoughts on multifamily real estate in Atlanta as we head into 2023.


Kevin has focused on multifamily investment property sales since joining CBRE in 1989. The team has been recognized as one of the most innovative and successful groups in the country, having transacted in excess of $20 billion in multifamily transactions since 2000. He is recognized on an annual basis by CBRE as one of the top investment sales professionals within the firm.


Kevin's been a great partner for us at Blue Lake Capital and if anyone has their finger on the pulse of multifamily real estate in Atlanta, it's him.


Below is a lightly edited transcript from a chat I had with Kevin in November. If you're interested in Atlanta real estate, this is one you won't want to miss.


Ellie Perlman: We're here in Atlanta and we're here to talk about the market and all of the dynamics and changes that we've been seeing recently.


Kevin Geiger: Of course, for the last two years the low cost of debt was just incredible. Consequently we've had phenomenal rent growth, population growth and job growth coming out of the pandemic. We knew that, based on historical numbers, this was was not sustainable in perpetuity.


However, we are still seeing good rent growth and prospects for growth remain quite good. The National Multi-Housing Conference has stated we're going to need 4.3 million housing units by 2035 and construction is not keeping up with demand at all.


Ellie Perlman: How do you think the financing markets are impacting investors and their appetite to invest in real estate today, specifically multifamily?


Kevin Geiger: We've seen a slowdown in available property, that's no secret. However, as you've seen in your history and as I've seen over the last several decades, the savviest investors invest when the, when the markets are dislocated.


Right now you have a lot of the institutional players sitting on the sidelines, but we're seeing tremendous investor demand. Investors know you can make money when you buy just as easily as you do when you sell. Unfortunately, the product's not there.


As we stated earlier, we still see really good rent growth lease trade out reports, 15 to 18% is not uncommon today. However, there's just a lack of product in the market. A lot of the sellers are used to selling at these very low cap rates that they've experienced over the last two years.


When you look historically, we're at cap rates that we were seeing pre-COVID, yet we have growth that far outpaces what we saw in 2018 and 2019. So cap rates in the four and a half to five cap rate range is very common, and that's really a normal market based on historic historical perspective.


What we're seeing in many of the Sunbelt markets, but more specifically to Atlanta, is that the diversity of the job growth is incredible. A lot of high tech companies moving in such as Google and others that the press has written plenty about, but we're also seeing job growth numbers that we've never experienced, certainly in my career.


You're talking about 150,000 new jobs in metro Atlanta this year (2022). When you compare that historical growth of about 50,000 to 80,000 new jobs annually, that's just an incredible number. Meanwhile you have a booming population with tens of thousands of people moving into the city every year.

Ellie Perlman: I think with affordability still being a painful subject for so many in the US,

people are looking to move to markets where they can afford a slightly bigger apartment in better areas, so they move to where companies are moving.


Companies are also looking for tax breaks, so there's movement from expensive markets like California and New York to markets like Atlanta, that still has a lot to offer in terms of affordability, along with a quality of life that you can't really find in other markets; at least not for the same cost of living.


It's a very interesting dynamic because we definitely see the demand drivers that continue to get stronger and stronger in Atlanta. It's not stopping, it's just improving and growing every quarter, every month. We look at the numbers because we are trying to understand if we still want to buy, in a certain market, if it's going to be a good market this year and next. The data that shows that there's tremendous growth and tremendous demand in Atlanta. And I think that it's a really fantastic market.


I was speaking with a colleague, a sponsor, probably two and a half years ago. And when he heard how much we're paying per unit, he said, "I would never buy anything in Atlanta. I remember when I used to pay $50,000 a door. You guys are crazy. You're buying it at a hundred thousand."


Well, we saw the numbers and we saw the demand and we were able to, sell at a much higher price, and getting 20 to 40 or 45% IRR is phenomenal. If you're not limiting yourself to how things work 10 years ago and you're looking not on the past, but looking towards the future and you see the growth, you see the demand, I think there's still a lot of runway in Atlanta


Kevin Geiger: There absolutely is. And you raised a couple of really good points. One is the business climate here is very pro business. I think you see a lot of migration out of some of the west coast states with business moving here. Likewise, individuals are moving here because . the cost of living is so much more attractive in the Southeast and particularly metro Atlanta with all it has to offer.


That's part of why we're getting such phenomenal growth, both in population but also rent growth. It's still an affordable market, so that individual you mentioned might have said he was buying when it was $50,000/unit. Those rents were half of what they are today, yet we're still an affordable market even after the explosive rent growth we've seen over the last five to 10 years.


Ellie Perlman: That's a a very good point. Kevin. Where do you you see the Atlanta market in 2023 and beyond? If you had a crystal ball and you could kind of look into it. I know it's been a tremendous year for CBRE, but I'm just wondering what are your thoughts about where the market is going?


Kevin Geiger: Well, without trying to be too Pollyanna and recognizing some of the challenges in the market, we're very fortunate to be in this city.


You have a phenomenal airport. You have the BeltLine, and that's paved with gold, the renter demand there is incredible. Two years ago there were 60 or 70 bars and restaurants along the BeltLine, and that number is much higher today.


I think we're going to continue to see really, really solid rent growth, and demand for housing even in a time when you think there may be some pullback from a few of the companies. We're still seeing these lease trade out reports, well north of 15% in many cases. So whether it's suburban or infill, there's opportunity here.


Ellie Perlman: I think you're absolutely right. Some of the assets that we bought from you, we were actually able to, push rents by 40 to 60%. And I'm sure when we sold, the next buyer is doing the same in pushing rents by a healthy margin. That's a very interesting and unique thing that we see in Atlanta that we don't really see in other markets.


Unfortunately we don't feel comfortable underwriting those numbers today. You know, we're, never going to underwrite a deal to 30, 40, 50% rent increases, but we know what we can do in this market, which is pretty unique, pretty phenomenal.


So, Kevin, what are some of Atlanta's strong submarkets?


Kevin Geiger: In Atlanta right now, because of the diversity of the employment base and the population base, it really depends on what an investor's looking for.


Are they looking at a core product where it's very stable, more of a class A community? Are they looking at value add where they can push rents even further?


The Vinings area is particularly very strong because you have Home Depot's headquarters there.

You also have easy access to the airport; you can get to the Atlanta Hartsfield Airport within 15 or 20 minutes often times. You have Truist ballpark as well, so there's a lot of demand. Live/work plays very strong role in and around the Vinings area.


Then you have the Central Perimeter. Not withstanding some of the construction going on there right now, you have Northside Hospital and, St. Joe's, all the major hospitals in the city in the North Central Perimeter and a huge office market there.


When you talk about the office market, with today's environment you can work and live almost anywhere. So you may want live in the northern suburbs near the best public schools in Metro Atlanta, so if you have young children, maybe you live in John's Creek, or Alpharetta, or Roswell or East Cobb, so you don't need to do that commute.


Maybe you want live on the BeltLine. A you know, the BeltLine in Atlanta is a 23 mile loop of an old railroad track that's been paved over. Now, bars and restaurants line the area and it's packed on sunny days, it's very, very attractive particularly for the millennials and younger generations.


You can look at different areas of the city that appeal to you as an investor, I don't think that there's any one hottest area.


Ellie Perlman: Thank you, Kevin. It's been a pleasure and we're looking forward to do more deals with you.


Kevin Geiger: It's always good to see you. You're quite welcome.


So there you have it. The Atlanta market has been incredibly strong and, while rent growth may not be what is' been the past couple of years and we have some economic headwinds to overcome, it's clear that the underlying market in Atlanta is still very, very strong.


As always, be well, be strong, and keep pushing forward!




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About Ellie Perlman


Ellie is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.


A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.


Ellie is the host of REady2Scale, a podcast that highlights the assets, processes, and strategies for the multiple approaches to successful real estate investing.


She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.


Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.


You can read more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.

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