Over the past several months, the buzz in Atlanta has revolved around the amount of apartment development taking place across the city but especially in the Midtown submarket. Multi-family developers are chasing the $2 PSF rents they’re starting to see other luxury apartment towers rake in from tenants; they know the delivery of all of these towers will drive rents back down so they are racing each other to pre-lease and deliver product.
Perhaps the biggest hurdle for developers in achieving the $2 PSF rents is not the competition from similar towers but that the demographic they are targeting with these towers might not be able to afford $2 PSF. Sure, Millennials typically don’t have families to support, but they are burdened with tens of thousands of dollars worth of student loan debt. Most Millennials are forced to take low paying jobs and work their way up the ladder when they enter the workforce and aren’t able to dedicate so much of their income to living in upscale, amenities-rich apartment towers in town. To combat this, developers aren’t lowering rents on their units but making the units themselves smaller and therefore more “affordable” to Millennials. Most agree that these “microunits” are not a way of the future and will not appeal to the younger generation in the long term.Share