The deluge of new apartments flooding the Metro Atlanta market has turned the tables on landlords, who are granting renters more incentives and lower rents.

But with developers hitting the brakes on new projects as financing grows cold, the upper hand may flip back to landlords by late next year.

Apartment renters are finding sweeter deals in the Metro Atlanta market.

Developers are underway with 18,500 new apartment units in Metro Atlanta, pushing the region to fifth place in the U.S. in terms of construction volume, according to an August Yardi report.

A bulk of the new supply is springing up in the suburbs. The 13,000 new units coming up in those areas are increasing the existing multifamily stock by 5%, according to Yardi Business Intelligence Manager Doug Ressler. Anything over 3.5% is considered robust. 

The rush of supply has forced developers to offer more perks to prospective renters, typically in the form of free rent that can span months, and in some areas of the metro area has forced rates downward. The dynamic is allowing renters to lease higher-quality apartments for the same rent.

“It may be a good time for renters to snag an amenity-rich apartment that previously may have been out of reach,” said Crystal Chen, who wrote Zumper’s August report on the multifamily market.

Every major submarket in Metro Atlanta experienced rental rate declines year-over-year in August, with rents dropping anywhere from 4.8% in Forest Park to a whopping 22% in Decatur, according to Zumper. There was an 8.9% drop in Alpharetta, a 6.3% fall in Atlanta, an 11% drop in Roswell and a nearly 10% drop in Sandy Springs, where GID Development Group is building almost 600 new units for its High Street Atlanta Apartments. 

“It’s Economics 101. It’s decelerating rents and concessions are increasing,” Ressler said. “That’s going to make it a very renter-friendly market.”

The share of landlords offering concessions has ballooned nationally from a low of 19.4% in July 2022 to 33.6% in April of this year, according to Zillow.

More than half the rental listings in Atlanta, Raleigh, Charlotte, Salt Lake City, Nashville and Austin include some form of renter incentive, Zillow reported. The Atlanta metro area saw a 14.5% spike in incentives on listings year-over-year in August. 

“Builders have stepped up and built an incredible number of homes in response to soaring rents during the pandemic, and renters are now seeing the benefits,” Zillow Chief Economist Skylar Olsen said in the report. “Now is a great time for renters to find a deal, with more new apartments hitting the market than at any time in the past several decades.”

Independence Realty Trust Inc. is offering incentives ranging from three weeks to two months of free rent in Atlanta, Raleigh, Nashville and Huntsville, Alabama, Senior Vice President Janice Richards said on an Aug. 1 earnings call.

And Mid-America Apartment Communities Inc. Executive Vice President Tim Argo said during an Aug. 1 earnings call that “Midtown Atlanta probably [is] our worst concessionary environment right now, sometimes pushing three months where there are lease-ups.” Mid-America reported rents falling between 8% and 9% for new leases in the region.

But Ressler said the fair weather for apartment renters likely won’t last. New apartment starts are quickly falling across the U.S.: By 2026, developers will be underway with 350,000 versus more than 500,000 today.

With the dropoff in new development, Ressler said Yardi is predicting rents will rise and concessions will fall off by as early as late 2025.

The ingredients for increasing housing demand are not abating, Ressler said. During the pandemic, non-native population growth in the U.S. drove people in spades to rental homes and apartments, especially since many don’t have the ability or credit record to buy homes. That trend is still in place, Ressler said, and is co-mingling with the Gen Z population — many of whom are now in their early and mid 20’s — who are moving out of their childhood homes and searching for places to live.

“So what you have is a double whammy. The demand for multifamily and rentals in general is increasing exponentially. Supply is not able to keep up with it,” he said. “Atlanta is a dynamic city. It’s a gateway city. Because of that, you’re going to see population growth and no real new supply to support it. What that means is prices are going to rise.”

Time Equities Inc. has acquired The Armory, a student housing property near Sam Houston State University (SHSU) in Huntsville, TX. The property, which features 145 units and 502 beds, was sold by Stonemont Financial, a real estate investment and development firm headquartered in Atlanta. At the time of purchase, the asset was 96% occupied. Commercial Edge reported the sale price at $25.8 million.

Built in 2018, The Armory spans 2.5 acres and offers a mix of studio to five-bedroom units, catering to a diverse range of student preferences and needs. Community amenities include a 10k sf clubhouse, a resort-style pool, a dog park, a putting green, soundproof study rooms and a fitness center, as well as a seven-story parking garage with 387 spaces plus guest parking. 

Located at 2257 Sam Houston Ave, The Armory offers easy access to university classrooms and athletic facilities, as well as off-campus dining, shopping, recreation and entertainment options, all within walking distance.

Time Equities (TEI) acquired The Armory at Sam Houston, a student housing complex located at 2257 Sam Houston Avenue in Huntsville, for $25.75 million. Built in 2018, the 145-unit/502-bed development is the nearest privately owned student housing property to Sam Houston State University’s campus.

TEI targets assets serving public, tier 2 institutions, catering to schools with a student population ranging between 10,000 and 20,000, versus assets serving Power 5 schools.

TEI’s Bobby Cohan added, “We continuously identify value and growth potential in student housing nationwide, and we are actively seeking new acquisitions to augment our portfolio within this asset class.”

This acquisition marks TEI’s fourth venture into student housing, complementing its existing properties in Tennessee, including assets at East Tennessee State University in Johnson City and Tennessee Tech University located in Cookeville, as well as a property in Richmond, Virginia that serves Virginia Commonwealth University.

The seller, Stonemont, was represented by Newmark.

It’s the seventh time Life Time has blended the concept of a high-end fitness facility and a residential rental community.

The Triangle Business Journal reports Life Time will open a new fitness facility and beach club in The Exchange Raleigh development, accompanied by an integrated Life Time Living apartment building. The Exchange Raleigh is a more than $1 billion mixed-use development under construction near North Hills.

Life Time will open a three-story, 80,000-square-foot fitness facility, including a 35,000-square-foot rooftop beach club. The facility will also include a coworking lounge and a full-service LifeCafe.

The building will be adjacent to the fitness center and have 17 levels and more any 250 apartments. The units will be for lease and will range from 650 to 1,550 square feet. The building will have work-from-home spaces, a private dining room, outdoor amenities and a golf simulator room.

The Life Time facility and associated apartments will break ground later this year with a projected completion of early 2027.

Industry leaders and power players are connecting at Connect Phoenix Multifamily & Single-Family Build-to-Rent on April 18 at the Westin Kierland Resort & Spa. Don’t miss the expert’s take on where the market is headed, and what changes are on the horizon. Register Now!