Atlanta Draws Strong Value-Add Investment

Metro Atlanta was a hotbed of multifamily investment activity last year, and the market continues to draw significant capital in 2022. Last year, the market saw $21.4 billion in closed multifamily deals, the second highest nationwide following Dallas-Fort Worth, according to a CBRE report.

And this year? Data is still coming in for the second quarter, but a Franklin Street report pegged transactions of more than $2.8 billion between January and March. Interestingly, unlike many other multifamily markets, it wasn't luxury communities drawing the most investment. Instead, Class B and C asset sales accounted for more than 70% of transaction volume.

Value-Add Multifamily Opportunities Driving Growth

The investment breakdown between property classes is a strong indicator that most investors are seeking value-add opportunities in the metro. Atlanta's Class B and C communities can offer more attractive price points to would-be investors, with key capital expenditures able to boost a property's value — and rents — almost overnight.

Atlanta's Class A assets are still hot, though, and they accounted for $728 million in deals in the first quarter — 25.8% of total investment. These upscale communities may cool off in the coming quarters. That's largely due to heightened activity from multifamily developers: Yardi Matrix reports that more than 26,000 units were under construction in March, and close to 80% of those were aimed at upscale renters.

This new supply could lead rent growth to decelerate a bit more — especially for core investments. Even so, rises in financing costs are likely to delay many households from buying homes — leading to a bump in demand for rental units.