Research & Forecast Report ATLANTA Q2 2015 | Multifamily Atlanta Multifamily Market Market Indicators ATL ATL Relative to prior period Q2 2015 Q3 2015* Remains Strong VACANCY Key Takeaways RENTS CONCESSIONS > Effective rents have increased 2.7% 2Q15 vs. 1Q15, and 7.3% annually. TRANSACTIONS > Highest 2nd Quarter rent growth was in these submarkets: South Atlanta suburbs (9.2%), Duluth (5.3%), Smyrna (5.0%), Southeast PRICE PER UNIT Marietta (4.9%), and West Marietta (4.4%). CAP RATES - - > Continued job growth of 3% annually in the region has brought the *Projected unemployment rate down to 5.9%. > Mid-Year 2015 occupancy rates have remained high at 94.2% amongst increasing inventory. These high occupancy rates are Historical Apartment Occupancy & Rents driven by sustained demand particularly for middle and top-tier 97% product in the northern and central parts of the city. 96% > Expansion continues in Atlanta at a rate of 1.4% YoY with 95% 7,997 units added in 2Q15. 94% 93% 92% Atlanta Multifamily Market % Occupancy 91% Atlanta’s multifamily market has remained strong with a continued rent 90% growth of 2.7% in the 2nd quarter of 2015. Year-over-year rent growth 89% is at 7.3% putting Atlanta in the top ten of all major metros and number 2013 2015 one in the Southern region. The foundation to this growth is a strong, 2014 robust economy along with limited new construction in the market. $1,400 $1,200 Demand has remained solid in the Atlanta metro due to continuous employment growth and corporate expansions. Atlanta ranked number $1,000 4 nationally for job growth in the 12-month period ending in June, $800 adding over 77,000 jobs. The locations of these jobs tend to be AVG Monthly Rent Monthly AVG centered around the city lending more desirability for apartments in $600 urban settings. Notable for the quarter, Porsche has opened its new $400 North American headquarters near Hartsfield-Jackson International 2013 2015 Airport which will have 400+ employees. Other corporate expansions 2014 announced in the quarter include Kaiser Permanente, Sage Group, US SOUTH ATLANTA Source: MPF Research Courion, and Google. High demand has kept occupancy rates at 94.2% for the quarter even amongst new units being added to the region. Atlanta Multifamily Market (continued) growth has remained under 2% for the past three years with 7,997 units added in 2Q15. Absorption in the market for 2Q15 was Another factor in the strong multifamily market is generational. 4,552 units. Approximately 13,000 units were under construction Millennials, whose ages range from 18 to 34, are not buying homes at in 2Q15 with 85% being located in Downtown, Midtown, and the same rate as previous generations. The average first time home Buckhead submarkets. This is largely due to high demand for buyer today rents for six years before buying a home compared product in these submarkets which has allowed many completed to two and half years in the early 1970s. This is largely due to the developments to command rents north of $2.50 per square foot. fact millennials do not have the financial savings to afford the down payment on many of the homes in the market. Rental growth rates across the country have grown at twice the pace of wage growth. In To sum, we can expect rents to continue to increase in the future Atlanta, wages have grown at 2% in the twelve month period ending with strong demand prospects and limited new inventory entering the June 2015, compared to a 7.3% increase in rental rates during that same market. Another trend to watch for the future is the growth of baby period. This has created further demand for multifamily rental housing. boomers in the apartment marketplace. The population ages 65 and older will grow to over 50 million by 2019 up from around 30 million in 1989. This is expected to fuel future rent demand as many empty While demand remains strong, Atlanta’s supply of apartments is nesters will seek to downsize their household and enjoy many of certainly on the upswing albeit at a manageable pace. Inventory the conveniences renting an apartment vs. owning a home provides. UPDATE - Recent Transactions in the Market Notable Sales Activity PropertY SUBMARKet SALes Date SALE PRICE SIZE (UNits) PRICE / UNIT BuYER Brookleigh Flats Northlake 5/14/2015 $84,950,000 332 $253,582 LaSalle Investment Mgmt. Steelworks Midtown 6/18/2015 $80,400,000 329 $244,377 Heitman LLC Dunwoody Place Central Perimeter 7/16/2015 $77,200,000 400 $193,000 Crow Holdings Avana Lenox Buckhead 6/29/2015 $71,600,000 423 $169,267 Greystar Real Estate Prtnrs ARIUM Johns Creek North Fulton 7/1/2015 $64,500,000 396 $162,879 Goldman Sachs Asset Mgmt The Jane Atlanta Apartments Midtown 4/30/2015 $63,600,000 280 $227,143 CWS Capital Partners Anderson at Clairmont Northlake 6/23/2015 $60,050,000 408 $147,181 Eaton Vance Corp. Berkshire Howell Mill Midtown 5/13/2015 $51,500,000 257 $200,389 Berkshire Group Inman Quarter Downtown 5/29/2015 $50,000,000 200 $250,000 TriBridge Residential/Coro Manchester at Mansell Apts. North Fulton 5/8/2015 $48,500,000 468 $103,632 Titan Real Estate Investment Source: CoStar Comps Historical Investment Volume & Cap Rates 7 8.0% ATLANTA MULTIFAMILY Apartment investment volume 6 7.5% Billions as of mid-year 2015 in Atlanta 5 7.0% is almost half of the amount in 4 all of 2014. Around 87 6.5% properties with a total of 3 19,784 units have sold to date. 6.0% According to Real Capital 2 Analytics, the average price 1 5.5% per unit in Atlanta decreased to $95,984 which is lower 0 5.0% than last quarter, but still 24% higher than a year ago. The 2011 2013 2012 2014 2010 2007 2009 2005 2006 2008 average cap rate for YTD15 apartments in the Atlanta market has remained Sales Volume AVG Cap Rate practically unchanged from last quarter at 6.6%. Source: Real Capital Analytics 2 Research & Forecast Report | Q2 2015 | Atlanta Multifamily | Colliers International PICKENS CO. CHEROKEE CO. DAWSON CO. FORSYTH CO. Canton . GAINESVILLE . O O C C E E CHEROKEE CO. W Cumming K O O T Cartersville . R Lake . R O E A O C H B C Lanier C H N Allatona T O Y Buford T S Lake L HA R GW L U I L C O N F NE O. F T Sugar Hill T C O. Woodstoc k r e v F i OR S R OW CO. Mountain Y Braselton FU T CH E R O L H KE E C O . Park T O C Acworth N O. C O. Alpharetta o o c h e e ac h . tt O a C h Roswell B C Duluth B O C 316 MARIETTA . O O C C B Lawrenceville B N O O C LT Multifamily Pipeline | Urban Atlanta U Sources: CoStar Property, MPF Research F 40 16 6 DORAVILLE Norcross 41 34 14 CHAMBLEE Powder 42 15 D F U 17 7 16 E L K 29 T Springs A O L N SMYRNA B 35 C 13 C O O 13 . 14. 15 G 18 W 4 IN Snellville . 1 3 5 D N O E E 31 19 9 K T C A T LB C G O 32 C . N 11 O I . D Austell 1 30 L 2 7 U COBB CO. 12 Clarkston Stone A 6 12 P DOUGLAS CO. 26 39 Mountain r 33 . e 10 27 22 21 O Lithia Springs iv 2 37 C W 28 23 T A R 11 36DECATUR T L ATLANTA 9 8 38 E TO 4 N N 20 IN C e 5 3 O Douglasville e 8 10 W . h 17 G c o o c h 24 25 a tt a h UNDER Construction C # Name Developer/Owner Address Market Units Lithonia 1 Broadstone Court Alliance Residential Company 3091 Maple Dr Buckhead 250 2 (not yet named) Abraham Properties & Builders 675 North Highland Ave NE Midtown 124 3 Elan Inman Station EASCrimT & Associates 144 Moreland Ave NE Downtown 285 POINT . 4 Square on Fifth Gateway Development Services 848 Spring St NW Midtown 220 O O C C 5 Peachtree Apartments 782 Peachtree St NE Midtown 294 COLLEGE E B 6 Ardmore & 28th Cocke Finkelstein, Inc. 306 Ardmore Cir NW Midtown 165 L L Conyers PAR K A A 7 The Monroe HAPEVILLPollack Shores Real EEstate Group 222 Colonial Homes DrDEKALB NW Buckhead CO. 218 K D E K 8 33 Peachtree Place Wood Partners 33 Peachtree Pl NE HENRY Midtown CO. 369 D C Hartsfield-Jackson O Covington 9InternationaThe Brady l Airport Perennial Properties, Inc. 930 Howell67 Mill5 Rd Midtown 230 R . 10 Aspire West Midtown Westplan Investors 1390 Northside Dr Midtown 133 O C 11 Elan Lindbergh Greystar Real Estate Partners 741 Morosgo Dr NE Buckhead 258 . E O 12 Modera Morningside Mill Creek Residential Trust LLCFOREST 1845 Piedmont Ave NE Buckhead 300 L C C A N L D 13 Domain at Phipps Plaza Columbus Realty Partners, Ltd. PAR K 705 Phipps Plz NE Buckhead 319 O A K Union City T Y C 14 AMLI City Place AMLI Residential Properties, LP 3464 Roxboro Rd NE Buckhead 640 W T O E O R 15 The Reserve at the Ballpark Atlantic Realty Partners 2875 Crescent Pky Northwest Atlanta 318 N N 16 The Collection JLB Partners, LP 4600 Roswell Rd Central Perimeter 316 Fairburn C Riverdale 17 200 Edgewood O Sanctuary Residential LLC 200 Edgewood Ave NE StockbridgDowntown e 144 .